Airline Chief Commercial Officers (CCOs) and their teams find themselves at a crossroad, recognizing the potential of modern retailing to unlock value creation. Modern retailing offers numerous opportunities for quick benefits. There's no one-size-fits-all approach, but it is important to balance the enhancement of technical and human capabilities, financial constraints and the risk of overwhelming change and embrace these considerations to propel your airline towards modern retailing success.
Start to really put your customer at the center
- Follow the lead of successful retailers like Amazon and Ikea by obsessing over your customers. Personalization, tailored offers, and experiences based on individual preferences and behaviors are key to effective retailing.
- Conduct in-depth discussions with existing and potential customers to gain insights into your strengths and weaknesses. Analyze your performance and propositions throughout the customer journey, identify key pain points, and prioritize "moments of truth" and key differentiators.
- Introduce net promoter score and customer behavior monitoring tools for real-time feedback at critical touchpoints to direct your priorities.
- Such an audit can be done engaging your whole team, and / or with external help within three months. The outcome should identify quick wins, medium-term enhancements, and necessary strategic changes.
Reset the distribution and direct sales strategy
- Set ambitious direct sales targets to stimulate team discussions around the real challenges to achieve them. These include strategies for improving conversion rates, enhancing digital and offline channel performance, and addressing pricing disparities with your own and third-party channels.
- Encourage experimentation, testing, optimization of different propositions to enhance sales effectiveness.
- A significant direct customer base is also a crucial prerequisite to substantially increase your ancillary revenue.
Boost your ancillary revenue
- Rankings from the CarTrawler Ancillary Revenue Yearbook 2022 analysis show the potential, with 13% of the 75 analyzed airlines achieving more than 30% of their total revenue with ancillaries in 2021.
- Consider an ancillary marketplace, inspired by examples like Air Asia, to expand product offerings beyond flights. This drives new revenue streams, differentiation, increased engagement and additional customer insights.
- It can also be a starting point for technological and mindset changes.
Implement dynamic pricing
- Flexible pricing strategies with many more price points (ideally a continuous curve) based on demand, inventory, and customer segmentation / willingness to pay, should be something to consider as a stepping stone on the way to modern retailing. It is a project which will help increase average yield and price competitiveness.
- It also refocuses revenue management as a core part of distribution, sales, digital functions.
Future-proof your technology strategy
- You cannot avoid thinking about your commercial technology ecosystem if you really want a consistent, seamless, end-to-end customer experience, data-driven dynamic retailing capabilities, higher conversion, speed to market and full commercial flexibility.
- Prioritize state of the art digital commerce technology to control your main customer interface.
- Transition to modern retailing whilst the old “plumbing” in the basement is still there, ie without an immediate overhaul of all the underlying technology. Gradually move to a modern offer-order management environment without disrupting the customer experience.
About Branchspace
Founded in 2013, Branchspace aims to be the most forward thinking and trusted technology partner for airlines and other travel companies to break barriers of legacy systems technology and thinking. It allows clients to create and manage personalised, data-driven digital commerce experiences to increase direct distribution and take greater ownership of the end-to-end customer journey.
Ursula Silling
CEO, Branchspace
