The travel industry knows there's great promise in selling ancillary products to travelers who want more ways to experience their journey. Fusion's research shows 61% of customers are open to buying add-ons to complement their flight purchase. However, only 37% say the ancillary products being offered are relevant, and only 12% say airlines specifically are doing a good job of customizing offers. Watch this Tnooz-Fusion webinar and learn how to design, test, and execute a winning ancillary sales strategy. Panelists for the webinar are: Mark Brown, VP EMEA, Fusion Sinead Finn, Owner, affinnity Sean O'Neill, Editor in Chief & Moderator, Tnooz Gene Quinn, CEO & Producer, Tnooz This webinar took place on the 10th of November, 2016.

1. The science behind ancillary
merchandising
Webinar
November 10, 2016

2. Your hosts
Sean O’Neill
Editor in Chief & Moderator
Tnooz
Gene Quinn
CEO & Producer
Tnooz

3. Your presenters
Mark Brown
VP, EMEA
Fusion
Sinead Finn
Owner
affinnity
Will Plusch
Sr. Optimization Mgr.
Fusion

4. Poll no. 1
Where are you located?

5. Poll no. 2
Which industry segment do you represent?

6. THE SCIENCE BEHIND ANCILLARY MERCHANDISING
THE SCIENCE BEHIND
ANCILLARY
MERCHANDISING

7. THE SCIENCE BEHIND ANCILLARY MERCHANDISING
KEY TAKEAWAYS
• The current state of ancillary sales and
merchandising in the travel industry
• What travel companies need to put together a
successful ancillary merchandising strategy
• How to reach optimization success through test
design and execution
6

8. Poll no. 3
Sales from ancillary products account for how much of
your company’s total annual revenue?

9. Poll no. 4
Do you expect that ancillary revenue number
to increase or decrease in 2017?

10. THE SCIENCE BEHIND ANCILLARY MERCHANDISING
CURRENT STATE
OF THE INDUSTRY
HOW IT’S GOING.

11. THE SCIENCE BEHIND ANCILLARY MERCHANDISING
INDUSTRY OBSERVATIONS
10
CUSTOMER NEED
ONE SIZE FITS ALL
INDUSTRY FOCUS
WIN WINHigh demand for ancillary
products from customers to
save time, hassle and money
Improving merchandising
and retailing across all
distribution channels is a key
objective
Travel companies as a whole are
not doing a
great job of merchandising and
selling ancillaries
You can increase
ancillary sales & deliver
a better experience for
your customers at the
same time!

12. THE SCIENCE BEHIND ANCILLARY MERCHANDISING
FINDING A CATALYST
Customers are open to
purchasing additional
add-ons to compliment
their flight purchase
11
61%
Customers say ancillary
products offered to them
are relevant37%
Source: Fusion Omnibus Study 2015

13. THE SCIENCE BEHIND ANCILLARY MERCHANDISING
MEASUREMENT FOR SUCCESS
Customers say that airlines
are doing a good job of
customizing their offers
12
12%
Travel companies offer ancillaries
based upon real-time ranking
and decisioning4%
Source: Atmosphere Research and Fusion / WBR The Digital Journey 2016

14. THE SCIENCE BEHIND ANCILLARY MERCHANDISING
?ONE SIZE
FITS ALL
13

15. THE SCIENCE BEHIND ANCILLARY MERCHANDISING
LEARNING FROM EXPERIMENTS
Most airlines currently have a low bar for
engagement with customers through their
digital platforms throughout the journey.
Rather than customer centric, these systems
are designed to trigger contacts focused
internally on the needs of the organization.
14
Skift / Sabre: How airlines can create a customer-centric digital experience

16. THE SCIENCE BEHIND ANCILLARY MERCHANDISING
EVOLUTION OF THE INDUSTRY
Airline executives say
improving ancillary
merchandising is a key
objective over the next 2
years!
Source: Atmosphere Research
15
91%Do you expect that number to increase or decrease
in 2017

17. THE SCIENCE BEHIND ANCILLARY MERCHANDISING
Sir Tim Clark
President of Emirates Airlines
“Need to sell
more ancillaries
to offset highly
discounted
economy fares.”
THE OBJECTIVE
“The key to digital is
using data to
understand customers
to personalize offers
and make it easy!”
Dame Carolyn McCall
CEO of easyJet

18. Poll no. 5
Which of the following best describes the method
your company uses to market ancillary products?

19. THE SCIENCE BEHIND ANCILLARY MERCHANDISING
INSIDE
THE LAB
WHAT YOU’LL NEED.

20. THE SCIENCE BEHIND ANCILLARY MERCHANDISING
GATHERING THE ELEMENTS
19
DATA PRODUCTS
PEOPLE PLATFORM

21. THE SCIENCE BEHIND ANCILLARY MERCHANDISING
THE DATA
20
DATA
Having centralized data on hand empowers travel companies to
better understand their customers through a variety of research
and analytical methods.
• Scoring
• Automated Analytics
• Customer Profiling
• Test Strategy
• Customer Segmentation
• Pricing Model & Elasticity Testing
• A/B & Multivariate Tests
• Predictive Modeling

22. THE SCIENCE BEHIND ANCILLARY MERCHANDISING
THE ANCILLARY PRODUCTS
21
PRODUCTS
• Seat upgrades
• Medical coverage
• Car service
A good mixture of products to offer your customers is
essential in meeting their needs
for any number of situations.
• Extra luggage
• VIP Boarding
• Travel insurance

23. THE SCIENCE BEHIND ANCILLARY MERCHANDISING
THE RESOURCES
22
DATAPEOPLE
• Project Managers
• Optimization Strategists
• Business Analysts
• Developers
• Marketing Experts
The right skills and experience are critical for any organization
hoping to optimize ancillary sales.
• Data Specialists
• UI/UX Designers
• Statisticians
• QA Engineers

24. THE SCIENCE BEHIND ANCILLARY MERCHANDISING
PLATFORM
THE PLATFORM
23
A flexible merchandising platform gives travel companies the
agility to improve marketing methods and increase sales in
real-time. This should include:
• Data models
• Recommendation engine
• Product repositories
• Purchase capabilities
• Testing
• Dynamic content
• Analytics

25. THE SCIENCE BEHIND ANCILLARY MERCHANDISING
GETTING IT RIGHT
Once you have the appropriate data, products, people, and platform in place – delivering
on the fundamentals of good merchandising and retail is not complicated.
24
Right
Customer
Right
Product
Right
Channel
Right
Time
Right
Way

26. THE SCIENCE BEHIND ANCILLARY MERCHANDISING
SUCCESS THROUGH
EXPERIMENTS
HOW TO GET THERE.

27. THE SCIENCE BEHIND ANCILLARY MERCHANDISING
SCIENTIFIC PROCESS
26
1 2 3
4 5 6
DETERMINE TEST FOCUS ISOLATE PREDICTORS
EXECUTE TESTS ANALYZE RESULTS
DEVELOP HYPOTHESIS
IMPLEMENT WINNERS
…AND
REPEAT!

28. THE SCIENCE BEHIND ANCILLARY MERCHANDISING
DETERMINE THE FOCUS
The first step in an optimization process
is to determine the challenge and to
choose a test focus with great potential.
For example, if a certain product accounts for a
large percentage of revenue yet is
underperforming expectations – this would be a
good place to make a positive impact.
27

29. THE SCIENCE BEHIND ANCILLARY MERCHANDISING
ISOLATE STRONG
PREDICTORS
28
Let the data drive the decisions. Look at all the
factors and determine which attributes help
group similar customers together into segments
and predict their most likely purchase behavior.
• # of Passengers
• Route Distance
• Trip Cost
• Trip Duration
• Booking Window
• Season

30. THE SCIENCE BEHIND ANCILLARY MERCHANDISING
DEVELOP THE HYPOTHESIS
29
For each customer segment, develop a test hypothesis and
determine the strategic test variations each will be
presented with.
A B C

31. THE SCIENCE BEHIND ANCILLARY MERCHANDISING
EXECUTE TESTS
The purpose of testing is to learn as much as possible
about customer behavior while minimizing the risk. This
can be done by limiting the initial audience to a small
representative
portion of the population, in an effort to predict how most
customers will likely react.
30

32. THE SCIENCE BEHIND ANCILLARY MERCHANDISING
ANALYZE RESULTS
Start by analyzing results of the test for the
entire test population and then systematically
drill down to more granular analysis to find
pockets of success and to augment learning.
This thorough analysis allows for promotion
of your test to a targeted group without
influencing segmentation or relying on
predefined business rules.
31

33. THE SCIENCE BEHIND ANCILLARY MERCHANDISING
IMPLEMENT WINNERS
It’s great to know what customers are doing
and why – but using the right type of platform
will allow for actionable intelligence and
provide the ability to apply changes right away without
having to wait in a long IT queue.
32

34. THE SCIENCE BEHIND ANCILLARY MERCHANDISING
EVERYONE WINS
33
POOR
EXCELLENT
HIGHLOW
Fully Personalized Ancillary Offers
Dynamic Offers Based On Unique Customer Segments
Static Business Rule Ancillary Offers
Generic One Size Fits All Offers
CUSTOMER EXPERIENCE
ANCILLARY REVENUE GENERATED

35. THE SCIENCE BEHIND ANCILLARY MERCHANDISING
SUMMARIZING THE SCIENCE
34
Move Away From The ‘One Size Fits All’Approach
Customers Desire More Relevant Ancillary Products
Improve Results via Continuous Testing & Optimization
Key Ingredients: Data + Products + People + Platform

36. THE SCIENCE BEHIND ANCILLARY MERCHANDISING
THANK YOU
Mark Brown
Vice President, EMEA at Fusion
mark.brown@fusion.com
Sinead Finn
Owner at affinnity
sinead.finn@affinnity.com
Will Plusch
Sr. Optimization Manager at Fusion
will.plusch@fusion.com

37. Q & A

38. Thank you!
Send your questions and comments to gene@tnooz.com
Replay and presentation will be available on www.tnooz.com

39. The science behind ancillary
merchandising
Webinar
November 10, 2016