Focus on ancillary revenue
Car Commission
Bobby Healy, cto of CarTrawler, suggested one simple way to maximise revenue from car hire commissions: use CarTrawler to manage direct consumer bookings. The system is in use by 30 airlines, in 29
languages, which sell through 550 car hire firms worldwide. Bobby pointed out that car hire is a 'commodity' product, with customers demonstrating little brand loyalty. They say they choose on price first, then on the car brand. However, while 81% compare prices, just 41% choose the cheapest car. The perception of choice and a neutral offer is therefore important. Bobby highlighted this point with a case
study of Hawaiian Airlines, which originally offered one car hire supplier on its website. By adding two more, at higher price points, CarTrawler doubled bookings. And by adding several more, and optimising the offer in various ways such as design and pricing, Hawaiian eventually trebled the business. With
Norwegian.com they redesigned the website to list the cars horizontally rather than vertically – and tripled the conversion rate. With 60% of car hire business being booked direct, Bobby emphasised how big this potential market is, and how important it was to think like a retailer. This means not advertising the competition and building
awareness with as many touch points as possible, because customers buy at different stages. With bmibaby, Car Trawler optimised the site and introduced extra touch points – resulting in a 60% increase in business.
"With
norwegian.com they redesigned the website to list the cars horizontally rather than vertically - and tripled the concversion rate"
Following the retail model, the customer can
be encouraged to buy by making payment as flexible as possible. With Australian airline VirginBlue, the website was fitted with a slider button to allow customers to pay with an exactly personalised mix of cash and frequent flyer points, which resulted in a 60% increase in sales. Not all customers want cars at the airport: CarTrawler cross-sells to the 60% who don’t book a car by sending a map of their destination with car hire depots in neighbouring cities. Bobby summed up by insisting that any big airline interested in AR will sooner or later have to introduce cross-sell to maximise revenue.
www.cartrawler.com
Brand attraction
Also addressing the conference was Magnus Zetterberg, vp e-commerce and distribution SAS, on Generating AR While Maintaining a Premium Brand Image. In a remarkably frank appraisal of
the key problem facing legacy airlines, Magnus dealt with the issue of how to increase AR without compromising long-term revenues. He broke AR down into the three main component parts: à la carte features such as bags and food, commissions from third parties on sales, and frequent flyer programme revenue. Magnus emphasised the importance of
starting with a full strategic review of both the main service and AR, including securing distribution channels, enabling a good variety of payment options, and ensuring close cooperation between commercial and IT depts. He stressed the need to keep the brand strong to demand premium prices and attract strong partners. These partners, he said, should be limited to one per function e.g. one partner for hotels, one for car hire etc. to get economies of scale. The strategy at SAS was to create an
AR champion and a separate forum and focus, including clear responsibilities and categorisation, Key Performance Indicators, and tight follow-up. He suggested focusing first and foremost on the elements of AR that the customer might see as benefits. He pointed out the opportunity for market differentiation from LCCs with an ad campaign such as SAS’s effective ‘No Hidden Fees’ campaign targeted at its competitor,
Norwegian.com.
www.flysas.com
CONTACT US
OnBoard Hospitality's AR Focus is now a regular feature. If you have a new product, new technology, a relevant report, or a new partnership to announce do email richard@appinpublishing.
co.uk (text only, please). Please send any picture files, marked AR in the subject line, direct to
jo.austin@
onboardhospitality.com.
www.onboardhospitality.com
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