Ryanair’s CEO, Michael O’Leary, is famously quoted as saying of his airline: “We want to become the Amazon.com of travel in Europe, with a whole load of additional services: price comparison, cut-rate hotels, discounted football tickets, concert tickets.”
And it’s a goal that’s based on a strong foundation of ancillary marketing. Ryanair makes about 25% of its profit from ancillary sales, and has a larger array of ancillary products and pro-rata sales than just about any other airline, whether it’s a fellow LCC or a larger legacy airline.
The comparison O’Leary makes to Amazon is astute. And that’s because Amazon is the master of data-driven upsets and side-sells.
So what are key characteristics of Amazon that airlines could emulate? We’d like to suggest these two data-driven initiatives as top contenders:
– Make ancillary sales more personally relevant
– Bring consumers back with re-targeting offers
One. Move up the sales funnel with relevant ancillary products.
Shop on Amazon for any product and you’ll see a message like “People who purchased this product also purchased this product.”
Not only is this useful for customers, but Amazon have cleverly leveraged their sales database and search metrics to move themselves higher up the sales funnel.
What we mean by this is that ten years ago people might have searched for a product-type on Google, reviewed a couple of manufacturers, then maybe searched Amazon before making the purchase … just to see they were getting the best price.
But nowadays most B2C marketers see Amazon Pay Per Click PPC campaigns as delivering a greater ROI than Google PPC … because when people search Amazon they want to buy now, whereas Google searches are more “I’m thinking about this product for the future”.
So how can airlines move up the travel sales funnel? By becoming a one-stop shop for people who are planning a journey. If airlines can partner with other airlines (even competing airlines), other transport operators, plus parking, car hire and hotel companies … they can deliver a multimodal ‘whole journey’ package.
There’s three key airline revenue benefits:
– Move up the sales funnel by becoming the ‘Amazon’ of travel marketing.
– Add value to your offer.
– Add commission revenue from partners.
A recent report on airline ancillary marketing by Idea Works Company (link below) describes how Asian LCC Flyscoot.com has moved up the sales funnel: “For example, FlyScoot.com now offers destinations and flights beyond the limits of its own network. Consumers are more likely to visit FlyScoot.com first before other major competitors such as AirAsia.” Scoot is part of Asia’s Value Alliance, a flight booking package offered by 8 budget airlines in the region.
Of course data – and in particular silo-free open data, big data, APIs and smartphone-connectivity are key enablers for that move up the sales funnel. Be sure to read about the ConztanzONE innovation hub as you get to the end of this article.
Two. Use re-targeting to remind travelers about your offer.
Amazon invest heavily in re-targeting, so when you have looked at a product on Amazon you’ll find that an advert for it follows you around the Internet. Many ad platforms offer a ‘re-targeting pixel’, which enables this way of reminding consumers about your offer.
Referring again to the excellent ancillary marketing report by Idea Works Company (link below), US company SalesCycle helped Virgin Atlantic to achieve an impressive 59% open rate on re-marketing emails, as part of a re-targeting initiative which is estimated to have raised the airline’s online revenue by 5%.
SalesCycle interviewed 1,000 travel consumers and found the following reasons why people leave a website:
* 39% – Just looking / Want to do more research.
* 37% – Price too high / Want to compare.
* 21% – Need to check with other travelers.
* 13% – Booking process too long / Complicated check-out.
* 9% – Technical issues / Lost connection.
* 7% – Payment issue / Lack of options.
SalesCycle statistics indicate that 87% of people would consider coming back to the site at a later date. But of course once people have left a site, they can soon forget about it or stumble on a competitor who provided a more compelling offer. For the 39% of ‘just looking’, 37% of ‘want to compare prices’, and 21% of ‘need social proof’ site visitors, re-targeting would stand a good chance of bringing them back to your site.
As with offering the ‘whole journey’ experience from our first point, ‘re-targeting’ and ‘re-marketing’ are very much data-enabled initiatives … and the job of ConztanzONE is to liberate your data, in order to enable such initiatives.That’s why we suggest you check out the ConztanzONE message which comes next. ConztanzONE is an open and flexible way of making data from internal silos and partner databases into a more valuable asset.
Increase ancillary sales with ConztanzONE data management.
A webinar by travel market specialists Tnooz (link below) says that 61% of airline customers are open to buying add-ons … but only 37% say they are relevant … and that only 12% airlines actually do a good job of customizing offers.
With Ryanair estimated to make 25% of revenue from ancillary sales, and international carrier JAL making nearer a reported 30% from ancillaries, the Tnooz figures suggest that airlines are leaving a lot of revenue on the table.
Potentially tens or hundreds of $ millions in extra revenue could be earned by using Amazon as a role model for upselling.
And of course it’s never been easier for airlines to take advantage of those opportunities than today. Smartphone makers like Apple and Samsung have very kindly put high-performance computer terminals in everybody’s pocket or purse … so the challenge for airlines is how to manage their internal data, partner data and website/app API interfaces more efficiently.
That’s where the ConztanzONE solution comes in. Created specifically for the airline and travel industry, ConztanzONE turns islands of data into a continent of instantly available market intelligence. It links all your siloed data into a cohesive whole; provides real-time links to partner data; and drives the websites, apps and data-processes that will enable your airline to move up the sales funnel.
At Conztanz we offer specialized consulting services too, advising on best industry practices and guiding you through the next industry models such as NDC and technology, before working on implementation of your pan-business data and revenue goals.
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Airline ancillary marketing : Reference sources.
IdeaWorks / Merchandising manual