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A Traveller is Not a Lemon That You Can Press Forever.
Ancillary Revenue in Travel Europe 2009
Tuesday, 5th May 2009
 
Exclusive: Experts Marketing's Arthur de Perthuis on ancillary revenue strategy -

Travel service providers and intermediaries are constantly working on covering all of customers' travel needs.

From a supplier's perspective, the lines continue to blur between supplier and retailer models, re-inventing the procurement and distribution of travel products and services. Also, for the supplier, driving the direct channel has meant they have become increasingly adept at merchandising their own product online with consumers increasingly reverting to the supplier site to avoid booking fees and for flexible management of the booking.

Also, when it comes to ancillary revenue, airlines have all the tools for the road to success - capitalising on their strong brand, traffic and frequent flyer scheme.

"Ancillary revenue is the best opportunity to sell complimentary products and extend the average transaction value," says Arthur de Perthuis, director, Experts Marketing.

"However, a traveller is not a lemon that you can press forever!" he added. "Airline's challenge resides in selling more products without diluting their core revenue, as one passenger loss to competition would need to be compensated by an important amount of ancillary products sold."

Arthur, whose firm helps companies to push more traffic to their site and extend their revenue per transaction, spoke to EyeforTravel.com's Ritesh Gupta about approach towards ancillary revenue, expanding the offerings and much more in an interview. Excerpts:

How do you think travel websites are making impulse shopping easy and inspiring consumers with a range of travel options?

Important advertising push have been made by travel website in order to communicate to the public enticing travel destinations and experiences. Once the traffic is on their site, a rigorous online merchandising is orientating the customer to the highest conversion product in order to generate profitability. Finally, they have been the first to optimise the CRM cross sell in order to enhance their customer loyalty.

How do you think the usage of "eye ball tracking" studies and advanced website analytics to advise placement changes is helping travel companies be it suppliers or intermediaries to augment selling of products other than what has been traditionally achieved over the years?

Online travel portals have an edge in this domain. Each area of the website is considered as a space to push conversion or cross sell products and traffic analytics help to avoid the drop out. Conventional evaluation methods such as web analytics are great for identifying problems with a particular website, though they provide little information about why these problems occur.

Therefore, the usability testings combined with eye ball tracking will be key to finding the best approach to adopt in order to grow the conversion rate. From an ancillary point of view, being on an airline website should be viewed as a customer making his shopping in a "travel supermarket". The traveller is here to buy his airline ticket as a first step but is open to buy his entire travel break from the same provider as long as the path to get it is smooth and enticing!

It is said that ancillary revenue products vary by complexity, cost and their impact on consumers. Do you think it is better for airlines to focus on core operations and to partner specialists who can assist with driving ancillary revenues?

Once the biggest growth opportunity products are identified, the milestone will be how both partners will work hand in hand in order to achieve their revenue targets.

Communication is key to get internal teams involved. If both parties are convinced by the complementary added value of the product and incentivised on its objectives, then a smooth implementation and growth will follow.

One of the most effective way to acquire this industry-wide experience is to use the service of ancillary experts as we are. The focus on the highest ancillary revenue opportunities combined with best market practice help to take a step forward in this area.

It is important to underline that trying to meet a set of diverse customer needs requires considerable investment and expertise that invariably takes years to develop. Do you think offering ‘everything' will dilute the travel provider's brand equity, and ultimately their ability to deliver?

Before trying to sell "everything", the ancillary strategy needs to be aligned with the airlines' long-term plan and the carrier's brand. Understanding where the market will lead the customer trend will clarify how to consider this road.

Once the revenue opportunities have been analysed, marketing experts need to be considered in order to match potential products and partners with brand values and targets. Frequent travellers also need to be put in the loop via surveys or focus group in order to understand how far an airline can extend its brand.

The most innovative airlines in this area are the one who use the web 2.0 opportunities in order to put some interaction between travellers and third party products. It helps them to maintain the quality standards that they have set up for their own product.

What do you think is the possibility of suppliers especially in the budget segment becoming genuine e-commerce players in the years to come?

This is definitely where the market is going.

Over the last 10 years, low cost airlines have changed the way to travel in Europe. Thanks to this experience, they know how to define new methods of influencing travellers and their buying habits. Few products are already being tested by the low cost airlines in order to explore the link between customer care and brand reputation.

Strategies will include partnerships with larger sites to create their own networks, and combining forces.

The transitional "sweet point" will be achieved once social media (as the best market representative) will integrate and relay the transition through online rating systems, discussion forums and blogs.

Ancillary Revenue in Travel Europe 2009 Conference

EyeforTravel is scheduled to conduct the forthcoming Ancillary Revenue and Partnerships in Travel Europe 2009 Conference in London (May 19 -20) this year. For more information, click here: http://events.eyefortravel.com/ancillary-revenue/agenda.asP

Or

Contact: Gina Baillie
Regional Director, Europe
+44 (0)207 375 7197
gina@eyefortravel.com
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