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