Marketers' Breakfast: Travel

Customer psychology and winning the last mile

Frederic Kalinke (Managing Director, Amigo) introduced the breakfast with a few points from behavioural economics. The well-documented phenomenon of loss aversion applies to recent developments in air travel. Customers have tended to focus disproportionately on losses over gains. If British Airways lowers flight prices, but introduces charges for previously complimentary items like drinks and meals, then customers don’t perceive what might in fact be an overall saving.

There have also been operational benefits to the use of psychological insights in air travel. Virgin Atlantic used ‘nudges’ to make pilots more fuel efficient in their captaining of planes. Monthly updates and the ability to donate to charity increased efficiency and job satisfaction. Special mention too was made of Easyjet’s growth off the back of its compelling proposition to business people.

Social Proof

We’ve long known that people are more likely to buy something if other people have bought it. This is as true online as it has always been for businesses like restaurants, which tend to attract more customers the longer their queue outside.

A relevant travel example is Robert Cialdini’s “towel experiment.” In hotels, customers are usually nudged into reusing towels. When three different messages were tried, the one that had the most impact was the one letting you know that most people who had stayed in that room had re-used their towel.

The other classic example from the travel sector was mentioned by Claire Farrington (Partnerships and Marketing Manager at Global Hospitality Services). Easyjet’s flight booking service notifies users of how many people are viewing a particular flight. This also creates an illusion of scarcity, that raises a user’s perception of the urgency of their purchase. Andy Chang (former analytics manager at Cathay Pacific, now Head of Analytics Consulting at Mezzo Labs) mentioned his experience with a similar tactic, using messages such as “only X seats left at this price.”

When asked why more travel brands don’t use social proof, all of our attendees mentioned legacy IT. One admitted that one of their former companies has between 9000 and 12000 pages on their website and many have no owner or are completely inflexible.

Large complex enterprises in the travel sector often become dependent on IT systems to the point of entrenchment. The cost of updating them spirals out of control. This is one of the problems that Amigo has identified as a core part of the marketing execution gap that we aim to help marketers overcome.

Salience

We then discussed salience. Individuals are more likely to focus on items or information that are more prominent and ignore those that are less so. Daniel Kahneman’s famous example is that media sensationalism leads us to focus too much on unlikely dangers like plane crashes or kidnapping rather than mundane ones such as cancer, which are of course far more likely.

For travel marketers, since 55% of users spend less than 15 seconds on a website, it’s important to signpost your most important messages through the customer journey. Stephen Moran (Director of Marketing at IHG) explained how they signpost the best price for direct bookings or for members of their loyalty scheme. Another attendee, Shivani Babuta (Global Marketing Campaign Manager at British Airways) referred to her own experience as a customer of IHG, noting the impressive ways that the brand uses these tactics.

Better signposting of their loyalty scheme through the online booking journey enabled Hertz to increase enrolment by over 50%.

Claire also mentioned Lux hotels, which include an iconic red telephone box that customers can use to phone home for free, along with free childcare and a daily prize draw. She described it as a “six star experience”, which would make her loyal to the brand in the future.

Transactional utility

Aimee Wilde (Marketing Manager, Amigo) discussed Wizz Air’s sign up experience, which helps the brand achieve its goal of becoming young customers’ “travel buddy” through a mobile-first experience. In Aimee’s view, Wizz Air succeed by offering transactional utility, a form of customer satisfaction based on perceived value. In this case that means rock-bottom prices and complimentary add-ons, which make customers feel like they’ve done well to make such a smart consumer choice.

Calvin Dudek (Chief Product Officer at Focal Data) and Tara Benjamin (Sales Capability Director at Brand Learning) also raised Hotels.com and Expedia as brands offering great transactional websites, and noted that this was one of the natural advantages of digitally-native brands.

Other guests mentioned other valuable additions to the customer experience. Jamie Childs (Commerce Executive at Strand Palace Hotel) discussed their initiative to install Bose speakers and the possibility of adding personalised mobile devices for deluxe room customers to provide further value for the customer experience. Shivani also mentioned BA’s partnership with The White Company. Even relatively minor touches such as a “welcome home” email help to create unforgettable experiences.

Both Shivani and Daniel Taylor (Global Content Manager, British Airways) also discussed BA’s ‘Know Me’ programme. The airline uses a large yet well-organised and accessible database to enable staff to create a highly-personalised service. Even cabin crew have information on most valued customers. Overall this initiative has driven £204M in incremental value up to 2017.

Intention-action gap

Another bias we discussed was the intention-action gap, the observation that most people do not behave according to their own statements. It’s another way of framing David Ogilvy’s dictum that “customers don’t say what they think, and they don’t do what they say.”

An interesting experiment was done by British Airways. They listened to focus groups and filled self-service fridges in business class with salads and fruits. However they soon found that due to the low oxygen, low-pressure climate on the airplane, customers preferred chocolates and cakes. This refutation of a focus group reveals the importance of experimentation. And it demonstrates why we view it as so important to enable marketers to experiment flexibly on their websites.

Pricing

We also covered how consumers always view price in relative terms. Nespresso price themselves competitively against coffee from Nero or Costa, rather than ground coffee. Marketers also need to be aware of the power of irrelevant alternatives. Daniel Taylor from BA discussed how pricing is determined by revenue management teams, but marketers see the potential to be creative with how prices are communicated.

Stephen mentioned a contextual difference between airlines and hotels. While customers of airlines expect price discrimination, customers of hotels feel aggrieved if they find out someone else has got a better price for a room. Aimee also discussed the “hurts so good” phenomenon (also known as masochism) where customers who have had to go through a process feel emotionally invested and more likely to take action, e.g. Jack’s Flight Club.

Honesty

We also discussed the importance of honest recognition of fallibility (one of the 22 laws of marketing) where consumers like brands to admit fault or admit vulnerability. The KFC ‘FCK’ campaign is a good recent example, while the most famous example in travel is Avis’s “We try harder.” Shivani said that she had experienced this fallibility effect when an airline’s chief had written 2000 letters to apologise for an issue in a frequent flyer programme.

You’ll find more content like this elsewhere on our blog. If you’re interested in attending an Amigo breakfast, please don’t hesitate to contact us.

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