Guest Editorial: Ancillary Revenue - role of fear & greed!

Guest Editorial from Sinead Finn, Director, affinnity & Chairman of Ancillary Merchandising Conference 2015

We have seen a positive shift in the last 18 months with the innovator airlines in how they market and sell ancillaries. There is a much keener focus on offering what the customer wants or needs rather than the “Bazaar Effect”.  

Why this change? Conversion of ancillary sales and consequently revenue is never at optimum levels. The issue is not that the customer does not want to be offered ancillary products, but it is that they do not want to be coerced into purchasing the ancillary products. In pressurising the customer, he is less like to purchase even a product that he may want. The Customer is so besieged with the vast products on offer, most of which are irrelevant to him and his recent flight purchase, that ticking the “no” box becomes routine.

However, if an airline changes its purchase points, it is not enough. Airlines need to look at industry leaders on ecommerce to build their digital footprint and not to other airlines. What about Ebay & Amazon, how do they treat their “guests” on the customer journey? What about customer recommendations within the booking flow based on historical data and purchases? What about personalising all the touch points to ensure that the customer is offered what he wants and is more likely to purchase, thereby increasing revenue? What about live social proofing and customer ratings such as those used by Booking.com and CarTrawler? E.g. “10 people are looking at this hotel now” or “15 people gave this car supplier 8 out of 10”. How challenging can this be, after all airlines are in possession of the richest travel data in the world?

Taking customer service delivery a step further, let’s take a look at the online retailer Zappos.com. They send customers to their competitors if they cannot help, the result being that 75% of their customers are repeat buyers and the 2nd purchase is 100% higher than the first.

What is preventing these shifts? It is difficult to understand why only a select number of airlines use technology partners to personalise. There is a greed and fear factor, whether that is sharing data or sharing revenue or both. So long as this fear factor remains, the airline’s focus is not on the customer in order to deliver the right ancillary and consequently ancillary revenue will never reach optimum levels. As long as this continues more and more of the airline’s share of ancillary product sales will be gobbled up by other savvy on-line sellers who offer products which the airline’s customers actually want when they are planning a holiday. Seems such a loss for something which is so simple.

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