In the recent Datalex webinar ‘Readiness for Airline Merchandising Post-COVID’, we explored some of the key trends emerging in digital merchandising. The pandemic has accelerated the adoption of e-commerce by five years – as reported by the IBM Retail Index in 2020 – with more opportunity to leverage digital merchandising to build deeper customer bonds and deeper wallet share post-COVID. In this blog we share some further insights into those key trends in digital merchandising and the opportunities for airlines as they emerge from the pandemic. You can also check out Datalex Merchandiser – our product to accelerate airlines’ path to intelligent digital merchandising.
Digital Servicing and the shift to Digical
The shift to full digital servicing throughout the travel lifecycle is accelerating, empowering travellers with digital self-service at every step and bridging the gap between the online and offline worlds. To achieve the reality of this end-to-end contactless, self-service journey, automation is absolutely key - both for the airline and the end-traveller.
This increased digital servicing trend also brings additional opportunities for merchandising throughout the order servicing flow, with the opportunity to position well timed, relevant and targeted ancillaries, that will have a higher chance of conversion.
We already see industries like healthcare and manufacturing move toward ‘digitalisation’ of their physical environments- becoming “digical”. Such as employing 5G-enabled robots to greet and triage people in a hospital reception to minimise physical contact between staff and patients. There are significant opportunities for the airline industry in this regard and 2021 will see AI playing a critical role in this “digical” shift, transforming information garnered via IoT sensor signals in physical environments into insights, and helping the travel industry to inch closer to a connectivity revolution.
The Digital Bothism trend describes the conflicting needs of today’s highly informed digital natives and the need to balance some polar opposite desires and habits - these include:
- Sustainability vs Performance
Consumers expect brands to take care of the planet while delivering a high-quality offering. People want to travel yet they are more concerned about its environmental impact than ever before. While travellers’ wanderlust will be stronger than ever post-pandemic, it will be increasingly with eco-consciousness– and with an airline with sustainability credentials. Airlines that reinforce their strategy around sustainability, support travellers with sustainable travel choices such as eco-accommodation, inspiration to avoid over-tourism destinations and position any sustainability initiatives in their merchandising flow, can successfully address this.
- Data Dichotomy
This is about the conflicting need of the improved experience powered by data AND consumers’ desire for privacy. The pandemic has stirred up the debate on data privacy as consumers want data to fuel fast, frictionless experiences, without sacrificing their privacy and over intrusive digital interactions. This is what we call the ‘Data Dichotomy’. It highlights the important role of Artificial Intelligence in predicting future behaviour and delivering great personalised outcomes while keeping consumer privacy intact.
- Global vs Local
While consumers are attracted to strong global brands, they are equally eager to discover local brands and develop a personal connection. This is something that airlines have an opportunity to leverage – to provide the high standard experience of an international or strong regional airline brand and inspiring travellers to connect with a more ‘localised experience’ for example by trying out new, lesser travelled to places, exploring niche local attractions at their destination – all of which can be promoted via third party ancillaries for in-trip merchandising
Digital Bothism reinforces the need to embrace Gen Z expectations, which are very much characterised by this trend and given Gen Z are the largest generation ever, comprising over 30% of the world’s population – they are an extremely important target for airline growth and merchandising in the coming years.
Beyond the Seat and the Long Tail of Travel
Unlocking revenue beyond the seat and taking advantage of the long tail of travel with timely, relevant and personalized ancillaries across the end-to-end travel lifecycle is a significant opportunity for airlines. It’s about packaging ancillaries intelligently at different stages of the travel lifecycle and corresponding to changing purchasing mindsets across the journey. Using customer intelligence to optimise the position, timing and targeting of ancillaries at each touchpoint.
The merchandising revenue opportunity is transformed by this approach, shifting from the restriction of a specific travel date to a prolonged window of opportunity. Essentially realising a chain of revenue opportunities along the customer journey, with value-add customer interactions that extend far beyond the customer’s flight, that engages and meets their needs pre, during and post journey and in fact can extend to non-travel related products as well as travel specific products.
At Datalex – we describe this opportunity in these 3 steps:
- Connecting customers with content that matches their need when they need it to increase ancillary conversion.
- Engaging them with a superior personalised experience to meet high digital expectations and drive loyalty.
- Monetising content across the travel lifecycle to increase revenue beyond the seat and beyond traditional ancillaries of seats and bags.
Doing this right will help airlines to position themselves as increasingly relevant and valuable with timely and value add products, reaching far beyond the traditional ancillaries and into almost any product or service category.
The ‘long tail of travel’ opportunity also takes on even greater importance in context of a potential subscription model for flight payment, which would drive an even greater reliance on ancillary revenue.
Dual Dynamic Strategy
Intelligent Dynamic pricing and more sophisticated product determination is a key trend for airlines right now and will play a very important role in their recovery and growth post-COVID. Applying real-time and data-driven Dynamic Pricing and Product Determination beyond initial booking to the full merchandising flow and applying Dynamic Discounting also – makes the Dynamic Opportunity even greater. The smarter, faster and more accurate data driven pricing and product determination, enabled by dynamic and continuous pricing, applied across ancillaries, dynamic bundles and fare families, will create a much better shopping experience and increased conversion.
The Experience Economy and ‘Liquid Expectations’
Recent studies have indicated that 85 % of travellers are willing to pay more for a better experience* and 72% of consumers expect companies to understand their unique needs**. This degree of customer insight and elevating the personalised experience is vital for merchandising success.
Increasingly consumers compare any new experience to the best experiences they’ve had with other service providers. This fuels what is referred to as ‘Liquid Expectations’ – a phrase coined by Accenture – to describe the perceptual gap that consumers feel when they encounter inconsistencies in a digital experience from one service provider to another, regardless of place, category or industry.
The traditional 4 P’s in Merchandising – Product, Price, Placement, Promotion - is now increasingly moving to or at least blended with the 4 E’s – Experience, Exchange, Evangelism (every customer as micro-influencer), Every Place (continuous, end to end trip communication) and here, we would also add Engagement - highly personalised, tailored and targeted.
By marrying the two concepts and transitioning to an Experience focused strategy and addressing ‘Liquid Expectations’ - airlines will come much closer to meeting the needs and expectations of today’s digital traveller.
Keeping experience at the heart of innovation and merchandising strategy will ensure its success and unlock new potential revenue streams.
Learn how Datalex can make this a reality for airlines today with Datalex Merchandiser and the Digital Configurator. Designed to accelerate airlines’ path to sophisticated digital merchandising, with intelligent and real-time promotion of relevant products to a targeted and segmented audience, optimising conversion across the travel lifecycle.
To learn more – check out www.datalex.com/datalex-merchandiser
* Amadeus Censuswide End-Traveller Survey 2020
** Salesforce ‘State of the Connected Customer’ 2020