October 3, 2017, by Gilad Berenstein, CEO of Utrip
A few days ago, I had the pleasure of sitting down with a longtime CEO of a leading global luxury travel brand. We discussed many of the latest trends in travel and took a deeper dive into how he sees travel companies succeeding in today’s digital world.
Below are three of my favorite takeaways from that conversation:
- Businesses are now choosing between 2 extremes: commoditization vs. experiential
A great example of this is the movie industry. In the last 20 years, Netflix has disrupted the space through commoditization: they offer a product to consumers at a low-enough price point that they’ve acquired more than 103 million users worldwide. On the other hand, movie theaters offer a vastly different experience at a higher price (average cost of a ticket is $8.84/person, the cost of Netflix is $7.99/month). The price difference is substantial. Netflix, however, hasn’t killed off theaters. Cinemas offer an incredible experience that can’t be replicated at home, and the success of the industry proves that, with the box office having set records in five of the last seven years.
You can draw parallels in the travel industry. What is your point of differentiation? Why should a consumer choose your airline, destination, hotel, cruise line, etc. instead of another? Some airlines sell you a seat at the lowest price, but you won’t be able to check a bag or receive any refreshments during your flight. Others (at a higher price point) sell you an end-to-end experience: airport transportation, lounge access, first class seating. There’s a dichotomy developing between these two types of businesses, and there’s no right or wrong path. The key here is to better understand your customers and tailor your brand’s offerings to their preferences.
- “Automate the predictable so you can humanize the exceptional”
In the context of technology and its role in the traveler journey, this statement really resonated. At Utrip, it’s our philosophy that travel is about 80% science and 20% art. The science of travel includes factors like a traveler’s budget, the transportation landscape in a destination, anticipated dates and a destination’s seasonality. During travel planning, these parameters must be accounted for, and today, because of technological advancements, we can automate this part of the process. By leveraging artificial intelligence, travel companies can streamline their own operations while enhancing the customer’s experience, because the aforementioned parameters are automatically taken care of.
The art of travel, however, is the subjectivity behind one’s own tastes and preferences, and there is obviously no one right answer. This is why you might prefer a tropical beach vacation while your best friend may favor backpacking across Europe. This is where the human touch becomes essential. Whether it’s through your own employees or your digital experience, can you create an authentic human connection with your customers? A healthy combination of streamlined automation and genuine humanization will help drive customer loyalty and satisfaction.
- The successful travel company of tomorrow will develop the deepest customer relationships
In today’s hyper-connected world, brand loyalty doesn’t last as long as it used to. You have to find ways to keep your customers constantly happy and engaged. In fact, according to Gartner, 80% of future profits come from 20% of your current customers. The need to maximize customer loyalty, therefore, is absolutely paramount. There are two parts to this: structural and emotional. The structural element of ensuring customer loyalty has to do with the tools and technology you use to enable your customers to have a painless, consistent experience, while the emotional part involves creating a sentimental connection with someone (through inspirational content, empathetic customer service, exceptionally customer-centric operations, etc.). The successful travel company of tomorrow must optimize for these two elements. Leverage the latest technologies to offer your customers an effortless, highly personalized end-to-end experience and explore ways to develop deeper emotional connections in order to compel repeat demand.
While these were three of my big takeaways from the discussion, we also talked about the overall future prospects of the travel industry, and this CEO is extremely bullish. He sees the travel market as having huge growth potential—perhaps more than any other industry.