The notion of ‘right product, at right time and at right price’ may be something airlines understand only too well but they still aren’t getting it right.
Today many airlines recognise the tremendous opportunity of personalised e-merchandising. Many are even looking to leading e-tailers for inspiration, and are trying to understand, for example, how they can engage with online customers as effectively as the likes of Amazon.
Airlines are asking the right questions. Shouldn’t they more fully exploit the variety of products and combinations of features arising from new ancillary services? How can they raise conversion rates and increase revenue through a more personalised approach?
However, despite consensus that there is a huge new opportunity, true personalisation remains elusive. Some of the problems include:
- Airlines still largely focus on selling the seat; ancillary is still generally treated as an afterthought.
- Pricing is still driven by macro factors namely overall demand and overall booking momentum, rather than the individual customer. Even customer segment-specific, factors are ignored.
- All passengers see the same fares two months before departure, or three weeks before departure, or three days before departure.
- The content doesn’t vary either – whether the traveller is travelling on business or leisure, airlines present the same options to all customers; they describe the benefits of ancillary choices in generic ways. There is no personalisation.
So, how then can airlines accelerate e-merchandising?
Well, let’s be honest, there are many impediments to this kind of change! It requires new key performance indicators (KPIs); it requires new customer databases with new information on searches and bookings; it requires new models of customer behaviour; it requires new skills among airline analysts.
Stuck in a silo
One of the largest impediments to more dramatic progress in airline merchandising, however, lies in the typical airline organisational structure, which remains highly silo-ed. Revenue management still remains distinct from loyalty which is separate from e-commerce and ancillary products. Elements of merchandising often exist in each of these functions; responsibility is thus spread across the organization. In this disperse organisational structure, merchandising ‘responsibility’ is a largely misnomer.
