Internet users are getting used to products and services that are genuinely tailored to their individual needs, personal profiles and buying behavior. Where customization used to mean sorting clients into segments and tweaking the way those broad groups were approached, it now involves making judicious use of increasing amounts of personal data to consider every customer as a market of one with a unique set of needs and preferences.
In retailing, Amazon has set a gold standard in terms of leveraging data on shoppers' profiles and purchasing behavior to tailor marketing efforts to individuals and improve their experience (e.g. "Recommended for You" based on the user's search history). Other online media and advertising companies have followed suit (e.g. Netflix's viewing recommendations and Google's targeted advertising), while traditional brick-and-mortar stores are introducing personalized coupons and promotions. Customization is here to stay.
In fact, personalized offers are not only expected but highly effective. In a survey by consulting company Infosys, some 86 percent of consumers and 96 percent of retailers said it had at least some impact on their purchasing decisions. What's more, almost one third (31 percent) of consumers wanted more personalization in their shopping experience.8
In consumer travel, aggregator booking sites are offering increasingly customized features in addition to more basic searches by criteria. For example, Hipmunk allows people to integrate their Google calendars into flight searches, while TripAdvisor posts recommendations based on their individual search history. Meanwhile, airlines, which have always allowed a certain amount of personalization (anything from frequent flyer bonuses and checked bags to vegetarian meals and VIP service), are stepping up their efforts to truly customize packages of ancillary services to travelers.
The digital universe is doubling in size every two years and should reach 44 zettabytes (44 trillion gigabytes) by 2020, up from 4.4 zettabytes in 2013.
Online brands are exploiting their data on consumers' preferences and buying habits to increasingly customize their offerings.
In managed travel, new technology is already making a difference to the level of customization offered to travelers. In particular, booking processes have been simplified by online booking tools and mobile apps that filter or sort the options presented based on previous reservation data and stored preferences. Travelers can also receive alerts, advice and suggestions based on their itinerary and current location.
Big Data, however, takes customization a step further, providing companies with more powerful insights on how their travel programs can best meet the needs of increasingly specific segments of travelers. The data comes from booking and expense management processes, as well as social media and emerging sources such as wearable devices.
Applications include, for example:
At the same time, Big Data is being put to good use behind the scenes to provide companies with more powerful insights on the performance of their travel program and how it can best serve the needs of increasingly specific segments of travelers. The data comes not only from booking and expense management processes but also social media, and in the future, other sources such as wearable devices.
Program reporting can be more powerful, timely and insightful when Big Data is analyzed and presented as bite-sized, highly visual insights in real-time. CWT AnalytIQs: aims to do just that, delving deeper into the available data, while allowing users to find the business intelligence they need, quickly and simply.
Due for rollout in the third quarter of 2015, CWT AnalytIQs: will offer visibility across the entire traveler continuum, integrating both booked and ticketed data. Analyses can be based on actual program data or be predictive, considering different scenarios to understand their impact (e.g. how redirecting volumes to different airlines will impact the market share of preferred airlines and the potential savings).
Key features include:
Other insights will be added in 2016, including call center performance; sources of ancillary spending, total travel and entertainment spend; and program leakage, thanks to integrated credit card and expense data. The tool is multilingual and will soon be available globally.
No travel manager will have missed airlines' aggressive push to generate extra revenues from ancillary services over the last few years and their success in doing so. Ancillary revenues have grown steadily, reaching a staggering $50 billion in 2014, according to industry estimates.9
Seen more positively from the buyer's side, airlines have been making moves to provide more transparency and convenience to customers through different packages — either sold separately, bundled with fares or even offered as subscriptions (e.g. lounge access or extra legroom).
Our survey shows that travel managers recognize the positive impact of ancillary services on traveler satisfaction, productivity and ease of doing business.
IATA's new distribution capability (NDC) should enable airlines to go a step further in customizing and selling services for individual travelers. The technology should also help companies to track spend on ancillary items. This is important when more companies are seeking visibility on their total air spend (beyond airfares) and including ancillary spend in their negotiations with airlines.10
1. What is it?
IATA's New Distribution Capability (NDC) is an open technical standard developed to transform the way air inventory is sold to customers. The aim is to provide buyers with transparent access to full content, including customized packages of ancillary products and services based on travelers' preferences. Launched in 2012, NDC has undergone several pilot phases and is due for live implementation starting in 2016.
2. What will change?
Today, airlines offer their inventory through their own sales channels and global distribution systems (GDSs). This inventory may vary with the distribution channel: in particular, ancillary offerings and certain promotional offerings may only be available directly from airlines. By 2016, the new NDC shopping interface will allow any stakeholder (GDS, travel agency or other third party) to receive the same offerings. It will also enable clients to receive customized packages based on personal information submitted voluntarily.
3. What are the potential benefits for corporate clients?
The benefits for corporate buyers and travelers could include:
4. What are the potential concerns?
Several concerns have been raised by key stakeholders:
5. What's the next step?
So far, more than 20 airlines, technology providers and aggregators have been involved in test pilots, while stakeholders from across the industry, including the Global Business Travel Association (GBTA), have weighed in with IATA through various forums. In addition, a coalition of national travel agent associations is currently collaborating on a study into the impact on travel agencies and ways to ensure clients' needs are met. For 2015 and 2016, IATA's stated goal is to support airlines, travel agents, global distribution and IT providers in their adoption of the NDC standard. CWT is exploring ways to participate in pilots in a measured and meaningful way that represents clients' best interests.
Consumers rely on ever more available digital word of mouth — social reviews and ratings provided mostly by people they have never met. Taking TripAdvisor as an example, the total number of reviews available on the site has been growing exponentially, reaching an estimated 150 million in 2014, while reviews on Foursquare have reached a smaller but still impressive 55 million (Figure 19).
According to Google,11 one-third of travelers have posted reviews online of places they have been. Another survey indicated that 81 percent of travelers find hotel reviews important, 46 percent post their own reviews and 49 percent won't book a property without reviews.12
Companies have been eager to promote sharing between employees and other trusted sources, especially by setting up in-house corporate social media such as Yammer and Chatter.
In managed travel, TMCs have taken this idea and applied it to travel programs by creating dedicated sites for a company's employees to share opinions on preferred suppliers (e.g. CWT Hotel Intel, which is now available on mobile via CWT To Go). This type of service not only gives travelers a voice but helps them to make choices that suit their needs. The reviews and rating data can also be analyzed to provide frontline feedback on supplier performance in terms of traveler satisfaction, quality of service, location and other aspects.
Social reviews are channeled to provide insights both to travelers and their travel managers with CWT Hotel Intel part of the CWT Hotel 360° suite of services.
This private online hotel directory enables a company's employees to share reviews of preferred hotels with each other rather than consult public review sites, which can contain fake postings. The tips can encourage travelers to book within policy, since only preferred properties are listed. They can also be useful for travel managers to monitor traveler satisfaction with the hotel program.
In addition, companies can subscribe to an enhanced version that can provide a "sentiment analysis" dashboard, among other features. This dashboard is based on an automated analysis of satisfaction ratings and comments, paying particular attention to the best and worst feedback. The data (e.g. on room quality, staff, cleanliness and food, with a breakdown by geographic area or business unit) can help travel managers to ensure that travelers' needs are being met by the properties in the program.
Initial feedback has been very positive. For example, one global client found that six months after implementing the tool, 90 percent of its 25,000 travelers had recommended hotels to their colleagues.
Some travelers are concerned about data security when it comes to customized or "contextualized" offers — no doubt wondering about their privacy and how safe they are from problems like identity theft and credit card hacking.
In our survey, data security is the top concern of travelers who have used customized offers.
Some travel managers also share their concerns, although they are more apprehensive of the effects on program compliance and optimization. Even so, their view of contextualized offers is positive overall.
Most travelers are aware of these risks and are prepared to make the necessary trade-off of giving some personal information and agreeing to browser data being used by a company in return for getting more convenient service. In their view, convenience is the main benefit of customized services (Figure 22).
Travelers ranked customized offers third in the list of top technologies and services they most wanted in their travel programs, after ancillary services (ranked first) and mobile apps (ranked second). (See Figure 23.)
For their part, most travel managers (91 percent) say Big Data will make a large impact on their travel programs (3+ rating). They also expect ancillary services and contextualized offers to move to the forefront of travel management (87 percent and 68 percent respectively).
Further, they see their TMCs as playing a key role in all of these areas (customized services, ancillary services and Big Data).
8 Source: Infosys, Consumer Attitudes to Personalized Shopping Experiences (January 2014)
9 Source: IdeaWorksCompany/CarTrawler, "Airline Ancillary Revenue Projected to be $49.9B billion Worldwide in 2014,"(November 3, 2014)
10 Source: CWT Travel Management Institute, Mastering the maze: a practical guide to air and ground savings (2012)
11 Source: Google Insights, "5 Stages of Travel" (2012)
12 Source: Olery "The Naked Truth About Hotel Reviews" (July 12, 2012)