The Unlimited Potential of Ancillary Revenue
Seemingly ubiquitous and often controversial, ancillary revenues are a prominent part of the modern airline and hotel experience. Indeed, ancillary revenue programmes have rapidly become an essential and established part of business models across the travel industry, but they have certainly not yet realised their potential. To look closely at these programmes today is to see unfulfilled – and unlimited – possibilities.
Just like Web 2.0, the time has come for ancillary revenue strategies to take the next leap forward, with programmes becoming dramatically more effective, widespread and relevant to consumers. Collinson Latitude brings you the springboard for that leap – ar².
ar² defines not only the philosophies, but also the practical steps, that airlines, hotels and travel service providers need to take to ensure that ancillary revenue programmes do much more than just produce one-off, short-term boosts in income.
Practical steps? Absolutely. Nebulous strategies achieve nothing. Through ar², the Collinson Latitude team will present your business with the real-world, online solutions you need to develop the true potential of ancillary revenue:
- Relevance to the consumer through tailored products and services
- Propositions that bring real value to the customer, and
- An optimised customer experience at every possible touchpoint
Janet Titterton, Collinson Latitude’s director, explains: “ar² is all about developing long-term, sustainable relationships with customers, driving up revenues by maximising new and existing ancillary revenue opportunities. If you want to retain profitable customers for life, you need to add value to their travel experiences, not just costs.”
Of course, increasing customer spend whilst also increasing customer satisfaction can be quite a challenge. “There are no easy answers here,” admits Titterton, “and no one-size-fits-all products to buy. Each company needs to find unique, sophisticated, tailor-made solutions. That’s why data is such an important element of ar², because each company’s customer base is different. A better ancillary revenue programme does not necessarily mean a radical overhaul of a business plan; the first step could simply be better analysis and exploitation of the customer data you already hold, leading to more actionable insight.”
Hotels, for example, know so much about their customers, from their preferred holiday destinations to their favourite after-dinner drinks, that putting together an appealing subscription package of benefits – lifestyle benefits that extend far beyond the hotel itself – is a real opportunity. Low-cost airlines, similarly, might realise that many of their customers will pay for the convenience of a single-price ticket package of otherwise unbundled elements – such as fare, baggage allowance and onboard meal. “After the long-term trend for unbundling,” says Titterton, “we’re likely to see a turning of the tide and a re-bundling process. Intelligent, targeted re-bundling encourages travellers to spend more money to achieve a greater sense of value and convenience. Beyond re-bundling, airlines could further improve the offering with third-party benefits that enhance the core product.”
This bigger picture view, understanding the complete passenger experience and lifestyle, not just your company’s area of direct involvement, is key to ar². If you want to offer customers products and services that spread across many areas of their lives, you should find channels of communication that reach across their lives too. Maximise the touchpoints. Ubiquity of message is needed to ensure the customer is constantly engaged in a relationship with your business, whilst always being reminded of the brand at the centre of the programme. By ensuring multi-channel contact with customers – from their desktop computers in London to their mobile phones in Beijing – you maximise opportunities for customers to earn and redeem loyalty points, for example. Mining the data you hold is again fundamental. If you know your customer loves golf, having subscribed to one of your membership packages with a golfing theme, why not offer that customer a means to earn loyalty points by buying golf equipment from a partner supplier, through your website? The closer you are to your customers all the time, the greater your chance for a long-term profitable relationship.
It’s time to move to a world of ancillary revenues where both the company and the customer win. It’s time for ar².