Dynamic pricing leaves little room for regret

March 11, 2019

There was a time when the choice matrix for airline customers was limited – choose your travel dates (including a Saturday night for the best fare) and choose your preferred flight time. The meal, seat and leg room were largely pre-designated. Even the choice of destination was limited, and booking non-air related ancillaries was a separate transaction. “The Paradox of Choice” author Barry Schwartz would argue that such few choices made for happy customers. 

Today’s consumer has turned the customer journey around – it’s now demand, then supply. Smart airline retailers are staying ahead of this curve. They are using concepts such as dynamic pricing and machine learning to personalize both the experience and the offer in real time, for every transaction.

But the benefits of personalizing the customer experience are deeper than simply delivering the right product at the right time, while at the same time trying to hone the lowest hanging fruit that bears the highest margin.

Download the complimentary white paper ‘Dynamic Pricing – Its Role in Digital Retail Thinking’

Personalization helps minimize ‘overchoice’ – whereby consumers potentially make poorer choices because they are over-burdened when confronted with too many choices. This also makes them more susceptible to buyer’s remorse, as they wonder after the fact if one of the many other options would have given them a more satisfactory outcome.

Overchoice_Is_OverwhelmingOverchoice is overwhelming for the consumer - they are better served with a smaller but personalized range of options

This is a real issue in all aspects of retail economics. Remember, today the matrix of choice in travel is only one of many that consumers face on any given day. But a robust airline merchandizing strategy tackles overchoice on two levels:

  • It tailors the offer by personalizing it – by making it relevant, it reduces choices to only the most relevant.
  • It mitigates regret before it has a chance to become an entrenched concern, which can affect brand loyalty in the future.

Airline retailers pursuing the optimal merchandizing strategy will largely (and rightly) focus on the elements of the offer leading up to and during the booking process. Many will also have a post-travel strategy – enticing the traveler to start thinking about their brand for that next trip.

However the point at which buyer’s remorse is most likely to occur (after booking but before travel), is one which is most at risk of being neglected. The traveler will be thanked for their business and offered even more tailored offers. But the airline also needs to consciously factor in a strategy to mitigate that regret. We know that for better or worse, emotions can affect a huge range of decisions, and will continue to influence future rational choices. Emotions are also responsible for high recall values when a consumer remembers a previous experience, or their last trip.

To overcome this risk, the airline needs to ensure that the point of potential regret is addressed by assuring the traveler that they have made the best choice. Use elements of their upcoming experience to reinforce this – remind them of the value of the products they’ve just purchased, tell them ‘you’ve just secured a great offer’, or use a gallery to provide visual reinforcement. 


Provide a personalized offer that no-one else would receive,
at that time, through that channel.

This touchpoint is also one where dynamic pricing can have real value – making a unique offer to that traveler at that time, means that they receive an offer only applicable to them. No other offer would have been as relevant or personal to that customer, and therefore by its nature, has the best potential to make them highly satisfied. Because the offer is unique, they are less likely to compare it on a like-for-like basis with other offers, therefore minimizing the risk of regret. No one else would have received that offer, at that time, through that channel.

Through the application of pricing agility and real-time automation, this is just one of the many ways that dynamic pricing allows the airline to maximise the digital retail opportunity. To learn about others, download the complimentary white paper ‘Dynamic Pricing – Its Role in Digital Retail Thinking’ by Datalex Chief Innovation Officer Alan Dunne.

Download the white paper

Theresa Quinn, 

Marketing Director at Datalex

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