Customers in today's evolving
travel industry interact through
multiple touch points and channels
(Figure 1). Each channel varies in
cost, implementation and benefits. Travel companies and airlines need
a deep understanding of the
various channels to create a
comprehensive strategy that will
simultaneously drive price
elasticity, product demand, cost
optimization and customer delight.
In migrating customers to the
channel of their choice, marketers
should address cost and
customer delight.
However, the challenge lies in
delivering consistent excellence in
customer experience across
multiple touch points (sales,
customer service, post sales) and
channels [Global Distribution
Systems (GDS), Online Travel
Agencies (OTAs), devices and
mobile applications] in a highly
competitive market.
A comprehensive strategy and
framework can enable travel
players to design an effective
channel mix. It will help companies
design a consistent and engaging
sales-to-service experience across
channels and effectively manage
cost-to-serve. The framework
should comprise of the following
key elements:
-
Cost optimization of
service channels
-
Mix optimization of
service channels
-
Step-wise channel migration
and deployment
Right Approach, Right Mix
We propose a channel mix
optimization framework as shown
in Figure 2 to enable travel
companies to methodically design an effective channel mix and
migrate customers to relevant
channels. The framework
comprises of two major steps.
Deciding Channel Mix
Migration
-
Migration Paths
-
Integration
-
Deployment
However, before implementing
this framework, companies
should look at the following
three critical aspects:
1. Tap Intelligence
Airlines and hotels possess a
valuable data repository. Through
intelligent profiling, segmentation
analysis and referral building, they
can apply analytics-based insights
extensively at every possible
customer touch point to optimize
acquisition, servicing and retention.
This is a significant advantage they
hold over new third parties or
competitors who have limited
information on customers'
personal preferences and
behavioral patterns.
2. Audit Channels
A deep dive analysis of costs per
channel will provide a
comprehensive picture of all
itemized expenses (such as
commission for net rates and
marketing costs). By auditing every
channel, companies can ensure
that the most profitable business
from all traffic sources is captured.
It will also help compute the
Return on Investment (RoI) on each
channel by mapping bookers vs.
lookers and bounce rate vs.
page visits.
3. View Through the
Customer Lens
By mapping the touch points of all
channels from the perspective of
customers, companies can develop
an efficient multi-channel lens. For
example, e-mails are still the most
robust demand management
channel for complaints. However,
live web service and chats seem to
work better for sales and
marketing to reduce transaction or
enrolment abandonment rates.
Now, let us take an in-depth
look at the various steps
in the channel mix
optimization framework.
Step 1: Deciding
Channel Mix
Customer segmentation, assessing
channel performance and adopting
best practices constitute the three
activities under this step.
1. Customer Segmentation
To determine the channel mix best
suited for their customers,
companies should first understand
their customers. They should
establish an efficient and effective
migration strategy that hinges on
customer segmentation or
profiling. The segmentation should
cover the following:
-
The customer's existing and
potential value
-
The number of service-related
contacts (how many customers
are using each existing channel)
-
The cost-to-serve for
various channels
Demographic data such as age,
gender and location can add
further value to the segmentation
exercise.
2. Assessing Channel
Performance
While deliberating on the right
channel mix, companies should
judiciously evaluate the performance of each channel. They
should compute the cost of each
channel through audits, and
identify and track metric-level
performance for each channel —
from query till post-sales services.
Continuous monitoring and
improvement will enhance process
efficiency and help effect changes
during channel optimization or
migration.
3. Adopting Best Practices
The key is not to isolate customers
by providing different responses for
the same query or problem through
different channels. Companies
should create a knowledge
database by capturing all
responses to service queries
during the customer journey. By
continuously updating and
analyzing this database, the right
repository of best practices can be
developed over time. This will also
support channel and cost
optimization through the selection
of the right channel for a given
touch point or query, and eliminate
different responses over multiple
channels. A clearly outlined
approach to manage the change in
channel mix will support the
channel migration process in
the long run.
Step 2: Migration
In the channel migration process,
migration paths and the integration
of relevant channels with existing
customer-facing interfaces are
usually the key levers. Once the
cost of each service channel,
customer responsiveness and
service level aspects are defined,
the next step is to identify
migration paths.
1. Migration Paths
It is important to analyze the
channel behavior of different
customer segments to identify the
most appropriate channels for
them. The output of this analysis is
a consolidated data set depicting
paths, costs, volumes and revenue
generated alongside customer
segmentation. This data indicates
the feasibility and appropriateness of migrating customer contacts
across channels best suited to
them. Auditing the channel
behavior for each customer
segment is also extremely
important.
2. Integration
Several organizations are
integrating their existing channels /
new channels with centralized
Customer Relationship
Management Systems to improve
the accuracy of channel selection,
migration and quality of customer
experience. The IT department
plays a vital role here; it has to
ensure robust, seamless and nondisruptive
services. It is of utmost
importance that diversion or handoffs
between channels are
seamless to avoid the impact of
negative disruptions.
3. Deployment
It's imperative to have deflection
and digital strategies, and
effectively manage change for the
successful deployment of the
migrated channels:
Deflection Strategy:
Companies should recognize that
channel deflection is not
avoidance of customer inquiry. It
should yield cost reduction as
well as boost customer
satisfaction. As a part of the
deflection strategy, it is important
to proactively guide customers
toward the most suitable
channels. By offering incentives
such as extra loyalty points or
discounts on self-booking tools,
companies can ease the
migration process as well.
Digital Strategy:
In the light of cost optimization,
hotels and airlines are leaning
toward the use of self-booking
applications or tools. Companies
should strategically choose the
content, placements of 'call to
actions' and diversions to other
mediums while designing booking applications or tools, and
make them intuitive as well to
reduce bounce rates. The aim is
to achieve higher bookers vs.
lookers. Today's internet-savvy
travelers want tools that allow
them to explore specific needs
without being restrained by
multiple links or searches.
Change Management:
While the designed deflection
strategy is implemented, bringing
about change in the operating
model of any business and
customer interaction medium
should be managed cautiously.
An agile approach to evolving
customer needs and a robust
resistance management plan
complement the channel mix
optimization framework. The
analysis of surveys and feedbacks
can provide valuable insights to
effectively implement channel
migration or induction of
new channels.
While the proliferation of service
channels is rapidly changing the
way organizations interact with
customers, there is one cardinal
rule to remember. It is the
customer journey and all its touch
points that should define the
selection of the right channel or
channel mix. Companies should be aware of evolving industry trends
and customer preferences in
channel responses, and swiftly
deploy the right analytics, tools,
surveys and techniques to create
superior customer experience.