Your client has booked online. You now have their name, address and email contact. But how do you use this information? Sue Tabbitt looks at effective customer relationship management as part of the consumer journey.
Incredibly, the travel industry, online as much as offline, is notoriously bad at keeping the customers it has worked so hard to attract.
Compared to other vertical markets, its practice of customer relationship management is very poor. Pre-sales activity is frenetic, but once a booking has been made and payment settled, it’s as though the customer disappears off the radar entirely.
This is a phenomenal waste. Valuable customer data, if gathered at all, is left to seep away through many cracks, never harnessed to refine customer profiles, fed back into future offerings and promotions, or exploited to up-sell supplementary, margin-rich products.
The customer, so eagerly embraced, is carelessly dropped again. Fickleness is assumed – the traveller will surely shop around again next time, so what’s the point investing in a relationship?
The cost-effectiveness of customer retention over the pursuit of new business is overlooked, and the marketing and sales departments effectively start again from scratch with the start of each new travel season.
“Most travel companies don’t think about customer relationships; they make the booking, and don’t take it any further,” says Phyllis Nsiah, marketing manager at CRM specialist, KnowledgeWire Systems. “This is alien to our way of thinking – if someone has come to you, you should be building a relationship with them so they come back.”
The travel industry is just one of the sectors KnowledgeWire serves, and is among the most backward when it comes to CRM, Nsiah says. “The industry is slow to realise the potential of each customer; it’s good at bringing in the sales, but not so good at going after repeat business, which is a great loss given that it’s much easier and cheaper to hold on to existing customers than it is to bring in new ones.”
But isn’t that because travel customers today are so fickle and deal-conscious, making campaigns to encourage loyalty futile? “Customers are not fickle if they get good service,” Nsiah counters.
Online travel firm, Aspire, better known by its branded choosetotravel.com domain portfolio, led by ChooseMalta, is a company that has found this out first-hand. After running its original sites for four years, Aspire wanted to be able to increase its revenue from its existing customers and drive up its profit margins. It does this very simply, using its own customer database, and automatically identifying those who are about to travel, so that they can be targeted in the run-up to their departure.
“We started doing this two months ago, and have already found that 30% of the customers we’re targeting are buying something extra,” says MD Jonathan Shaw.
Rather than blindly bombarding customers with generic promotional emails that could be rejected as spam, Aspire is careful to disguise its carefully targeted sales pitches in valuable information about the customer’s destination, along the lines of ‘Only a week to go before your well-deserved holiday, and the weather is Malta is a sizzling 30°C’, or perhaps an itinerary of activities taking place at the resort during the customer’s stay.
“One concern we had was about annoying customers by upselling to them, when they could argue that, if they’d wanted the additional services – such as transport to the hotel – they could have booked them at the outset,” Shaw notes. “We didn’t want to be seen to be ‘cold-calling’. By making the sales offers secondary, we have got round this.”
Airline Lufthansa uses a similar approach with its customers, emailing them with up-to-date flight information.
How well received the emails are, and ultimately how successful they are in building relationships and securing additional revenue from existing customers, depends on how well targeted they are.
“If emails are simply blasted out en masse, they can do more harm than good,” notes Frank Reeves, co-founder of CRM specialist Avvio. “If you misuse or abuse email, it can push clients away.”
Problems typically arise when firms put themselves at the centre of the email campaign, on the basis of what the company itself needs to achieve. Without considering how well received the blanket emails are likely to be – especially if these are being distributed on a regular basis – companies risk irritating the customers they have worked so hard to secure, jeopardising any lasting relationship.
“We find that hotels often have no idea how many emails to send – we tell them to ask their customers,” Reeves says. “Technology can do amazing things, provided you are close to the customer. These days, entire websites can be designed to deliver a personalised experience, if you understand the customer. The same is true of email. The key is to put the customers, and their needs, at the heart of what you’re doing.”
A poignant example that demonstrates the difference between good and bad eCRM is provided by a hotel group Avvio dealt with last year.
“Every touch point was covered, every transaction linked through to the company’s central profiling system, and customers could opt in or out to ensure they received only very targeted email,” Reeves recalls. “But then someone abused the system with a last-minute offer, and customers unsubscribed in high numbers.
“Spam is not just unsolicited mail, but also untargeted mail,” he emphasises. “If a customer has specified that they only want to receive one email a month, don’t abuse that. If customers aren’t complaining to you about the spam, the chances are they’ll be taking it up with their email service provider, with the result that all Yahoo email addresses start rejecting your messages.”
What’s particularly galling is that customers are so ready and willing to provide information about their needs, if only travel firms would capture and make use of it, Reeves notes.
“The trouble is, too few hotels take e-CRM seriously,” he says. “They throw away any personal touch they’ve generated during a person’s stay by asking them their name, whether they’ve stayed before, and so on, in any follow-up feedback or if the customer comes back to them with a new enquiry. They should know that already.”
Avvio’s e-business software joins all the dots between companies’ reservations systems and CRM, and provides a relevance filter, to help organisations better target their messaging. “This also means we can measure to the pound the ROI for each e-campaign,” says Shaw.
By adopting the technology and filtering its emails so that they were much more selective – often sending out just a couple of hundred, rather than, say, 5,000 – Lynch Hotels, one of Ireland’s biggest hotel groups, has seen its repeat business grow at a healthy rate. Some 5% of monthly group revenues are now accounted for by these highly targeted email campaigns.
When Avvio starts work with a company, the first task it undertakes is to establish the conversion rate of ‘lookers to bookers’ from the hotel’s website.
Reeves says: “If we can increase that from 0.5% to 1%, or 2% to 4%, via targeted messages, that’s going to make a massive difference to revenues. And the closer you are to your customers, the more you’ll be able to cross-sell and upsell to them.”
Merchant hotel group encourages customers to customise their trip, specifying the types of pillows they want and the temperature of the room, and pre-ordering drinks, flowers and dinner. Some of these are free value-added services, with the paid-for extras subtly slipped in.
Effective email campaigns needn’t be restricted to pre-trip activity, however. “We’ve seen a growing trend of clients in the travel sector wanting to develop specific campaigns that reflect the individual stage of a customer’s holiday cycle,” comments Volker Wiewer, CEO of European digital marketing company eCircle. “The automated approach to CRM allows travel companies to engage with their customers at relevant and timely touch-points across the travel lifecycle, with highly relevant and engaging content.
“Relevancy is the key to success, and campaigns typically show a performance increase of 100%-150% higher open rates and click-throughs than standard emails,” Wiewer notes.
Yet, despite the power of targeted, personalised emails, Wiewer believes there is still a place for more generic email ‘newsletters’. “Relevant offers and promotions can still be communicated through these, but they are also valuable tools to allow brands to demonstrate their personality and build loyalty,” he says.
Far from treating email as a special case, best practice dictates that the medium enjoys greatest success when integrated into a broader marketing strategy. For example, Aspire’s Shaw favours email for luring people in, but prefers to follow up with a personal phone call, despite the additional expense, as this is more likely to seal the deal.
“Email should never be seen as a standalone medium, but should be one of a number of integrated communication channels used throughout the contact lifecycle,” says Stuart Aplin, an account director at search-inspired communications agency Steak.
“Too many companies see email as a generic information/confirmation/cross-sell tool, but it can be used much more productively: potentially as a hub to bring together a range of links to other channels with valuable, tailored content – useful websites, podcasts, videos, itineraries, health and medical information, user-generated reviews and suggestions.
“With a lot of competition within the travel sector, both from established intermediaries such as Expedia and lastminute.com, as well as social media sites like WAYN and TripAdvisor, travel companies must focus on improving the relationship with their users by providing relevant, engaging content that will keep the user coming back regularly and delivering this content across whatever channel the user prefers – at the time the user requests it, and in the format the user asks for.”
That accepted, email clearly has unique qualities, such as its capacity for automation, immediacy, direct links to web content – and it’s low cost. Avvio calculates the average cost of delivering business by channel to be $71.89 for banner ads, $26.75 for paid search, $17.47 for affiliate programs and just $7 for email.
“Email is cheap. There, I said it,” says Emma Bates, email marketing manager at Holiday Extras, which sells airport parking and hotel accommodation. “Not only that, but it’s fast and, if you build it right, it can make the difference between someone buying today and someone not buying until they see your ad in the paper or your leaflet through the door.
“Let’s not forget that it’s an interactive medium,” she adds. “The recipient needn’t wade through needless information when they can make just one click from the email and all the information they need is instantly in front of them.”
Email can also serve customers outside of normal hours. “The great thing about anything digital is that it’s available 24 hours a day, whenever you need it,” Bates notes. “If one of our customers needs a quote, makes a booking or wants to recommend us to a friend, our user-generated instant emails do the job even at 2am. This leaves our in-house email team free to devote time to those areas that need more specific attention.
“But, whether user-generated or built in-house, we are able to obtain extremely valuable information about the user according to their behaviour, or even non-behaviour, with the email, which we are able to take into account the next time we contact them,” she adds.
For anyone in any doubt about the need for a good, robust email marketing strategy, consider again the cost of doing it badly.
“Poor email marketing isn’t just a waste of time and resources; over time it can have a negative impact on a company’s brand and reputation,” concludes Paul Bates, UK managing director at email marketing specialist, StrongMail.
“To avoid the pitfalls, travel companies that use email to guide customers through the sales cycle – and beyond – need to make customers feel like they are valued, rather than just one line item among millions on a database. That’s the critical difference between eCRM done well, and done badly.”
Case study – Bales Worldwide
Having invested in email marketing tool Neolane to hone its message targeting and personalisation, tour operator Bales Worldwide has seen its email opening rates rise from 20% to over 56%; click-throughs leap from 8% to 41%; and reactivity double from 24% to 49%.
“Neolane helps us to hyper-segment our customer base and run many thousands of mini-campaigns, tightly targeted to our customers’ holiday preferences, stimulating interest, interaction and bookings,” says marketing communications manager, Raymond Howe. “As well as helping to stimulate interest with prospective and current customers, our more relevant communications are also reawakening lapsed customers.
“By whichever metric we consider the improvements, we have increased campaign response rates by at least 100%. In the first year alone, the software, coupled with our switch to customer-oriented marketing, has given us a 5% sales boost.”
Case study - Virgin Holidays
Specialist digital and eCRM agency, Underwired, has been producing Virgin Holidays’ eCRM programme and tactical email marketing campaigns for the past five years, with impressive results, including: £3 million of direct sales from the first email; average click-through rate of 48%; and an increase in average spend per customer by 6%.
Online channels now account for 20%-22% of business in a given week, and the campaign has won a number of industry awards, including BIMA’s Best Email/CRM Programme.
Underwired strategic planner Ellie Beasley says: “Virgin Holidays had tried online advertising, it had a reasonable website, and there was the occasional email newsletter. The team knew that more could be achieved, but needed some help to bring it all together under a unified digital strategy based around customer acquisition and retention.”
Underwired redesigned the website to make it easier to use, and to bring bookings to the homepage. It then produced fast-turnaround online campaigns, which were tracked. This culminated in the world’s largest travel industry eCRM programme. Last year, five million emails were sent out across 40 industry segments.
As well as generating £3 million in direct sales from the first email alone, the Underwired initiative helped move 6% of sales from agents to direct channels, with a direct impact on the bottom line. Some 22% of all holiday bookings are now made online, and the eCRM programme’s core campaign generates around £26 for every £1 spent.
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