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we're here with Raj sivakumar who is
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head of travel technology and strategy
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at wns global services and Peter fader
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wharton marketing professor and most
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recently co-director of the wharton
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customer analytics initiative welcome to
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both of you thank you so we're gonna
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talk about hotels and online travel
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agencies and first of all can you tell
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me what travel agencies both traditional
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and online are doing now in analytics to
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understand their customers better and
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what business opportunities does this
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represent thanks Jay probe travel
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agencies and the large intermediaries
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such as of OTAs are becoming
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increasingly savvy at applying customer
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analytics you know in order to enhance
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their own own business as well as
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enhance the customer experience just to
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give you an example you know they you
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know this first of all everything starts
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with the data collection right and
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they're getting increasingly good at you
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know knowing the customer knowing the
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customers profile okay where they are
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booking from and certainly you know the
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advances you know the the the geo
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locations and such is helping the
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process right and the data collection is
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becoming richer and richer and because
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of the nature of the booking process
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okay they are also able to collect
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traditionally used to call it keystrokes
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now these are clicks they're able to
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collect how far into the customer
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progress you know in their booking
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process you know before they walked away
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you know did they just look for
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something did they go all the way up to
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the payment screen and then they walked
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away so you have all this rich data
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about customers and how far they vent in
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their booking process and thirdly the
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OTAs and the travel agents have an
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advantage that even the airlines don't
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and that is they're able to understand
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the entire ecosystem of customers travel
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so as an example if you go to a large
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your key nowadays you can either just
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booked a flight or book a flight in a
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hotel booked a flight or hotel in the
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car rental etc so they have this rich
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array of information from the customer
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on what class of customers would rather
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just travel and what caused them to book
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a hotel what caused them to book a car
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rental or any combination
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shin of that right so this again the
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data collection you know is getting
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better and better and better and they're
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starting to use that data to target
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customers with specific offers i would
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say in a way the the large agents have
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taken a leaf out of the airline you know
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who have traditionally been very very
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good at analyzing the customer data and
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they really taken it to the next level
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because they're able to do they're able
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to start investing in that so what
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they're doing is you know and all of us
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have seen this you know with the large
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OTS in particular we get offers okay and
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we get off with hey do this and you get
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this for free whatever the case may be
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and they're getting better that they're
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getting better analyzing the data the
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bettering they're getting better at
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Target offerings for the customers and
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this fantastic they're so smart it's
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it's amazing it's not just out there
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getting more data it's not just
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capturing every click but it's really
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understanding what it means it's really
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understanding almost inside the
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consumers head the process that their
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followers it's not just you know how
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many clicks until they book or they
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leave but it's understanding for which
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kinds of customers do we want to sort
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say the different hotel options on the
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basis of price on the basis of stars are
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on the basis of social recommendations
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so so after you've made a few bookings
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or just even just visits to the site we
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know how to serve up the information for
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you and other customers like you so we
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know how many results we should be
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showing some people get overwhelmed if
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they see more than five other people
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would like to see more options we know
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which sort order to use we know which
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filters to have on the left side so the
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idea of customizing the experience and
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not just the the overall you know a
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travel experience itself but the
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experience that leads to the travel I
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think it's been one area where the OTAs
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have been a way out there on the leading
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edge and it's been great to see among
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other things the way that they've
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embraced a lot of academic work in order
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to run experiments and do the right
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kinds of data optimization and so on to
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become smarter about it I think though
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the best is yet to come what are some
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best practices that OTS need to follow
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in your opinion um just to pick up on
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what up what Peter said
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I think the the OTS have an incredible
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opportunity to understand the
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unconstrained customer behavior okay so
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it's not only you know when you look at
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the airline for example all the airline
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gets to see is sort of the flown pattern
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if i can say that okay but what the work
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is get to see is what led the customer
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to make a decision whether to book or
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not to book and with that opportunity
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also you know comes a responsibility you
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know on on the other part of the work
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lace on how do they maximize and for
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their own you know for their one good as
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well as for the customers benefit how do
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they maximize the value that they
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provide to the customer in terms of
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targeting the customer in a way the
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right offer okay offering the customer
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the right value okay and perhaps even
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partnering with the airline okay in
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terms of you know what is it that the
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airline could be doing or what is it
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that other players in the ecosystem
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could be doing in terms of positioning
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their product we enhance the experience
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for the customer and this is really
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advanced and clearly we're not there yet
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okay but you know and unfortunately you
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know a lot of instances there's a bit of
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an adversarial relationship you know
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between the different players in the
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ecosystem but given that the OTS are
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really the fulcrum where they they're
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able to get the vantage vue of a
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customer from you know the multiple
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components of the travel ecosystem they
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truly have an opportunity to put all
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these pieces together okay and be a
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leader you know when it comes to
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understanding the customer and
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prescribing to the other players in
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vehicle system what what could be done
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we increase the value for everybody I
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just want to add one word to what Raj
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said and that's experimentation the OTAs
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on one hand is a problem they're facing
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so many different sources of variability
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so many different options that a
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customer i want to see but that creates
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an opportunity so let's go out there and
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and very different offers let's go out
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there and very the look and feel of the
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website let's go out there and very as i
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said a moment ago the way that we sort
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the different options that are made
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available to the customer let's do this
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in a systematic way let's have control
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groups let's let's not only run this
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experiment today let's think about based
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on the result of this experiment what
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experiments are we going to
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next so we see a lot of leading-edge
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work there in order to really embrace
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all of that variability and as Roger
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said to not only do a better job for
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themselves but then become even more of
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a thought leader throughout the entire
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ecosystem to pass some of that knowledge
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to some of the partners that they work
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with so travelers like to compare prices
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online but once when it comes to
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actually booking something they tend to
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go with the companies where they have
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loyalty programs so what can I TAS do to
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enhance their customer brookings this
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has been one of the most fascinating and
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one of those well cited papers that I've
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ever written paper that I wrote oh
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goodness 15 years ago when all of this
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was just starting when the whole
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internet thing was just taking shape we
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were throwing around words like hyper
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competition frictionless commerce
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disintermediation and we figured that by
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say 2016 2017 everyone would be pricing
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it cost but that's not the case one of
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the things that we observed just as you
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cute it up in the question Deb is that
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there's there's much less search going
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on than there should be if people were
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rational if markets were efficient then
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then customers would be searching every
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possible option to find the best price
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but we find out that there's a lot more
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stickiness in the system and here's the
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question why do we have that stickiness
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is it because the loyalty programs exist
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is it because of true loyalty that that
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a lot of customers feel that they just
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can't abandon certain OTAs or travel
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providers is it laziness so there's a
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lot of different reasons why and that's
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part of the research that I do is to try
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to sort out in which cases is it true
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loyalty or is it that you feel held
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hostage because you've accumulated so
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many points and you better stay there
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I'm or is it in some cases just laziness
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and i found an offer it's good enough
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I'm moving on so to understand those
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sources of stickiness and and how it's
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going to vary from different kinds of
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customers and then very importantly how
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it is that companies can both create it
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and leverage it to understand that the
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people aren't going to search so broadly
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so maybe we don't have to compete on
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price maybe we can compete more on sir
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service and selection and quality and
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convenience that price is as Raj likes
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to say all the time just a trade-off
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attribute it's not even necessarily the
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number one attribute and so in a weird
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way if we can be a true trusted advisor
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to the customer then then then search is
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a bad thing we want them to search less
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we want them to know that they're going
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to get a pretty good deal not just on
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this trip but we're going to survive
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surround them with a variety of other
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products and services so search is just
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kind of the tip of the iceberg about all
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this stuff that we call customer
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centricity and some of the strange
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surprising results that we've seen for
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it I think shows the power of loyalty
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and customer centricity and just try to
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what Peter said you know at the end of
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the day that customers are going to go
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through each step for their transaction
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where they see the value you know
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clearly they they come to the OTAs you
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know because they see the value in
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shopping and they go to the you know
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they take the effort of going to an
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airline website okay to make the booking
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because they see some value you know the
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in doing that part of the transaction
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despite the additional effort that is
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involved what do you have an opportunity
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you know to create value you know they
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have an opportunity you know and like I
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said before they are at the fulcrum
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where there's different components of
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the travel ecosystem come together okay
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and it is incumbent upon the oth to find
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out how to make sure okay that the value
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is generated all the way through the the
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transaction and not just for the search
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purposes and also you know the act of
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moving towards an airline for booking
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you know its geographic okay no the lot
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of this happens in North America okay
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but where does him you know when you
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look at Asia uncertainly Europe okay the
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transaction is completed on the oth sir
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okay and it goes back to understanding
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the customer okay and another day you
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know the customer why is the customer in
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North America going to an airline to
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complete the transaction was the
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customer in Asia and Europe perhaps
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staying in the roti so the data is
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available okay it's up to the you know
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the right people to do the right kind of
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analysis to answer that question so
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hotel chains would like to maximize
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their marketing return on investment
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through analytics so how can they use
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analytics to manage loyalty tears more
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effectively
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me it starts with customer lifetime
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value that in the old days before we had
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the kind of data before we had the
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analytical capabilities it was here's a
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guest let's just figure out what's the
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right thing for the guests and they were
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again faceless nameless undifferentiated
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entities but today based on collecting
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good data on having really good CRM
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systems and the ability to draw insight
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from it we can understand who are the
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customers who not only have been really
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valuable to us but based on on using
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analytics like customer lifetime value
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we can project how much more value they
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have in them and we can start to treat
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them a little bit differently maybe have
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a little bit different line for check-in
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put them on a different floor give them
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different kinds of services or maybe
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even be a touch more responsive for them
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than we be for other customers there's a
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lot of industries that have been kind of
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hesitant to do that they didn't believe
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that they could really see the
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difference across customers and they
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also thought that it would be both too
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difficult too expensive there'd be too
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much of a backlash if they treated
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different customers differently we're
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starting to see hotels really starting
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to embrace these ideas quite well and to
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recognize that there really are
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different tiers of customers not on the
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basis of demographics but on the basis
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of genuine value and so to embrace that
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more and more and to really build the
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business around those differences across
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the customers I think is the real path
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to the future and they're off to a good
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start and the hotel loyalty programs I
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would have actually even higher
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possibility you know for success than
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and airline likely programs if you think
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about it for a couple of different
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reasons because of the nature of the
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business the hotels have an opportunity
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to create even more of an emotional bond
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you know with the customer as opposed to
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just an airline you know because the
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only thing that happens in their line is
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you know you sit in the seat and go from
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point A to point B secondly they the
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hotel's unlike the airline's they have
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multiple brands okay so depending on the
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travel needs of the customer they're
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able to say you know you know we can
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target you with specific offers on the
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specific brand you know for a specific
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location the opportunity is there and
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you know the concept behind the loyalty
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program is the same everywhere it
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increases the stickiness and it also
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gives you a higher share of the wallet
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and you know so if the holders can tap
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this right they have an incredibly rich
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possibility you know of leveraging even
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more or the loyalty programs than what
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they are lines do and they're starting
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to do that long way to go but the
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opportunity is clearly there
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you
