Good afternoon ladies and gentlemen. My name’s Mike Wheadon and I’m Partnership Development Manager for TUI Accommodation Business to Consumer Division. My presentation today is called The up-sell versus the cross sell, and seeks to examine the factors, in our experience, we believe transport merchants, should consider when apportioning resource in relation to their ancillary channels- It goes without saying that our view is very much based on our position as an ancillary revenue provider. I’m sure you’ll have your own thoughts and experience on where to apportion resource. Our experience is directly in cross selling, so I can talk to you today about our view on the benefits of that. The presentation should last around 15 minutes and I’d be happy to take questions at the end.
TUI Business to Consumer proposition sits within the accommodation and destination division of TUI travel and represents commissionable accommodation stock direct to consumers.
Our three consumer facing brands are Laterooms.com, Asiarooms.com, which is the number 1 site by search in the Asian market, and Hotels-London our London centric brand.
We take ancillary revenue very seriously and have over 650 active partners with the top performing sector being transport. Delivering 40% by volume and 60% by revenue. We work with a number of key partners within the airline industry directly and also through our relationship with TUIfly.com, that aggregate content from German wings, Lufthansa and Air Berlin. We also work with a range of other travel partners from train operating companies, to ferry and coach businesses.
Forgive me, but in the first instance, just to be clear, I’d like to clarify what I mean exactly by cross sell and up sell. For the purpose of this presentation, we define “cross sell” as the ancillary products and services related to the customer journey, but not intrinsic in the fulfilment of the journey or flight. Whereas “up sell” we see as the un-bundling and charging of products which have traditionally been included within the ticket price. An airlines’ core business is moving passengers, just as for a supermarket it’s selling groceries. However we’re all getting used to being offered financial products, insurance, even broadband and mobile phones at a Tesco checkout. The supermarkets use their powerful brands to drive ancillary sales to customers who come to them for an essential service. The analogy with the airlines particularly, is very close. There are obvious pitfalls inherent in over emphasising either cross sell or up sell and distinct advantages and consequent rewards in being able to seamlessly mesh the two ancillary streams together. Travel merchants need to have a clear strategy for dealing with each, and this presentation attempts to offer some hints and tips as to how best to approach the opportunity.
Some of you may have seen or spotted this, but on April 1st this year, a new airline was unveiled –Publicitair , not low cost, but NO cost . Finance was to be generated from brand advertisers and ancillary partnerships. The resulting revenue would offset the operating cost of long-haul flights to New York from the UK and tickets were to be allocated by lottery . Every space on the aircraft would be up for sale – exterior or interior. The chairs, headrests and even the crew’s uniforms would carry advertisers’ slogans and logos. They proposed to fly once a month and within an hour of the campaign’s launch, hundreds of enquiries had been received via the “Air travel should be free” Facebook page, along with a flurry of Twitter mentions and numerous re-tweets. Several global brands then made contact and requested sponsorship details. The stunt was devised by Renegade Media and although just an intriguing concept. Renegade account manager Dave Barton, as ‘CMO’ of Publicitair, started his pitch to potential sponsors with this enticement: “Imagine a captive audience engaged with your brand for eight solid hours – no escape … It is easy to see that the risk of over emphasising the cross sell opportunity is customer overload and consequently damage to your core brand.
Equally as great a risk, is continually diminishing of perceived ticket value. There are certain things that the customer expects to receive within the cost of the ticket free and gratis, toilet access and a seat being two. Getting the mix right will lessen the burden on your consumer and consequently protect the brand which is key.
So where should travel merchants focus resource to best effect – on up-selling unbundled or previously packaged products and services, or cross-selling your ancillary partner’s products? Drawn from our experiences in developing significant partnerships within the airline and transport sector , we think that It ‘s easy to imagine the customer having a greater appetite to facilitate the delivery of their journey plan in one place or portal; rather than to pay extra for services which they perhaps perceive have been drawn from the conventional bundle. Key benefits to the consumer are convenience, potential discount for extra purchases through the portal and the trust and depth of relationship which is built. Regardless of the ultimate focus, the role of the ancillary provider is to seamlessly mesh into the travel merchants overarching ancillary strategy. Key to success in this is to remember the imperatives – enhance the customer experience and facilitate the sale of the core product. You can help reduce potential brand erosion – by forming strong ancillary partnerships with consumer recognised specialist brands from each ancillary sector, that have a pedigree of delivering true customer satisfaction And although conversion and margin are important metrics, a true estimation of the potential of any ancillary stream has to encompass a measure of customer life time value and effect on your customer loyalty and brand integrity.
To set this in context, it is important to understand The Consumer has changed beyond all recognition over the past ten years becoming exponentially more sophisticated in the way they shop, particularly within the travel sector... The range of comparative tools, the speed of general internet access, the rise of UGC influenced sites all mean that the simple reference point of access and availability are no longer the core influencing factor on the travel purchase decision
We all know the travel market has also changed with significantly increased competition and commercial pressures. Developing a cogent ancillary revenue strategy has become essential not just for the survival of airlines particularly, but relevant to all travel merchants. The internet has also meant that it has never been easier to source and create well integrated ancillary partnerships.
In our experience working with sector specialists not generalists will quickly bring insight into the range and intricacies of the product, what it is, and how your consumers interact with it. Specialists will be able to leverage their experience and understanding to drive the correct integration for your consumer that will deliver the best results whilst protecting your brand. Enhancing the customer experience and facilitating the sale of the core product. Each potential ancillary partner will have subtle differences in both their product and approach to partnerships but it ‘s important to remember that they should be considered the experts within their relative field. They will understand your consumers interaction with their product, because they are probably already servicing them. Any snapshot of traffic flow during a travel booking process will show migrating traffic from the travel merchants portal to ancillary products that facilitate the sale off the core product. So in reality, if you don’t provide these services efficiently on your site, it is likely the consumer will go off an find them somewhere else.
Specialists should also quickly be able to offer a perspective of the key touch points within your customer journey. At what point during the purchase process do the products facilitate each other? And consequently where you should begin the cross sell process? No one truly knows the customer journey , but we do know the key touch-points along the way.
We know the most successful integrations start cross sell messaging early but let users self select their preferred basket path or journey.
Here is an example of the process starting as soon as the customer hits the site, then progressing through the booking flow.
Over and above the consumers appetite, there is also a very strong business case for focussing on cross sell ancillary. It ‘s low risk, as most of the integration cost burden is/or should be born by the ancillary partner. We know from our own partner experience that is can represent around a fifth of total revenue and upto a quarter of profit. It also creates further merchandising opportunities for your up sell products ...and ultimately as an additional and supporting revenue stream, an opportunity to potentially reduce or support fares in a fiercely competitive marketplace
So we come to creating a model for how best to approach the focus of resource within the development of a cross sell ancillary revenue We use a model based on the five pillars of success: Understanding the key merchandising opportunities – where best to integrate with the core partner and their other ancillary streams to enhance the consumers spend and experience. A collaborative approach – sharing data and insight to drive the relationship forward Analysis and measurement – if it is not measured, it’s not managed. An obsession with performance and linking ultimate reward to the movement towards key performance indicators ensures this Product – presenting the best available product and ensuring it is aligned with the travel partners core objectives Conversion – perhaps the bluntest of measurements but equally very important
A good ancillary cross sell partnership should seek key touch points across the entire gamut of distribution and communication channels. This includes other ancillary partners and products. From research we know the consumers perception is that the travel merchant is at least the facilitator, if not ultimately the provider of the ancillary product and so it is incumbent upon the travel merchant and ancillary providers to work together. Some of the essentials: Shared planning process Home page nav I frame Booking pod integration Booking flow dynamic packaging Outbound communication from all ancillary providers
It is clear that ancillary revenue generally is becoming more important for a number of different reasons, and there is a constant drive to seek new and further opportunities, however the core within travel remains the same and the hierarchy is generally dependent upon revenue delivery – In Europe Hotel is worth 10.9 billion Euros or 18.6% and car is 2.4 billion Euros or 4.1% of total travel spend. is this the correct way to structure the management of ancillary? I’m not sure.
What is certain is our model dictates a collaborative approach, this is often reflected in account management structure. The partnership can only be optimised by sharing data, reporting and strategy between partners and across ancillary channels. This looks like shared marketing and tactical promotional calendars, a joint reporting suite. Monthly analytical meets as well as strategic planning cycles.
Measurement should form the foundation for any partnership. Understanding the key metrics to measure is key: Consumer satisfaction should be measured. Customer surveys, returning versus new...we know returning customers convert at significantly higher levels. Key Indicators • Understand net revenue for every product sold • Measure revenue per UV • Measure margin per UV • Track take rate for every placement • Include post purchase in metrics Focus on conversion based on relevance and placement of offer
Measure core product booking path before and after the integration, core product only performance should not decline at any stage. Partners should have tools in place to measure customer journey and experience and test and validate any theories drawn from usability work. For example we use a number of tools including maxymiser, which takes the guess work out of multivariate testing.
...and the results can be significant, in a recent programme of activity with a partner we noted that four subtle changes to the hotel details page resulted in a 5% increase in conversion. BMI baby noted an 18% up-lift working with maxymiser
What product is surfaced at what point during customer journey can only really be understood by examining conversion in relation to a wide variety of partners from a varied distribution of sectors.
We know from experience however that product overload can be as detrimental to conversion as weak or low product availability, this is true across all ancillary channels not just accommodation. Product should be matched to consumer needs but ultimately measured on conversion Any solid ancillary partner will have reporting systems in place to measure the market, and a direct consumer portal or de-badged buying pool to measure conversion performance against.
And it should be your partners responsibility to be visable in up selling their cross sell channel to increase ultimate basket value.
And seek to drive further integration across all possible consumer touch points. This includes brand reciprocation where appropriate.
...the channel should not really be important in the relationship, ultimately the measure of success is the quality of interaction with the consumer.
So in summary, it is our experience that there is a strong business case for travel merchants to foster strong and valid brand partnerships and that your consumers already have an appetite for them. Specialists not generalists with strong consumer brands, that have reputations for delivering direct consumer satisfaction and extensive partnership experience will genuinely deliver a relationship that will grow and enhance revenue whilst protecting the imperatives of customer experience and brand integrity. Any partnership forged should be a shared journey seeking to enhance the number of consumer touch points and therefore cross sell opportunities whilst improving basket value. And ultimately reward should be based on delivering against these objectives. Thank you, any questions