take skift
Selling unbundled services does not automatically produce results. As travel brands navigate the path to recovery, a successful add-on strategy relies on a balance of human creativity and machine learning to deliver the right message about the right product at the right time.
Alliance Partners
The travel industry faces many uncertainties – labor shortage issues, inflation concerns and new Covid variants to name a few – but one thing is clear: the future is all about ancillary services. From paying $20 for a late check-out that lets a guest enjoy the afternoon by the hotel pool, to opting for a premium package that includes surf and turf on a cruise ship, the unbundling revolution is spreading, which started on board low-cost airlines, to all parts of the travel industry.
However, putting a separate price tag on each product or service does not mean that customers will be willing to pay for it. Driving ancillary revenue depends on creating the right opportunities and the right messages that resonate with customers at the right moments in their booking journey. It’s a complex puzzle that Allianz Partners, the world’s leading provider of travel insurance, has worked to solve. The company draws on more than 166 billion data points, 2.1 million annual surveys, and a blend of human creativity and machine learning to deliver a superior customer experience with a better choice of ancillary products.
As more travel leaders adopt à la carte product structures, here are five key tips from the Allianz Partners playbook.
1. Think about the emotions of your customers
Begench Atayev, Head of Product Management and Innovation at Allianz Partners USA, spends a lot of time reflecting on data science and the ever-evolving capabilities of Fusion CORE, the company’s bid and optimization technology platform. However, his thoughts on aid are rooted in a more fundamental part of analogous human experience: empathy.
“Even with an ancillary product like travel insurance, it’s important to consider the stages of a traveler’s journey – the emotions they feel during the trip as well as the rational financial decisions along the way,” Atayev said. “From dreaming to planning to booking and the actual travel part, each customer works to meet different needs and address different fears about their trip.”
It’s no secret that many potential travelers get through part of the shopping experience only to change their mind. With the travel industry facing excessive online shopping cart abandonment rates — up to 98 percent for cruise bookings — Allianz Partners is working to ensure customers know their product can help alleviate some of their biggest worries about their travels. Consider the type of security travel insurance can offer when booking. It’ll be easier to get to the confirmation page knowing your money is protected if you miss a trip due to illness or you’re being flown on international trips in a health emergency.
“In travel insurance, we see our offer not just as a product, but rather as a solution,” Atayev added. “We try to understand the characteristics of each trip and each traveler to better understand what concerns they may have during their trip in order to provide the most relevant offer at the time of booking.”
However, it’s not just about generating revenue with an easy-to-add offer during the reservation process. Atayev stated that it was imperative for the recommendation to prove its worth later. “We have to make sure it’s the right solution so travelers are happy when they actually need to use it,” he said. “That makes all the difference in the customer experience. Nothing feels better than knowing that the product you bought actually made your trip better.”
2. Limit the number of decision points
Upgrade to Premium Economy on your flight; Book a sea view room; Pay for your rental with loyalty rewards points and more – there are so many options for add-ons. However, offering too many choices carries a major risk: the customer might decide not to make any choices at all because they are overwhelmed with the number of choices.
“While it’s often assumed that consumers want more and more control, there’s also the heavy burden of decision-fatigue that comes with it,” Atayev said. “Faced with too many choices, consumers often abandon their bookings, either to give themselves more time to reconsider or to look for alternative, simpler options.”
With this in mind, Atayev focuses on providing a simple decision-making process that avoids “throwing them in the sink.” Instead of offering an endless number of options that might hit the mark, he wants to continually experiment and include only a few options – all of which offer personalized value and reduce the decision burden on the customer.
3. Let the context of the journey create a deeper sense of personalization
Speaking of personalization, travel brands are heavily into the concept. However, personalization is not simply about using historical data to tailor an experience to a person. Atayev explained that the details surrounding the current booking – the booking window, the season of the trip, the final destination, the number of travelers on the itinerary and more – are the ultimate factors in predicting what customers really want.
“Personalization isn’t just about the traveler, it’s also about the context of the trip,” Atayev said. “Are you traveling with several children? Perhaps positioning advanced boarding and extra baggage at the right time in the booking could help de-escalate some of the stress created by seat selection. Long waiting times? A perfect time to offer lounge access. Staying in the hotel for four nights with children? Perhaps an offer to upgrade to a junior suite with more living space would be ideal. ”
4. Always optimize
When customers start adding accessories to their shopping cart, it’s not time to celebrate achievements – it’s time to start thinking about how to continuously innovate and improve. Atayev’s team of more than 50 optimization experts works diligently, analyzing data and combing through side acceptance rates to understand what’s important to customers. In addition, Allianz Partners conducts more than 1,500 marketing experiments each year to optimize messaging and timing of offers. The results speak for themselves: Allianz Partners achieves an average year-on-year growth in insurance revenues of 18 percent for its partners.
“We are evolving beyond simple A/B testing and are consistently able to drive unmatched revenue growth and improved customer experiences through an advanced add-on optimization program that leverages machine learning to implement changes quickly and deliver “winning” offers faster promote,” said Atayev. “We are constantly reviewing and updating experiment ideas based on previous experiment results, collaborative ideation, and ongoing customer and industry research.”
5. Let customer value increase company sales
As Atayev’s team analyzes data to optimize ancillary offerings, they focus on answering one question: What can we do to offer value as customer expectations evolve?
“Ancillary services are most successful when they are first approached from the perspective of delivering customer value,” Atayev added. “Not only are there short-term business benefits, but if you lead the way with customer experience, it’s easier to drive customer acquisition and lifetime value. Happier customers usually lead to more sales.”
This content was created jointly by Allianz Partners and Skift’s branded content studio, SkiftX.
