2010 is shaping up to be another year of economic and political uncertainty. I will in this article look at the ways in which businesses across every sector will need to look toward incremental revenue streams in order to capitalise on the online customer journey and provide a more convenient and seamless user experience, if they are to maximise growth.
This will undoubtedly be the year in which the true value of the online user experience is demonstrated. It has never been more important for brands to use their online offering to both engender customer loyalty and maximise revenues, and failure to do both will separate the strong, survivor brands from the weak.
The big question then is: how can brands capitalise on their online presence to ensure growth in 2010?
The key lies in looking beyond a brands' core offering at products and services that both compliment the brand and are relevant to its customers. For years, brands have recognised the potential of ancillary revenue and cross-selling products and services that compliment their core offering. Indeed, over the past five years its importance has increased significantly - particularly in the troubled airline sector. Ryanair recently announced that profits from ancillary sales now account for 22% of group revenues -almost £550 million. Similarly, the Financial Services sector has a long history of up-selling products, such as insurance and car breakdown cover, as part of a monthly account fee. It is estimated that these added value products accounted for an additional £8.74 million revenue in 2007.
What then it is the key to a successful ancillary revenue model and what should brands' consider before implementing an AR programme?
A brand must first be able to understand what specifically it is aiming to achieve from its ancillary revenue strategy. Is it to differentiate itself from competitors? Is it to improve customer satisfaction? Is it to increase profits? Is it to gain a better understanding of customers? Once decided, businesses are then able to define the propositions accordingly.
This may take one of three forms: providing bundled packages of added value products designed to enhance your core offering and offer added customer value; introducing profitable and engaging rewards programme extensions with established affiliate connections; or braining traditional offline promotions to an online audience to drive behavioral changes and cost savings.
Once the objectives are clear, it is essential to look at the customer. Effective ancillary revenue - both in terms boosting profits and loyalty - starts with thinking of the customer journey as a whole. Focusing on services that will add to and improve the customer experience, and providing the answer to all associated customer needs in a single, holistic manner across multiple touch points is fundamental.
Once you understand the entire customer journey, including all the touch points where you could add value for the customer, you are then in a position to also identify where your brand can revenue for itself. This should translate offline too - look at the customer's physical journey once they arrive at the airport, bank, supermarket or retail store. Are there businesses your brand could partner with to add value to the customer? Think outside the square to recognise what else your customer might need or be interested in whenever they interact with your brand. Use insight from existing data you have on your customer base to identify what types of products or services will incentivise them and encourage loyalty.
Remember that profits are an important metric, however so is customer satisfaction. Brands should not be afraid to segment their customer base and tier their offering, as this can ensure not only customer relevance, but also drive greater revenues by correctly targeting.
And finally, measure, review and refine. An AR strategy is a long term commitment. Brands should go back to the plan and measure the performance against the original objectives, listen to customer feedback and adapt accordingly.
AR can be used as a great tool to engender loyalty in the long term. It should be used to enhance, not exploit, the relationship with customers. In such a commoditised market place, brands need to offer something unique to stand out and ensure that customers stay loyal.
Never has there been more of an opportunity for challenger brands to gain market share or leading brands to gain the edge over their rivals. A well-thought out ancillary revenue can be the golden ticket that will ensure a brands' future well into the new decade.