Travel Analytics Blog
NDC Shopping Analytics (Part 3) – Watching Searches as well as Bookings
Posted by Sonja Woodman on Monday, October 5, 2015
Up until now legacy carriers were stuck offering fully loaded services to passengers coming via the third party channel because unpacking the various elements of the service could not be unbundled in the selling process. Today, that is changing and technology (such as shopping analytics) is here that enables them to break the product apart and begin to sell it in separate chunks or bundle it together in differentiating offers not just on their own sites but via the lucrative agency channels. The seat on an aircraft today is no long a seat with the trimmings, but a seat offering personal choices to create value and experience. Understanding how customers view these choices first at the search level and then at the booking level can help airlines better understand their passengers and their markets in order to fine tune their products or even their partner offerings.
Before the Booking – The Search
In a search and booking process there is plenty of data around – the new art of retailing is using that data. Understanding what the traveller is searching for opens up new opportunities. Traditionally, airlines have focused on the booking rather than the search. This is the ‘sale’ which already has the revenue identified. The search, however, enables an airline to look at the ‘potential lead’ or potential revenue opportunity if the search can be converted.
For airlines most bookings or sales tend to appear out of nowhere, after the customer has already researched a variety of sites to get options and prices. This means airlines have lots of intelligence about actual bookings made but not very much about the searches made prior to the booking. If airlines want to take more control of the sales process and become more like sophisticated retailers, then the ‘sales funnel’ leading to conversions and bookings should also be monitored and analysed, and ultimately acted upon. (Ok this is a quick plug to say Triometric has an analytics platform that can help here).
Looking at the travel search funnel should include:
- Starting point, (Origin airport)
- Finishing point (Destination city)
- Connection points (if any)
- Date (sometimes passengers pick from a range rather than a set day)
- Segmentation (leisure, business, hybrid)
- Segmentation (single, couples, families, friends, etc)
- Conversion rates (how many searches convert)
The overall search funnel is many times the booking volume itself, reflecting the high number of potential trips or different routes that are investigated before making a booking. This is the look to book rate that other sectors of the travel industry have learnt to keep a close eye on as it can reveal a lot about their performance. Searches give an indication of what is being looked for and can reveal some interesting insights. For example how far ahead do frequent flyers buy? How often do they fly the same route? Do many potential travellers investigate your flights and yet never book (at least on your airline)? What are the characteristics of these travel planners and the flights they are investigating? Ancillaries beyond bags and leg room will increasingly become part of the search options and differentiators between airlines. It is possible to imagine ancillary tick boxes as part of search criteria becoming normal, similar to the type of filtering that already takes place in hotel searches (e.g. hotels with pools or gyms or flights with WiFi or cool entertainment options).
Airlines as Retailers
Merchandising is not just about presenting differentiated products, but also about matching those products with actionable intelligence about the customer, or the customer’s segmentation. With the adoption of IATA’s New Distribution Capability (NDC) – based on XML standards, airlines have the opportunity to invest in systems that go beyond tracking bookings and historic loyalty and track customers according to search and buying behaviour. This degree of analytics needs to be extended beyond the direct channel that they own but reach out into the indirect ones, through which the majority of bookings are still made.
Airlines today are striving to become ‘travel retailers’ and NDC is designed to help them on that path. Retailers of goods routinely strive to improve the sales conversion rate with offers of free shipping or two-for-one sales. Airlines can emulate this approach with offers of free bags or lounge passes to help turn a ‘lead’ into a ‘sale’. More personalised offers are also possible with frequent flyers, including special fares and special mileage credits.
As airlines engage with their customers earlier in the booking process, there is an opportunity for the airlines to improve their merchandising by monitoring their ‘leads’ funnel. Distribution Managers Yield Managers and Marketers need to exploit the rich data now available to develop and refine targeted initiatives at various points in the customer’s travel planning process.