5 MINS READ
INDUSTRY
Travel and Logistics
Data and AI in Travel Industry for a Memorable Passenger Experience
Highlights
- Customer preferences have witnessed structural changes. Customers now want to feel valued, and they expect a digitally oriented experience.
- Travel companies have, however, achieved only incremental benefits through their investments in customer experience, hampered as they are by structural challenges.
- Exponential improvements in customer experience are only possible if they adopt a comprehensive, customer-centric design approach and fix structural issues while embracing new technology paradigms.
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Travelers now reengaging with the world
The travel and tourism industry has been a hotbed of customer-focused innovation since the entry of brands with disruptive propositions, such as Booking.com, TripAdvisor, and Airbnb.
As customers of what was traditionally a people- and service-centric industry, we found ourselves facing new digital interactions with our hotels, hire-car companies, and airlines. Travel brands began to curate customer experiences and services that felt more relevant and meaningful.
This all ground to a halt in 2020 when we were confined to our homes, staying safe and hiding away from the global COVID-19 pandemic.
‘Customer experience’ is not a new concept, but getting it right is more critical to organizations than ever, especially in the travel industry. There is a huge pressure for revenue growth to recoup losses, whether by acquiring new customers or via additional new revenue streams; heavy competition for the loyalty and retention of returning customers; as well as pressure to improve efficiencies and cost to serve.
Airlines, hotels, and car rental companies have enjoyed a rapid return of demand over the last year. Still, there have been significant challenges to ramping up supply to meet this sudden, exponential increase in demand for flights, hotel rooms, and for-hire vehicles. The result has been painful customer experiences for the traveling public.
As customers sought to reengage with the world, their experience expectations simultaneously continued to rise. They were driven by the convenience provided by sectors such as retail that were less impacted by COVID-19 and by the rapid digitalization made necessary by the virtual lives the pandemic enforced on us. The retail industry acclimatized customers to contactless digital interfaces that were more seamless than before, giving them the option to select the engagement channel or touch point of choice and delivering experiences that were more convenient and expedient than we’d known up until then.
Also, experiences are now more personalized and anticipatory across the entire customer journey given the huge amount of personal data now available.
Travel companies, however, are facing challenges not only from disrupted workforces, inflexible legacy systems, and unpredictable growth in demand but also from the customer experience bar that has moved higher.
Customers still don't get the travel experience they expect despite neat innovations like Delta’s PARALLEL REALITY™ now live at Detroit Metropolitan Airport, where displays allow up to 100 customers to each see their very own flight information on a single digital screen all at the same time. So, for example, they still look for:
- Real-time information and notifications
- Connected experience across all channels and touchpoints
- Unified payments
- Ability to self-serve anywhere, anytime
- Seamless and anticipatory disruption handling
Limited benefits to customers
Travel companies have invested in capabilities to enhance customer experience.
But there doesn’t seem to be any real improvement for the customer or the business as it does not derive much benefit from the investments because of a host of factors:
- Limited applicability of loyalty programs in customers’ broader lifestyles
- Key data points related to the customer journey are missing in the personalization drive
- Direct distribution channel (DTC) not scaling up to address the travel needs of all segments, such as corporate
- Limited segmentation of customers
- Lack of recognition of events that trigger higher customer value
- Ancillary sales more focused on revenues than convenience
Longstanding players in the travel industry have been hampered by structural challenges that restrict their ability to enhance customer experience beyond incremental tweaks or removal of isolated pain points. These structural challenges are a barrier to the improvement of the experience for customers. These include:
- Inconsistent personalization across all touch points caused by business siloes
- Third-party sales making up the bulk of travel purchases
- Legacy systems limiting means of engagement with the customer
- Common use environments restricting information to channels
- Lack of influence over end-to-end customer experience that straddles many providers
Building delightful experiences
Travel companies must take multiple actions to get ahead of the curve in delivering world-class experiences that customers now need and expect.
They have to not only fix the basics but also curate delightful experiences. It can be difficult for customers to be receptive to new, shiny features when the basic levels of service and experience are not functioning properly. Travel companies should, therefore, focus on:
- Foundation experiences: Basic customer expectations continue to grow. However, there are certain non-negotiable hygiene factors that need to be delivered:
- On-time performance
- Real-time information
- Data privacy
- Consistent experience
- Enhanced experiences: Beyond essential elements, other experience enhancements should include:
- Proactive notifications
- Pre-emptive journey recovery
- Seamless hand-offs across touchpoints
- Personalized and contextualized communications
- Recommending partner products
- Continuous engagement
- Delightful experiences: There are elements of a customer’s experience that can drive greater engagement. Customers are open to:
- A continual but relevant dialogue across all channels of choice
- Go-to travel advisors
- Single shop for door-to-door journeys
- Rewards and benefits across multiple complementary partners
How to improve the traveler experience
Whether it’s growing revenues from new customers or improving retention, a clear line of sight to outcome is fundamental to any digital or technology investment.
If investments are made to implement a particular solution rather than designed with customer outcomes in mind, then customer experiences are unlikely to improve fundamentally.
- Know your customer (segment) better:
Armed with more and more data, there is no excuse for travel companies to not deeply understand existing and potential customers. Organizations also need to rethink customer segmentation—for example, the traditional approach of focusing on high-value business customers is becoming outdated. According to industry studies, 50% of the travel industry spending power comes from millennials. So, in providing experiences to acquire new customers, organizations cannot ignore this important group. Creating a personal connection with any customer requires defining segments that describe people in multiple dimensions that influence their travel behavior, right from ‘dreaming’ to ‘planning’ to ‘booking’ to ‘experiencing’. These dimensions or variables could range from their psychographics (such as their personality, lifestyle, interests, opinions, attitudes, beliefs, and values) to the value that the business derives from that customer group. - Design with the customer in the midst of the journey:
Technology solutions enable organizations to deliver an experience or proposition to their customers. The solutions must be designed with the customer in mind if the experience is to be frictionless, relevant, anticipatory, and connected. This means there are journey mapping and human-centered service design techniques at play. A greater focus needs to be on the human and digital collaboration and the roles that each touchpoint, and, therefore, each solution, can play in the journey. Organizations should, for example, determine what can benefit from automation and what needs a human touch. - Align the organization and solutions around this experience:
Creating these enhanced experiences requires organizations to place data and technology at their core. This likely means building some degree of machine learning and artificial intelligence into the mix, given that data enables them to create more relevant experiences. Once the customer-centric design has been created, required capabilities need to be mapped and assessed for maturity. Not just technology and data but also people, processes, KPIs and ways of working need to be aligned to be able to deliver this new customer experience design. - Adopt ‘test-and-learn’ ways of working:
Agile isn’t just a technology process. It should be a modern marketing and business approach. Creative processes with long lead time and traditional approval dynamics are constraining. An agile way of working built for speed can unleash multidisciplinary skills, empower teams to drive test-and-learn approaches and make faster decisions. This means real-time, data-driven decisions, continuous consumer listening and demand detection, and, operationally, rapid decision cycles and more engagement across various silos of the business.
Push the boundaries, offer new experience
Travel companies have thus far provided only incremental benefits through investments to improve customer experience.
Exponential improvements are only possible if they adopt a comprehensive approach to fixing structural issues while embracing new technology paradigms to match the expectations of an increasingly digitally savvy customer base.
Customers want to feel valued, so they expect a digitally oriented experience that treats them that way. Brands need to focus on coming up with solutions and pushing the boundaries with experiences that are better than their last. The best way to do this is to take a customer-centric design approach.
