Use cre­ative dig­i­tal ex­pe­ri­ences to grow ad­vo­cacy and loy­alty with to­day’s trav­el­ers

The Insider - - CONTENTS -

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.

Ex­pe­ri­ence trumps…every­thing!

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.

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