The collapse of Thomas Cook sent shockwaves through the media and the travel industry, and its repercussions will be felt for some time.
The downturn of high street retail performance seems to be spreading. Just as in retail, travel consumer confidence is fragile, much-loved industry stalwarts are struggling, technology is changing purchasing habits and new competitors are delivering new propositions. Many businesses are struggling to find their feet in this new world with all its financial uncertainty.
The retail industry has been dealing with these challenges for a decade. But for every struggling retailer facing administration there is a company like Joules Clothing or Hush that continues to deliver double–digit growth. So what can the travel industry learn from these companies?
1.Use your data
Accurate customer data is a holy grail for high street retailers. The winners in retail are using their customer data to drive their marketing and those that don’t have data are struggling to catch up. Travel companies should have a natural advantage – booker data is always captured – but few travel companies are truly harnessing the power of this data to drive evidence-based decisions across their operations. This is often their database has been designed to manage the booking and confirmation process rather than with the customer in mind. A built-for-purpose customer database platform makes customer behaviour insights much easier to access and optimise.
2.Don’t rely on discounting
Discounting can be a great way to hit a revenue target but businesses can spiral into reliance on near-constant discounting to their detriment. Not all customers need a discount and not all product needs a discount. Make sure you’re using promotions strategically to drive margin. Always test and measure incrementality of your activity – what would you have achieved if you hadn’t done run that discount?
3.Know your customers
Successful retailers know that sending the right message to the right person at the right time delivers results and that mantra is even more true in travel. People buy different holidays at different times and for different purposes. If you can understand something as simple as whether an individual is restricted to travelling in school holidays or not, you can deliver much more relevant marketing.
4.Reward your best customers
Customers have more choice than ever before. In travel, it’s not just the choice of where, when and how to travel but also which tour operator to book through. The same package might be available from multiple different operators so how do you make sure customers choose you? While this discussion may traditionally have revolved around blanket or discounting, it is now important to test and reward customers for their loyalty and spend. This will result in more higher–value customers and a more stable business
5.Make sure you acquire enough customers
In tough times, it’s tempting to over-rely on your existing customers for revenue but existing customers will always find competitors, grow out of your product or no longer have the need. You need to make sure you have enough new customers to drive growth. You also need to know what you should spend to get them – don’t under– or over–invest.
6.Don’t forget customer service and proposition
Even more so than retailer, a bad customer experience can have a big effect on customer loyalty, and acquisition. Travel is one of the most expensive regular purchases a consumer makes, whatever the price point or holiday type, and if they don’t believe they are being treated in the right way, they will quickly look elsewhere.
