Use creative digital experiences to grow advocacy and loyalty with today’s travelers
Just a few years ago, the thought of a self-driving car would be considered ludicrous to most. Brain-computer interfaces that allow paralyzed people to move their limbs just through thought — pure science fiction.
But today, innovation is happening faster than many organizations can fathom, and for some brickand-mortar service businesses like hotels and airlines, this can be terrifying. For others, it’s just an opportunity to create a memorable customer experience.
Every 12-18 months, computers double their capabilities, as do the technologies that run on them. It’s hard to wrap our minds around the fact that in 10 years — when the majority of millennials will be in their prime earning and
spending years — technology will be over 1,000 times more advanced than it is today.
By 2028, the world won’t look anything like it does today and life experiences will be far beyond most people’s imagination. Will travel brands be ready to serve the next generation of travelers the way they want to be served?
To survive, let alone thrive, airlines and hotels will need leaders with visions that look far beyond analytics that only tell them what worked yesterday. 21st century leaders need to be brave pioneers who — as one of the greatest American writers of the 20th century, Kurt Vonnegut said — “continually jump off cliffs and develop their wings on the way down.”
One of the first steps in that journey will be the reinvention of their organizations into Experience is Everything (EiE) enterprises.
In 1998, James H. Gilmore and Joseph Pine II co-authored The Experience Economy: Work Is Theatre and Every Business a Stage — a best-selling book that asserted that the future of economic growth lays in the value of experiences and transformations; goods and services were no longer enough.
At that time, the Experience Economy was emerging and not well understood, but today it’s mainstream and wreaking havoc in businesses that lump experiences into services and pay the price through lost loyalty.
Gilmore and Pine strongly cautioned against that bundling. They contend that experience is the “fourth economic offering” due to its unique and progressive value; whereas services are increasingly becoming more and more commoditized. Today, 78% of millennials say they would choose to spend money on an experience over buying something. Ownership is far less attractive to Gen Ys than it was for their parents which is great for travel brands, except for the fact that millennial expectations are far higher than their parents and growing at an alarming rate.
Millennials’ love the Sharing Economy for many reasons, not the least of which is that it has given them more disposable income — income they’re spending on travel experiences. In fact, they are travelling and spending more on vacations this year than any other generation.
So it’s probably no surprise that Gen Ys expect their experience with a hotel or airline be the best they’ve ever had and they won’t tolerate anything less. They also want creative digital experiences — engaging technology delivered with a personal touch.
The human touch has been part of the luxury travel business for decades. I have enjoyed many “tokens of appreciatio But those gifts come with a hefty price tag.
Low-cost carriers and budget hotels rarely offer any perks to their clientele. In fact, many airlines are taking more and more away from economy class passengers and upping the ante with their premium class travelers — a bet that may bite them where it hurts the most if they don’t recognize the need for more diversity in their cabin classes and start adding Premium Economy for those willing to pay for it.
Perhaps they are still living by the 80/20 rule, where 80% of their revenue comes from only 20% of their passengers — those in the premium cabins. Even if it’s true that premium class seats make airlines more money, that doesn’t mean economy class travelers should be treated more like cargo than valued passengers.
The International Air Transport Association (IATA) forecasts that commercial global airline revenues in 2018 will be US$834B. If 20% of that revenue comes from those in the economy class, that’s still US$167B — a sizable chunk of cash travel brands would seriously miss if it were gone.
But is that 80/20 rule even true? In 2012 IATA reported that 73.1% of airlines’ revenue worldwide came from economy class passengers.
If that global data is still applicable, economy travelers would bring in US$609B. Something to think about.
So let’s stop regarding those who favor frugality over frills as just fillers of empty seats and rooms. These travelers are your future and it’s time to invest in them.
The GEN Y hotel experience
When it comes to accommodation, millennials today want affordable, functional, connected, and minimalistic luxury.
Will they suddenly, in middle age, change buying habits and start spending their forecasted US$22T on high-priced goods and services? Sure, Gen Ys enjoy premium experiences like the rest of us,
but what premium means to them is different from what it meant to previous generations.
In my recent interview with Jerry Inzerillo, outgoing CEO of Forbes Travel Guide, he described it like this…
“In circa 1980-1990, when Mr.
Jones was told by the hotel that they were giving him a butler, he would respond this way, 'I bought a suite at the St. Regis and now I have a butler. Wow, that's cool. My wife loves the fact that they’ll unpack for her and pack for her because that's an amenity and a service that my parents could never afford and we could never afford. Wow, having a butler makes me feel good about myself.'
“Now, the millennial generation says, ‘Hey, that's cool. I like having a butler, but I don't want them hovering over me. I know where they are when I want them.’
“Millennials are misrepresented by those who say they're twitchy or that, because of technology, they're non-communicators and don’t like human interaction. That’s actually not true.
“What is true is that they like less interaction, which means as a hotel, instead of having one in 20 chances to please them, you may only have one in 10 chances to please them. You've got to be able to read them in terms of their sonar that indicates, 'I'm ready to be served. Or not.'
“It's going to take the luxury global community two to three years to catch up with the mores and norms of that generation, but we're learning it very quickly.”
GEN Ys in flight
So we know that millennials are already spending more money than their parents and grandparents on travel even though they are less financially stable than those previous generations. And while traveling on vacation, 74% of millennials will continue to work.
So it’s no surprise that GEN Ys want a comfortable, connected, and entertaining flight that they can easily book online.
They want Wi-Fi everywhere, on-board experiences (both digital and nondigital), and power at their seats for their mobile devices so they use them instead of IFE systems for entertainment.
Millennials will also choose airlines based on their onboard connectivity capabilities and even pay more to be on a child-free flight.
You don’t get a lot of second chances with these fickle flyers. If they don’t get what they want, you’ll soon hear about it when they share their bad experience with the rest of the world — and they will share it (probably using the airport’s Wi-Fi while waiting for their bags to arrive). A number of new airlines are popping up around the globe (e.g. Joon created by Air France, Mango by South African Airways, and Level by International Airlines Group) that cater specifically to this new generation of flyers.
And while these experiments have yet to show bottom line benefits for their respective legacy airlines, I give them both an ‘A’ for effort because they are breathing a breath of fresh air in the stodgy traditional approach to air travel.
It’s all about the journey — the whole journey
For decades, organizations in the travel industry went to extraordinary lengths to cater to the needs of their clientele during their stay or while on board their flight or cruise; their loyalty programs set the bar for others to follow.
But with today’s high-demand, “me first” travelers, loyalty program points aren’t adding up to engagement or repeat business like they used to.
In the case of hotels, instead of making the most of opportunities to build longterm relationships throughout the entire customer experience journey — from the moment a person thinks about booking a trip right through to their return home and their next wanderlust wish — too many hotels only focus on the low hanging fruit — between the booking and check-out phases.
They lose out on a huge opportunity to build brand advocates and grow loyalty post-stay because they’re not focused on the whole customer journey. Perhaps it’s because too many bookings are being done through third-party Online Travel Agencies (OTAs) these days — bookings that take revenue away from hoteliers and airlines and hinder access to those guests’ contact information.
Whatever it is, it became brutally obvious from our survey that hotel executives aren’t seeing opportunities during the poststay loyalty loop — the advocacy and bonding phases that can help motivate travelers to skip intermediate phases with OTAs and jump directly to booking with the same travel brand when they next get the itch to take a trip.
Loyalty ain’t what it used to be
According to Accenture’s February 2017 Strategy report, more than 90% of businesses have some form of loyalty or customer engagement program in place, but many of them are failing miserably.
Although 66% of U.S. consumers spend more with the brands they love…
• 78% are withdrawing their loyalty at rates faster than three years ago
• 26% of them think brands should do everything possible to earn their loyalty (and keep it)
It’s no wonder why 85% of business leaders at topperforming companies believe that customer expectations are influenced by relevant, realtime, and dynamic experiences. Unfortunately, few move fast enough to capitalize on those opportunities.
Robert Wollan, senior managing director, global lead of Advanced Customer Strategy explains why the good old days of loyalty are gone,
“New ‘languages of loyalty’ have emerged, driven by brands experimenting with creative digital experiences, which have changed the dynamics of customer loyalty today.
“The traditional ‘low price’ and ‘reliable service’ mechanics are no longer as effective at driving loyalty. Organizations that stick to traditional approaches and don’t explore the new drivers influencing loyalty risk draining profitability and pushing customers away — even when they have the best intentions or are following their historical playbook. It’s time for organizations to take a fresh look at loyalty.”
What drives brand loyalty today
It probably goes without saying, but the foundation upon which to build loyalty is trust, particularly when it comes to respecting people’s privacy and protecting their data.
In a recent IBM Cybersecurity and Privacy Research survey, 78% of Americans believe data privacy policies are “extremely important.” However, only 20% of US citizens “completely trust” the businesses that store and control their personal data.