Ai Editorial: Content is vital for merchandising, are airlines ready for it?

First published on 2nd February, 2017

Ai Editorial: If airlines aren’t able to deliver content that covers apps, sites, social channels, IoT devices etc., then they are falling short of displaying their own product aptly, writes Ai’s Ritesh Gupta

 

Airlines generally tend to struggle to make the most of their core offering when it comes to displaying images, videos etc. This means airlines are falling short of optimizing the investment being incurred on refining the overall product and shopping experience. And with this gap, they are also potentially missing out on revenue optimization, say selling of air ancillaries.

Are airlines matching content with the intent of the customer? Are airlines equipped to handle opportunities emanating via artificial intelligence, robotics and automation? Not really.

So where is the problem when we talk of management of content?

One area that is being discussed even in the other sectors is the limitation of traditional content management.

Airlines need to look beyond web publishing, and rather gear up for publishing that covers apps, sites, social channels, IoT devices etc. One also needs to support global, multilingual content at scale.

Keeping pace with technology

The pace with technology evolves increases expectations, brands are expected to be ready, and that’s what we, as travellers, expect from our favourite airlines, too.

In this context, content needs to gear up for mobile-first approach, artificial intelligence etc. For instance, chatbots are being trained to respond to queries. Now if a traveller is sitting at the airport, about to board the flight in next 30 minutes, intends to ask a question around what’s going to be served during the 7-hour transatlantic flight and is even willing to pay for a certain dish, can the chatbot show the image of the dish if its available? How much to pay for it? It is definitely possible today. Chatbots and AI can provide convenience and value to travellers via real-time recommendations (say links to purchase options or opt-ins that could lead to purchases). If bots are improving upon the experience, then content that is being shown is an integral part of the whole effort. Even chatbots should be equipped to automatically serve content in the format – aptly suited for a user’s device, right?  

“Headless” CMS

The limitations of legacy content management systems (CMSs) typically are - being browser-first, page-centric, on-premises set up etc. Traditional CMS products were set up as a coupled CMS. As for the coupled versus decoupled web CMS architecture, in case of coupled architecture authoring and delivery are on the same set up. While the initial setting up is simple, there are challenges that are being highlighted with the coupled approach. Scaling up is one issue. Also, since content is normally in a database schema (CMS code is tightly connected with templates and custom code) intended for use on the site, it can make integration and migration arduous. Plus, software complexity is more since the code base features both authoring and delivery concerns. Also, being on the public server raises security issues.

In this context, headless CMS has been in news.

Such systems pave way for editing, storing, and management of content but put away the design and delivery of the same content to a distinct offering. Here API makes the content available through any channel and on any device.

E-commerce companies are evaluating content-as-a-service through microservices and APIs. It is being underlined that headlines CMS marks the evolution of the CMS architecture. Headless is being termed as an answer for content for multiples screens, and the list also includes devices such as smartwatches. Also, headless CMS allow developers to choose whatever front-end user interface technology they would prefer. Organizations can better manage application lifecycle without any interference of CMS code. Another advantage that airlines can consider is the fact that a decoupled architecture is beneficial for those digital assets that need high levels of availability and performance, for integration with third party business systems etc.

Don’t ignore customer experience

However, it needs to be highlighted that there is balancing act that needs to be managed, when we talk of headless or coupled.

As a specialist in this arena, Sitecore underlines that organizations need to be careful with the impact on customer experience (CX).

In a recent blog post by Sitecore, it was highlighted that even as headless CMS can result in freedom while finalizing on a front-end user interface technology say for an app, on the flip side the CX end up being decoupled as well.  This would limit the ability to personalize that experience, or answer real time with pertinent content, or even test and optimize and manage forms and market in context of user interactions.

So how to go about headless CMS?

Sitecore asserts that such architecture should be used by “digitally mature” entities that are capable of managing “customer experiences in context of how users interact with your brand”. Further adds, it should work for those “whose digital properties are personalized, who regularly test and optimize those experiences, and whose organizations are set up to be customer-centric.”

Then only one should expect to manage the balance between contextualized digital experiences and standout app user interfaces.

Overall, airlines need to evaluate possibilities with the cloud-first headless CMS approach.

Content management, be it for going for an architecture that supports delivery of content for emerging technologies and all devices, adopting personalization rules that tailor a site content based on visitors’ profiles, or monitoring how content is performing, without navigating to a separate web analytics system, is one key area that is demanding action in a swift manner.

This way airlines can get better with their overall e-commerce plan, and target improved revenue generation from both their core products and ancillaries.

 

Gain an insight into intriguing issues at Ai’s 11th edition of Ancillary Merchandising Conference in Spain this year. 

Date: 25 Apr 2017 - 27 Apr 2017; Location: Mallorca, Spain 

For more info, click here

 

Follow Ai on Twitter: @Ai_Connects_Us

Ai Editorial: Too easy to go awry with personalisation

First published on 27th January, 2016

Ai Editorial: By being too transaction-centric, overlooking the limitations of big data or not respecting travellers’ privacy, airlines can go wrong with their personalisation-related efforts, writes Ai’s Ritesh Gupta   

 

Amidst all the talk around how personalisation, backed by smarter data capabilities, can elevate the overall brand experience, there are noticeable instances where the whole initiative can prove to be either useless or even annoying.

Yes, personalisation is a journey – moving from demographic segmentation to bringing behavioural and transactional data into the picture to algorithms-driven, automated one-to-one personalisation. But being meaningless during the path is what marketers are trying to avoid. As cautioned by a couple of airline executives in the recent past, when things go wrong, the image of a brand takes a beating.

·          “Awkward personalisation can be worse than not personalising at all,” this is what Maria Cardenal, head of product development at Vueling Airlines had to say when we interacted about selling ancillaries and personalisation.

·          In another interaction, Frank Bornemann, head of marketing, Loyalty Programs & Provider Management APAC at Lufthansa, highlighted that airlines have so much data available to address individual needs, but yet they usually blast offers to all customers in newsletters, apps, social media etc.

What personalisation shouldn’t be like then?

Ø  Irrelevant by being “transaction-centric”: An email addressing users with their “name” and sending 10 emails in a month with all of them enticing them about buying your next flight with a promo code or discount can detest a user from even opening an email. And if users have accrued points or miles, it is even more detrimental to the experience as users neither can unsubscribe (since they would lose out on something relevant to them) nor wouldn’t like to open as most of it seems like “spamming”.

As highlighted by Olson Digital, for most entities operating in the digital space, every interaction with a visitor is not a direct sales opportunity.

Be it for historical data, the recent activity (say keyword search or clicks on the website) etc., anticipate where the user is in the booking funnel. Let’s say a user typically takes two family vacations (in March and in June) and there are other times when the same traveller travels for business. What would the right time to inspire this traveller for family vacations? What sort of content would be shown depending upon historical data, the recent activity (keywords search, sections clicked on email, behavior on airline app/ website etc.), the stage in the booking funnel etc.

Treat every piece of communication as part of the journey, starting from the inspiration phase, and enabling the user to take a decision with relevant messaging, choices, deals etc. Olson Digital sums this up with an analogy: a suit “must fit one’s preferences (cut, color, fabric), the season or occasions during which it is likely to be worn, and ultimately one’s body”.

Ø  Missing the mark with big data: A major issue with big data is assumptions arrived at, based on variables. These can be 90% - 95% accurate and yet can end up being irrelevant with the recommendation. VCCP’s co-founder and chairman Charles Vallance made a pertinent point in a blog post few months ago, “the trick with big data is to make it small”, and “distil and compress it until it tells you something concrete, substantial and discriminating”. He underlines that if one would only end up counting on data-driven targeting as personalised and to being personal, and overall a way to forge desirable customer relationships, this may well end up being a mistake. Vallance accentuates that one needs to balance out, and make the most of the blend of human angle, communication and technology, and also states: “technological leaps that big data makes possible are seldom about understanding me better, they are more often about serving me better”.

Airlines and travel organizations can also dig deep into what sort of analytical process failure can result in disappointing results. Look into bias, and their impact, and also learn about true positive, true negative, false positive, and false negative, and ask pertinent question like why same data can result in different interpretations?

According to specialists in this arena, being extremely reliable on the initial dataset, no data cleansing or transformation, or statistics being done wrong are common issues.

Ø  For trust, know your limits: We all dread the idea of sharing too much information on any social network or even sharing our email id thinking of being chased or being exposed to unwanted messages. The responsibility is even bigger when a consumer shared some piece of information for a meaningful association. Make the effort to ensure customers can opt out. Retargeting definitely hasn’t evolved it seems – be it for chasing with same creative or showing an ad umpteen times even when a consumer isn’t interested.

As Cardenal explained, even if an organization is ready with data and has managed right interpretation of that data (aligned with the business strategy, as well as the technology to be able to use it effectively), do ensure the same comes into play at the right moment and with the right message. If no, then the same effort can come across as intrusive by the traveller.

Technology is not enough, you need to build your customer’s trust.

Travelers are willing to provide more personal information if it means a better customer experience for them. If you make proper use of their personal information and the message you send is relevant to them, then it will not annoy them, but will develop trust. 

 

Gain an insight into intriguing issues at Ai’s 11th edition of Ancillary Merchandising Conference in Spain this year. 

Date: 25 Apr 2017 - 27 Apr 2017;

Location: Mallorca, Spain 

For more info, click here

Follow Ai on Twitter: @Ai_Connects_Us

Ai Editorial: Speed – one vital driving force behind every CTO, CMO’s move

First published on 6th January, 2017

Ai Editorial: Speed is one popular notion that is driving new initiatives at an enterprise level. Ai’s Ritesh Gupta assesses how 3 areas –merchandising, API connectivity and micro-moment marketing – are gearing up for the same.

 

Speed with which what an airline can do, be it for introducing a new ancillary product, acting on business intelligence or dealing with digital marketing ecosystem for funnel optimization, is now defining what transformation is all about. It is exerting tremendous pressure on every organization to evolve in a certain manner.

From the IT standpoint, one has to make the most of the blend of mobile, IoT, SaaS, cloud, big data and social and accordingly adjust their operating model. For a marketer, it’s imperative to make the most of every interaction a customer has with the brand, making apt use of CRM, marketing automation or campaign management tools to organize multichannel interactions.

Here we explore certain operational changes that denote the significance of speed, in the context of supporting an environment for innovation, gaining competitive edge for instance launching a new product or a new digital asset building on the existing resources etc.

·          IT operating model: Airlines need to excel with their API connectivity as this paves way for a seamless application network of apps, data, and devices. Implications for airlines include passenger tracking inside the terminal to speed up departure gate boarding or cutting down traveller queues at airports with mobile check-in.

As a specialist in this arena, MuleSoft foresees that in 2017 APIs and microservices are going to be vital weapons that IT teams would build for developers across an enterprise to use for apps, services, and processes. (According to IBM, microservices architectural approach is a way to set up only one application as a group of services, each operating in its own process and communicating with lightweight mechanisms, often an HTTP resource API). This way one would be able to discover, reuse and self-serve assets. Overall, such move is going to result in speed and agility by enabling more teams to innovate without central IT being the bottleneck. How? Such IT operating model means technology components can be split into smaller pieces, be composed and recomposed into new digital products and services across the business. Citing an example, a blog post on MuleSoft, explained how by divulging data through reusable APIs can propel innovation, rather than starting from scratch every time a project is initiated. From a tangible benefit perspective, this means when an app for iOS is created, and post this an Android app is to be delivered, this wouldn’t require a massive effort. Rather by divulging data required for the app through APIs, various components of the mobile app can be referred to as reusable building blocks.

Among airlines, flydubai is one such airline that has been counting on one such platform to cut down on the time taken to introduce new products by up to 70%.

·          Merchandising and distribution: Personalized offers in milliseconds? Yes, this is what airlines need to consider. Airlines have to work on plans that result in flexibility and quick, centralized approach to merchandising. For instance, the web and mobile front-end should be accommodating so that it adapts dynamically when one adds or eradicates any fare, bundle or ancillary. The work that is done at the back-end to introduce a new offering should be done in a way that there is no amendment required in existing digital assets such as PC website, mobile app etc.

Also, if an airline is pushing its content via NDC-enable API then any changes/ new offering needs to be displayed across all the channels to sustain consistency. One has to work on dynamic merchandising, pricing, availability, and schedule building as part of real-time offer creation and delivery across all channels. The related engines for such functionalities should be cost effective and have millisecond response time.

·          Not just traditional “marketing”: For marketers, it is important to respond quickly to market opportunities with real-time market and performance insights. For instance, if tomorrow another game like Pokemon Go emerges, then what sort of agile planning is needed to make it part of the marketing mix. Of course, the popularity of Pokemon Go underlined the potential of speed and scale of digital disruption, and marketers need to be ready for it. So airlines need to evaluate what they can do to integrate data and technology.

Marketers need to be nimble, need to capitalize on the blend of content, data, analytics, algorithms etc. The lines between marketing, product, and engineering are diminishing. For instance, the team needs to have certain set of technical skills to capitalize on say each ecosystem (Apple, Google etc.), what can trigger virality (for instance, how to count on gamification) etc., funnel optimization through measurements and insights using tools such as Google. We are in the era of micro-moment marketing. As Google points out, mobile has fractured the consumer journey into hundreds of real-time, intent-driven micro-moments. These moments have been categorized (Want to know moments, Want to do moments, want to buy moments etc.), and marketing today need to acknowledge that moments tend to sit at the crossroads of content, immediacy and intent. How to crack this is in real-time is going to be the key forward. No doubt piecing together a technology staff for the marketing function is a very big challenge.

How can airlines embrace change and count on "speed" for competitive advantage? Gain an insight into intriguing issues at Ai’s 11th edition of Ancillary Merchandising Conference in Spain in April this year.

Date: 25 Apr 2017 - 27 Apr 2017; Location: Mallorca, Spain 

For more info, click here

 

Follow Ai on Twitter: @Ai_Connects_Us

Selling ancillary products – simplicity is key

First Published on 1st January, 2017

 

Ai is set to conduct the 11th edition of Ancillary Merchandising Conference in Spain this year 

Date: 25 Apr 2017 - 27 Apr 2017; Location: Mallorca, Spain 

For more info, click here

 

Follow Ai on Twitter: @Ai_Connects_Us

Ai Editorial: Can personalisation be about knowing “me” in 2017?

First published on 28th December, 2016

Ai Editorial: Can airlines make a traveller spend based on the sum of “clicks” or “tap”, or customer experience (CX) based on sum of all interactions with the brand, probes Ritesh Gupta

 

How would you define personalisation?

This question isn’t new, but then have we found a way to excel? Not really.

For me, personalisation in travel e-commerce is about helping me in booking a flight or during the course of the journey. I believe we have a long way to go:

·          The sum of my “click”, “swipes” and “taps” on devices: It isn’t uncommon for a user to use multiple devices. One might look for destination-related content, local tours, air tickets or best hotel deals session after session, say on airline.com or an OTA app. There are stages where users give strong signals of the destination they intend to book, the kind of flight itinerary they are looking for, the sort of hotels they want to book etc. But in today’s era in which one could log on to TripAdvisor, Facebook, Google Maps, airline- or OTA –owned digital platforms, meta-search engines  etc., there aren’t sufficient ways to come to grips with what the user is looking for. For example:

I searched for New Delhi-Zurich-Geneva-New Delhi flight at least 10 times on Swiss, Lufthansa sites, Google, Skyscanner, Kayak etc. over a period two weeks. Did any airline, Google or any flight search engine at any stage offer me a piece of content that made me click and book? No. Eventually I did book, there was a comfort level with certain itineraries depending upon the price, the connecting flight, meals etc. No organization managed to sprang a surprise. Retargeting, too, today to me is just a soft extension of the session where I left. No real value is being added when I am being shown an ad. A way for brand to just hover around the screen I am on. Of course, I left the website or app for a reason. Can the reason be identified and inspire me, lure me into a deal that matches my intent, preferences, price I am willing to way. So rather than just displaying an ad for 14 days that says book a car rental in Zurich, one could show the spots that I am most likely to visit. Show visuals of say Old Town or Lake Zurich and how could I move around from the place I am trying to book. The ad tech fraternity is making moves with initiatives such as programmatic native marketing. It is being highlighted that native ads blend content/ creative with the page a user is on, don’t hamper the user experience or aren’t intrusive, and are data-driven.  

·          Selling more via seamlessness: I did use my smartphone extensively right from the planning to booking to in-destination phase. I visited 5 places in Switzerland with my wife and 10-year old daughter. I searched for “things to do”, rail passes, tickets etc on the official tourism site of Switzerland. Me and my wife paid around $US 800 or so for two rail passes for unlimited travel, and only relied on SBB Mobile rail and transportation app during the course of the stay. We bought the pass from the Zurich main train station. Wasn’t there is any opportunity to offer me this option – didn’t the airline, the hotel, the OTA etc. miss out? Timing, content etc could be the key. May be at the of time of online check-in or cross-selling when an email is being sent for the check-in? I have apps of Booking.com or Gmail. How creative can these apps get, say via a push notification, to lure a user into such transactions. One area to watch out for seamlessness is Internet of Things (IoT). It assumes that information and data will flow seamlessly and securely from one device or one party to another, where it can be accessed and used immediately. If the IoT keeps tracks of the items you intend to purchase, it can automatically tally the payment and process the payment as soon as it connects to the nearest payment terminal or app and verifies the customer's information and data. The IoT will remove even more layers and more steps that are now involved in shopping and paying for goods and services.  

·          CX based on sum of all interactions: Be it for interactions during the course of one booking funnel or one journey or counting on all this as historic data for the next trip, airlines need to improve in this arena. Again a couple of examples:

I was unable to change seats at the Geneva and Munich airports for my Munich-Delhi during the same trip to Switzerland with my family. I tweeted from both the airports. I accessed a self-service kiosk and couldn’t change it. Even Lufthansa’s personnel accessed the self-service kiosk, but in vain.  It only increased anxiety as I had to wait till I reached the boarding gate. And the staff at the boarding gate had no clue. So there is lack of integration, no real-time alignment and employees tend to go through numerous systems or data sets to find the information they need. As Sabre states, silos at the technology level (i.e. multiple disparate systems) and silos at the business level (i.e. disjointed workflows and processes) often result in siloed decision making. Post this journey, I did search for a flight again on Lufthansa.com, and there was no awareness of what I was looking for during my previous flight. Airlines need to look at cognitive computing and artificial intelligence to make the most of structured and non-structured data – could be about offering my favourite seat. It’s time to count on loyalty data, trip data, previous purchase data and with apt permissions in place for social data for a personalised experience.

 

How is personalisation expected to shape up in 2017? Gain an insight into intriguing issues at Ai’s 11th edition of Ancillary Merchandising Conference in Spain next year.

Date: 25 Apr 2017 - 27 Apr 2017; Location: Mallorca, Spain 

For more info, click here

 

Follow Ai on Twitter: @Ai_Connects_Us

Ai Editorial: Airlines bent on changing “indirect” equation as we go into 2017

First published on 20th December, 2016

Ai Editorial: Airlines are now seeking more purposeful association with indirect distribution partners. Ai’s Ritesh Gupta assesses what’s evolving, and what’s expected to stay the same in the near future.

 

The reach of indirect channels, be it for OTAs, GDSs, Google, meta-search engines etc. can’ t be ignored, so in this context, it is interesting to assess how airlines’ quest of being in control is shaping up.

2016 hasn’t just been another year, even though the charge to lead the change in distribution has featured a limited number of airlines. For instance, IATA’s much-talked about NDC standard is making progress, but the pace of adoption has been slow. In fact, a section of the industry has raised serious questions around the utility of NDC. Does it break the “stranglehold” of entities that specialise in aggregating and count on their buying power, and pave way for channel-constricted free marketplace? Why messaging protocols are being “wrapped around” or bolted onto legacy airline systems? What is being done to sort out unstructured traveller data? Numerous questions have been raised in 2016.  

Old isn’t fading away    

Established B2B conglomerates such as Amadeus and Sabre play multi-faceted role in the whole value chain – from IT to distribution. Since NDC is an investment decision, and change doesn’t come easy to airlines, Sabre and Amadeus are expected to figure in the scheme of things. But emerging entities, too, are making steady progress, and forcing airlines to pick and choose, and improvise on their existing set up.

“We are talking about big, heavy systems that need adjustments (not easy to change say PSS). Yes, airlines are looking at fair distribution of their offering, but can they do without GDS as of now, not really,” stated an executive when asked to comment on airlines’ stance towards NDC and change. In fact, it needs to be noted that airlines’ ancillary revenue generation is on the rise and they are trying to push their products through as many channels as possible, as stated by American Airlines when a deal was signed with Sabre earlier this year (Sabre stated that it was first to deploy NDC-based technology solution to sell American Airlines premium Preferred and Main Cabin Extra Seats to travel agents). Few months prior to this, American confirmed their GDS integration to Sabre using the airlines’ NDC-style API.

“Airlines have the right to sell their product the way they want. OTAs and meta-search engines have the right to make the most of the traffic they garner. PSS/ GDS specialists can continue to count on their transaction processing model till provision of indirect distribution services and IT solutions can’t be done without,” added the executive, who indicated that airlines are definitely looking at their IT infrastructure, though PSS remains firmly perched in the value chain. “We are witnessing carriers increasingly opt to control their own merchandising, e-commerce and API technologies, using platforms that enable airline control, faster speed to market, and flexibility – and move away from solutions that are hard coded or community-model based, or tied to a particular PSS or channel.”    

The strength of APIs

Whether we talk of retailing, be it direct or indirect, one clear area that stands out is API-led distribution.

“Whether you believe in NDC or not, it describes a practice that is becoming more and more prevalent, airlines are switching to API distribution,” says Mark Lenahan, co-founder, CJ Ingition.

Airlines are after differentiation now, and they expect their content and merchandising to stand out in the indirect channel, too. So what would make it possible? Lenahan agreed and explained: OTAs, GDS and meta-search companies need to be able to price compare offers from multiple carriers, and that includes ancillaries. Yet airlines naturally want their products to be distinct, and will all come up with different pricing models (not just different prices) and bundle combinations. “(Probably) there isn’t a consumer search engine (web or mobile) yet that lets a user search for flights + a checked bag + extra legroom and compare multiple all-in prices from different carriers, or better yet let one pick a carrier based on fare only, but when one adds the other products points out one could now get the whole thing cheaper on a different carrier. That’s complex enough without even considering what we get for free because of our frequent flyer status. High performance, real-time APIs are probably the only way to solve this kind of complexity,” mentioned Lenahan.  

Doing away with old arrangement

The quest of being in control has seen new developments this year, for instance, in case of Lufthansa and Siemens, the arrangement uses Amadeus Altea and Amadeus- owned Cytric OBT, and Amadeus GDS is out. It’s worth following how airlines would go about connectivity as they try to streamline distribution, be it via direct connect agreements, API-led distribution etc. “Well yes what Lufthansa has been doing has been quite striking (developments), but this might not work for everybody,”  mentioned an executive.

And if we talk of airline-OTA dealing, the striking difference between direct and indirect sales for an airline used to be the cost of distribution, but it has increasingly become about the quality of the customer data, the opportunity to cross-sell and up-sell, and owning the ongoing relationship with the customer. “On one hand retailers (such as OTAs) want to control the offers, partly because merchandising is the retailer’s job and also because they don’t want ground and insurance products to come from the airline. On the other hand, many airlines want to control their products by channel, keeping the option open to have some products or bundles unique to their direct channels, or their loyalty programs. With sufficient motivation the technology can be made to work, but I’m not sure both sides are working towards similar goals,” said an executive.

Focus on Google and meta-search too

EveryMundo recently highlighted that airlines need to focus on “search-informed digital infrastructure”, and if this isn’t handled, then Google will continue to “defer to OTAs as long as their user experience is superior”. Of course, there are other areas, too, as far as Google is concerned, say native programmatic buying that can tap indirect traffic to drive direct response bookings.

Other than facilitated bookings in case of both Google and meta-search engines, airlines also need to look at the cost component while considering meta-search engines. Airlines can count on technology to manage all requests from meta-search engines and ensure queries only touch a system once the customer is on the booking path. The logic of whether to pull results from a pre-computed shopping system or to perform a query on the live systems is determined by the airline through a business rules engine.

Being an ally

How can airlines better work with distribution partners – for instance, an OTA sending traffic to airline.com? How about a meta-search engine seeking the FFP number as the request for an offer comes and then passes on to the airline?

Lenahan says some degree of personalisation is inevitable. “Consumers want convenience and value, meta-search and OTAs need to compete. So if one OTA or meta adds “status aware” pricing and offers (e.g. accounts for baggage and upgrade allowances) then customers will use it, and the others will be forced to do the same. Just look at what Pointshound, Rocketmiles and Kaligo are doing in the hotel search space,”  he says. “It is absolutely in the airline’s interest to allow 3rd parties to identify the individual passenger as soon as possible, but this does create a conflict of interest between the OTA and the airline - who exactly is selling the upgrades, hotels, car rental, insurance, etc.? More importantly – whose app or website gets used the next time this customer travels. OTAs pay a lot for customer acquisition and they need commission products to survive. The OTAs sometimes do not even get a GDS segment contribution when selling airlines who are not full content (on GDS), instead they have to pay for access to best fares using tools.”  

 

Can we expect any major change in status quo in 2017? How will NDC shape up? Gain an insight into intriguing issues at Ai’s 11th edition of Ancillary Merchandising Conference in Spain next year. 

Date: 25 Apr 2017 - 27 Apr 2017; Location: Mallorca, Spain 

For more info, click here

Follow Ai on Twitter: @Ai_Connects_Us

Ai Editorial: Making merchandising an integral part of a traveller’s journey

First published on 16th December, 2016

Ai Editorial: If airlines are seeking a greater share of the customer’s wallet then they actually have to care about a passenger’s journey, writes Ai’s Ritesh Gupta   

 

Airlines are digging deep to ascertain what passengers love about them, and striving to become an integral part of their journey. So for a family it could be about making the most of togetherness on the day of travel, whereas a business traveller would prefer flexibility on ticket changes, and for their part, airlines are trying to entwine their merchandising around this.

Constant effort is being made to ensure unbundling or re-bundling matches with what a brand stands for and at the same time make benefits apparent.

Merchandising continues to evolve, a fact exemplified by the constant introduction of new offerings from airlines across the globe. So be it for Ryanair’s tailored bundle of discounted travel extras or American Airlines opting to extend availability of Preferred and Main Cabin Extra Seats to travel agents, there is plenty of action in this arena. Unbundling, branded fares, service bundles, fare families and subscription are all being played around with, and airlines are refining these all the time.

This level of product differentiation is must as the game of merchandising and ancillaries is bigger than ever. According to IdeaWorksCompany, airline ancillary revenue generation is projected to reach $67.4 billion this year. The report mentioned that optional services, such as onboard sales of food and beverages, checked baggage, premium seat assignments, and early boarding benefits, is expected to generate $44.9 billion of the total figure.

Being part of a journey

Every airline has unique values that appeal to different people, for one it might be a particular seat pitch, for another carrier it might be the food served or the airport experience or the on-time performance, says Mark Lenahan, co-founder, CJ Ingition. He says this varies by customers also. “Maybe there’s a UX (user experience) for the hundreds of different things I might want to filter flight results on, but I think the answer is not to just keep adding more data to the booking engine shop window,” says Lenahan. He says the vast majority of passengers are not first-time passengers, most of them are familiar with most of the airlines competing for their business on a given route. So a traveller might know a special feature, say a seat pitch, is worth $10-$20 more for a better experience. “What airlines need to work towards is improving the experience in the whole journey not just onboard their flights but including interline partners, ground transport, destination and airports. If you want a greater share of the customer's wallet then you actually have to care about their problems. The alternative - equally legitimate - strategy is to be the cheapest and most efficient transport provider you can be, but drop any pretence about being a retailer,” explained Lenahan.  

Also, airlines need to look beyond cost, revenue, margin, etc., and rather assess retail metrics like revenue per visitor, average basket size, and attach rate - which can apply to all ancillaries or down to individual products, says Lenahan. He says analytics tools need to be across all channels and fine grained - reporting views, clicks, purchases down to the individual product. “I think the two most significant KPIs are cost of acquisition and lifetime value. The industry has significant issues minimising the former (e.g. paying for the same customer over and over) and understanding the later (strong tendency to ignore the earning potential of all but the top tier). If the customer experience in the whole journey (airport, on board, at destination) isn’t competitive then lifetime value will decline, even while the attach rate on the app or website improves in the short term. Airlines have to think of the long-term impact of everything they do.”

Value should stand out

Do you get peeved when you have to pay for a seat?

The fundamental idea behind charging for a particular seat is not the opportunity cost, but the benefit of choosing where to sit and removing the uncertainty of where you will finally sit, says Maria Cardenal, head of product development at Vueling Airlines. She says Vueling passengers will have a seat assigned for free if they choose so or will be able to choose it themselves if either they pay for Optima fare or pay for Basic fare and then the seat they prefer. Either in an unbundled way or in a bundled way, there is value behind the possibility to choose.  It’s the same simple principle for which you have different prices depending where you want to sit at the theater or the Opera or a football match. You will have to pay extra if you want to sit in a privileged zone.

Sell what makes you special

Fare and product attributes need to be presented in a way that is easy to understand, digest, compare and personalise. There are several areas where airlines can improve.

When I spoke to Robert Albert, CEO, Routehappy, (a company that helps airlines to deliver their product attributes wherever flights are sold) same time last year, he indicated airlines are between 5-15% of their differentiation potential in their own channels overall, and closer to 0-5% in indirect channels. More recently, during one of our conferences in Kuala Lumpur, he urged airlines to take concrete steps. “Airlines everywhere are investing to transform their products. When will we merchandise these innovations in flight shopping? When will we showcase product in up-sell, ancillary and other offers?”probed Albert, who said the hotel industry has differentiated “well”, and get their “customers excited to buy their products”.

Irony is that content exists, but the industry struggles to show the same in the transaction flow. Albert asserted that one needs to “sell what makes you special”. For instance, ANA can count on their 34” seat pitch in economy, Singapore Airlines on their champagnes etc. and this needs to be integrated into product offers. Also, avoid overly generic or inconsistent presentation of product attributes. Don’t opt for “too general” a way of showing content which can’t be truly useful to a consumer's decision process. Information shouldn’t presented inconsistently so it doesn't reinforce usefulness, importance, comparability, or accuracy of the product attributes. 

As for technology and e-commerce, airlines need to seamlessly integrate all ancillary products and services into their own payment and booking processes. As Datalex points out, airlines require significant investment in re-platforming their digital commerce suites to enhance their ability to dynamically price, promote and reward customers across all channels and devices. The industry may not be equipped to assess the booking flow in real-time, say what to display after the first click or the third click, but retailing is evolving all the time. So watch out for IoT commerce or new checkout experiences, and strengthen commerce initiatives.

Lastly, what is being promised needs to be delivered as well. So, for an example, if an airline identifies that a flyer tends to buy certain items on-board, let’s say a mango pudding, then the catering and crew needs to be informed about the same.

 

Ai is set to conduct the 11th edition of Ancillary Merchandising Conference in Spain next year.  

Date: 25 Apr 2017 - 27 Apr 2017; Location: Mallorca, Spain 

For more info, click here

 

Follow Ai on Twitter: @Ai_Connects_Us

Ai Editorial: NDC and transition period, any change in status quo?

First Published on 1st December, 2016

Ai Editorial: With the surge of interest in NDC, the industry has to think about the transition period. Ai’s Ritesh Gupta takes a look how change is coming along.

 

“Don’t forget change doesn’t come easy (to airlines). We are talking about being customer-centric, but most airlines are largely driven by processes. How many airlines are evolving – 30, 40…right?”

This comment from a senior industry executive during our recent conference in Toronto summed up the current situation when we talk of digitalisation today. Ryanair, Lufthansa, JetBlue, AirAsia, British Airways…how many airlines you can think of when you talk of digital transformation?

Talking of distribution, especially via indirect channels, the progress that is being made with NDC and the adoption of this XML-based data transmission standard is being closely followed. As IATA states, the introduction of NDC based services “will represent an evolution, with tomorrow’s situation being a hybrid of today’s service provision, service utilizing NDC and other services aimed to support both”.  As we highlighted in one of our recent articles, the “existing” IT infrastructure can’t be replaced at one go. And with NDC continuing to evolve (there have been questions about the overall viability of NDC, too), how various stakeholders are finding a way out for a standardized, scalable decision-making is vital.

Status quo – is it changing?

Considering the way the likes of Amadeus and Sabre are associated with airlines, right from IT solutions, including PSS, to distribution via GDS, how airlines are picking and choosing the available options available?

Is the status quo being really challenged? Are best of breed specialists finding their way into pilots or new contracts?

The answer lies in how an arrangement can help in bringing down integration costs and also curtail the time needed to deploy new offerings. It all comes down to the value proposition that can be created between airline and intermediary, and at the same time how airlines can be in control of their inventory, distribution and sales, improve their financial performance and also serve their customers better. NDC is only a catalyst to enable a value proposition. If the airline can send new and relevant content via an intermediary that can display and transact on this content better than another intermediary, then competitive pressure gets created which is beneficial for the entire travel supply chain.

Airlines can evaluate how such initiatives are coming along, especially the control that is being desired. They can also explore issues, say, which is the fastest way to bring a product to the market. Does the traditional approach relying on ATPCo filing is still the way to go? Also, opt for connectivity that makes the most sense to a business, constantly re-evaluating the cost-benefit ratio of changing connectivity.

In case of Lufthansa, as shared by the group recently, a NDC pilot was fully integrated into its existing distribution and production processes and so involved actual ticket sales. In conjunction with TUI group’s tour operator l’tur, Lufthansa featured unique product bundles exclusively via lturfly.com. Highlights include: offers were crafted for certain routes on the European network of the group; these included bundled ancillaries, such as free checked baggage and free lounge access, set up in airline’s merchandising engine and worked around a flexible and rule-based product compilation; featured product descriptions, icons, and images etc. The focus was on AirShoppingRQ and AirShoppingRS messaging to evaluate offer management.

There are several interesting aspects when we talk of how all of this is being implemented, especially in the context of how much airlines are ready to drift away from the legacy environment (do they believe their existing partners are too slow to respond) and rather go with the best of breed offerings. Entities like Sabre and Amadeus assert they are evolving, too. Amadeus recently shared that as an IT provider to airlines, the team has been delivering NDC XML-specific enhancements, and is already using NDC XML in its solutions using NDC XML AirShopping verb, the NDC XML FlightPrice/ServiceList verbs, the NDC XML FileRetrieve verb etc.

In case of Lufthansa, their direct connect IT platform is being used in new initiatives. If we look at new arrangement with Siemens and Volkswagen, it was about Amadeus Cytric bypassing Amadeus GDS to hook into Amadeus Altea!

“Till the point all the inventory is being controlled by Amadeus or Sabre, the industry can’t witness a major change,” stated a source.

Being realistic

Don’t expect pilots to run smoothly in every instance.

In case of Lufthansa’s pilot with l’tur, the airline acknowledged that banking on NDC to have a real-time, transaction-based offer process “did not easily link to the cache-based solutions that are widely used in the European tour operator business”. So an NDC converter was developed to feed NDC offers into l’tur’s cache-based production environment, shared the group. Lufthansa’s pilot achieved IATA NDC Level 2 certification (focuses on offer management) and used NDC schema 1.1.3, an early version that was current at the time of the project’s inception.

Strong foundation

With NDC, there are schemas for shopping and, order management, and the end result is the creation of Offer ID and Order ID, featuring order creation, ticketing, issuance, payment authorization and BSP reporting.

Airlines need to evaluate what is needed to support NDC – be it for profile (mainly rules to determine which shopping requests should be sent), offer and order management, as well as content.

Basic requirement is astute merchandising system to create offering dynamically, and work on the most relevant offer at any given time, through any point of sale, any channel, direct or indirect and through any device. Gear up for delivery of enhanced airline content at the point of sale, whether in the direct or indirect channel. And plan integration of systems with PSS for an end-to-end traveller journey across key touch points such as servicing, delivery, disruption management plus ticketing and fulfilment.

If we talk of airlines and APIs, they must learn how to build, deploy, manage and upgrade them so that connected parties, too, can benefit. But there are cases where airlines that already have API XML connectivity have it in a proprietary way. This needs to be avoided. The technology behind the API is generally related to the functions one wants to deliver through the API. In the airline world its things like flight search, flight price, PNR create, ticketing, etc. When it comes to a distribution approach to an airline’s selling channels, the delivery methodology would be quite clear, i.e., a centralized and standardized API that would be consumed by all channels – web site, kiosk, GDSs, mobile, etc.

As for GDSs, it means accepting the fact that the airline’s systems will be responsible for processing all distribution-related transactions, not their distribution system anymore. It doesn’t change the intrinsic value of GDS, i.e. the unmatched reach they deliver. The biggest issues are in understanding the various workflows that have been established by a GDS or OTA and understanding how the schema from the airline will impact the established workflow.   

Travel agents obviously prefer to consume content that does not disrupt their processes, in particular when it comes to comparative shopping, mid- and back-office integration and customer servicing and this has a major impact on the success factor of any strategy involving the channel.

Also, messages may change and improve with new versions thanks to the addition of new elements (e.g., sending video images) or enhancements to existing elements (e.g., split PNR improvement). Plus, while deploying an NDC API between airline and intermediaries there will be evolving versions of the schema that will impact the specific XML messaging, in that messages themselves will change over time – new ones added, existing ones modified, etc. 

Of course, standardization in this case isn’t easy, since we are talking about big, heavy systems that need adjustments.

There are valid concerns around the cost to support implementation, employee training to use NDC-enabled processes and ongoing product and technology support.

 

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Flight Search – What’s Next?

First Published on 22nd November, 2016

How mobile, cloud, social media, big data and analytics, and artificial intelligence are driving the future of flight search?

San Francisco-based Gillian, CEO & Founder of mobile app Hitlist, a personalized mobile travel agent, underlined that new business ideas have a certain gestation period before they go mass. “Disruption doesn’t come out of the blue. It’s a process, where trends develop over a long time before they hit the mainstream,” Gillian said.

She noted that “millenials” and “mobile” are two trends that are tipped to signal a new era in the flight search category.

Referring to emerging trends in the flight search space, she mentioned that this segment is witnessing several approaches. These include assisted (FlightFox, TRVL, Lola, Slingshot), inspirational, proactive alerts (Hopper, Hitlist), customer-first (Skiplagged) and socially integrated, shared Gillian, who took an unusual career path, marked by her journey of staying in different countries and opting for different assignments in around 10 countries. She eventually ended up a venture-backed start-up. As for Gillian’s company, Hitlist proactively finds best itineraries for users, helps them to make the most of data in their social graph to provide them with relevant destinations and deals.

“Millenials buy in a different way,” she said. It is being estimated that 40% of overall travel spending is going to be contributed by this segment by next year, as the level of spending from this age-group is set to go up. This group embraces mobile offerings faster than “older” generations, and it is time for travel companies to engage millenials on their terms, offer a range of payment methods.

As for mobile distribution, Gillian mentioned that the industry is yet to see the real shift the way travel is marketed and distributed. “(Mobile) is a personalised, super-computer in your pocket, present all the time,” she said. 

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Ai Editorial: Is growth hacking meant only for start-ups? Not really

First published on 21st November, 2016

Ai Editorial: Organizations that aren’t start-ups, and are executing a proven business model, have a lot to learn from growth hacking, writes Ai’s Ritesh Gupta. 

 

When one reflects upon the story of Airbnb, it is inevitable that their Craigslist integration and the so-called growth hack strategy would surface in the discussion. Could a marketer have ever achieved that? Or was it the sheer brilliance of an engineer to script such a legendary story?

Stories such as these have set a new benchmark in the arena of growth hacking. What can trigger “virality” of a campaign? How to master the art of A/B testing and landing pages? How to deliver personalised content? These posers aren’t really new, but cracking them isn’t a solution that has stayed the same for years. And if any marketing initiative/ campaign proves to be a successful and that too at relatively “lower” cost, then it’s worth an applause. 

In today’s digital era where ecosystems such as Google, Facebook, Alibaba, Tencent etc. can be home to massive volume of traffic, optimizing a product or message requires a new skill set. Not too long ago, Pokemon Go became a rage, and there was a rush to make the most of the associated users/ traffic. Here only the blend of content, data, analytics, algorithms etc. can do the magic, and it is clear that lines between marketing, product, and engineering are diminishing.

This is what “growth hackers” have achieved over the years, especially when we talk of scaling businesses. They excel in crafting sensational success stories that have marked success of brands such as Airbnb. They can be described as experts in several disciplines - partly marketing, partly product development, partly engineering.

Airbnb rallied on their strong Craigslist integration. Dropbox quadrupled its users in 15 months by redefining an old door-to-door salesman trick of recommending an unsuspecting neighbour who might be interested in the product. In complete transparency, Dropbox incentivised referrals so both the referral and the referee were rewarded. Amongst users it became a race to see who could refer their entire network first.  

“There is plenty of opportunity for airlines to take a similar approach by reimagining strategy around the traveller’s needs,” says Matt Walker, Chief Storyteller, LikeWhere.com.

Overlap between marketing and growth hacking

The background of growth hackers makes for an interesting read on the web. There is plenty to learn from growth hackers, even though what marketers set out to achieve is different (trying to find a balance between awareness, reach and conversion). Growth hackers stand out for their ability to reap results from repeated testing, and proficient at being precise with return on investment. In a recent article on rockboost.com, it was highlighted that with apt blend of user testing, data mining etc., growth hackers focus on crafting a product or refine it to attain product/market fit or PMF. It also stated when at least 40% of your users have strong affiliation with a product/ service (about using it), PMF has been achieved. So the growth hacker’s goal is to create a product their customers cannot live without.

A marketer in a bigger sense has to create an aura around a brand. It just goes beyond virality or finding a PMF.

“It certainly (growth hacker becoming a VP marketing) could fit the bill, but there are other factors to consider industry by industry. Making a growth hacker VP could entrench your marketing efforts in that approach alone,” says an executive. “I wonder does a VP need a broader, more nuanced approach - of which growth hacking could play a considerable role.” 

Unearthing something new

What about the need for growth hacking in a mature industry like air travel?

“I do think airlines could take a growth hacking approach to long tail inventory: new and underperforming routes. Currently, cutting prices has been the predominant solution, and limited at best. Hacking is about identifying or creating opportunities. Increasing the perceived value of lesser known and underperforming routes through context and story is a fresh strategy, and one that is proven in other industries,” pointed out Walker.

Being disruptive as a non start-up  

A mature sector such as air travel needs to embrace change, and be more agile.

·          First, specialists point out that for relatively mature companies to make the most of capabilities of growth hackers there is a need to re-look at the goal of a marketer. Go beyond awareness and acquisition. Departments operating in silos doesn’t work today, and there is a need to evaluate the whole funnel in a holistic manner. So evaluate activation tactics and metrics such as customer segmentation/ behavioural analysis, cohort analysis etc.

·          Second, problem doesn’t lie in understanding innovation, rather it’s about how to pave way for innovation and embrace in an organization’s culture. So look at the design. Dig about innovation KPI’s, policies, processes and incentives. So JetBlue Technology Ventures comes across as a visionary move. The entity is focusing on investing, incubating and partnerning with early stage start-ups at the intersection of technology, travel and hospitality. Objectives include customer experience and operational efficiency.

·          Third, look at data and platforms. Even as we talk about owning the entire customer lifecycle – from awareness and engagement to conversion and loyalty, one can’t ignore the fact that the landscape is fragmented. “We are sort of locked in a data ecosystem, which is not transferable. So what we call is a “walled garden” – you can’t get data out of it,” says a marketer, referring to Tencent and Alibaba ecosystems. Find ways to have a unified view, and do away with data silos that can create inaccurate customer profiles and duplicate information.

·          Fourth, focus on what can go viral or facilitate virality. For instance, gamification is spoken highly of in terms of experience and engagement; freemium - offering simple and basic services for free for the user to try and more advanced or additional features at a premium, and this can be used for expanding social media base; target low-hanging opportunity such as page load time, focus on link building and spread your content; memes are considered to be very attractive.

Establishing a huge user base, quick publicity, massive sharing of your post, etc… this is what growth hacking is all about. It is exciting. When all of it happens at virtually no expenditure or at best “low-cost”, it’s like winning over a battle without even letting your opponent know when it started and got over!

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