Next competitive battleground for airlines lies in staging personalized experiences
How do economies evolve?
The entire history of economic progress can be recapitulated in the four-stage evolution of how people travel from point A to point B. In the agrarian economy, people walked or used animals such as horses to get around, which was cheap but time-consuming. As the goods-based industrial economy advanced, people started using trains and cars, which were faster but more expensive. With the rise of the service economy, people started using ride-sharing services like Uber or Lyft, which are more convenient and faster than traditional taxis but still come at a higher cost. Nowadays, with the rise of autonomous vehicles, people may soon be able to outsource the entire transportation experience, summoning a self-driving car with a smartphone app to take them where they need to go, without having to own or operate the vehicle themselves. Welcome to the emerging experience economy
Today we can identify and describe this fourth economic offering because consumers unquestionably desire experiences, and more and more businesses are responding by explicitly designing and promoting them. As services, like goods before them, increasingly become commoditized — experiences have emerged as the next step in what we call the progression of economic value. From now on, leading-edge companies — whether they sell to consumers or businesses — will find that the next competitive battleground lies in staging experiences.
An experience occurs when a company intentionally uses services as the stage, and goods as props, to engage individual customers in a way that creates a memorable event. Commodities are fungible, goods tangible, services intangible, and experiences memorable.
Today, every business confronts the fundamental truth that customers purchase experiences, not just products. In a fiercely competitive environment where companies vie for customers’ hearts and minds, businesses must prioritize delivering exceptional experiences that surpass customers’ burgeoning expectations at every stage of the journey to succeed. 78% of millennials choose to spend money on a desirable experience over something material, the trend extends beyond just young people, to every age bracket and socioeconomic class.
It doesn’t matter what industry you operate in, airlines like other companies today, face a key challenge: how to become an experience-based business? How to focus first on the experience travelers have through the journey, from inspiration and planning to post-flight feedback and sharing?
Customers are more self-servicing and demand variety, transparency and flexibility and in order to create a truly memorable, emotional experience for your customers, it is imperative to first understand the pain-points across the customer journey
Travel is an end to-end journey and experience, not a series of isolated moments. Before travel companies can implement CX interventions along the customer journey, they must clearly understand where the customer journey begins and ends. For most travel companies, the customer journey no longer begins when a customer makes a booking or shows up to begin a trip. Rather, it begins much earlier, when customers ask themselves, “Is it safe or enjoyable to travel right now, or should I just stay home?”
So how might we reimagine the customer experience with high ROI, thoughtful touches along the customer journey?
The “Experience Economy” involves considering several important factors:
Expand your view of the ecosystem
Complex network of interconnected and interdependent players that rely on each other to provide air transportation services to customers is apparent in airlines with different players like global distribution systems (GDS), online travel agencies (OTA), airports, aircraft manufacturers, NDCs, Travel management companies, and ground handling companies all play critical roles in this ecosystem. Moving beyond these entities you have other partners such as hotels, car rental, ride hailing, credit card companies which provide value added services that enhance the overall customer experience. In the long term, we believe strategic ecosystem plays & partnerships can provide a source of competitive advantage to airlines
Digital at it’s core
Average customer’s digital savviness has risen rapidly over the last couple years. To succeed in this new environment, companies will need to ensure that their digital channels live up to ever higher expectations. Continue accelerating your investments in technology and step-change the utilization of technology. Meanwhile, travel companies are creatively exploring new digital-media channels to engage customers from their couches. While many travel players use social media and video platforms, some Asian travel companies are successfully leveraging influencers, livestreams, or virtual-reality / augmented- reality tours. The way in which travel is booked and managed through ‘super apps’ like WeChat, might have application beyond China.
Prioritizing automation as a strategic initiative
Goal should be to rethink an outcome that eliminates majority of error prone, bothersome, low-value manual interventions from hundreds of day-to-day processes by relying on automation and digitization. Automation can be looked upon on different functional areas such as to improve efficiencies with streamlining operations of routine tasks such as check-in, document processing, in flight meals, baggage info etc. Accelerated decision making with automated reports, triggers, recommendations and lastly robust integrations built in with partner ecosystem for smooth transitions in customer journeys.
Addressing technical debt through deliberate actions
Despite being one of the most technologically advanced sectors in the 1960s, the airlines industry is now grappling with outdated legacy technology that no longer meets its business needs. Technology teams should invest selectively in modernizing the tech stack and software development tooling which allows for quicker iterations, higher deployment velocity, improved resiliency — all these leading to reduced complexity and therefore cost going forward.
Break down cross functional silos
Encourage communication, knowledge sharing, transparency and open communication between different teams such as marketing, personalization, merch, engineering, operations, partnership teams work so there is much tighter collaboration and they are working towards common shared goal of improved customer experience.
To compete in this digital-first world — and effectively deliver a fully connected, customized brand experience — brands must drive technological transformation throughout their entire organization, from customer experience through to operational processes.
Every organization must find ways to connect with customers in a unique, personalized, memorable manner, cutting through the cacophony of the competition. The capacity to deliver personalized experiences that are significant and contextually appropriate is the critical factor that distinguishes experience-oriented businesses from their rivals.
Digital channels should prioritize improving efficiency and speed in processes such as booking, check-in, and baggage handling to save customers time. Physical channels such as airports and lounges should focus on providing personalized experiences and creating meaningful relationships with customers, allowing them to feel that they spent their time well.
In the experience economy, time is a valuable commodity for customers, and airlines must ensure that they provide value in terms of time well spent or time well saved.
The most successful companies that will emerge will have figured out how to re-imagine every touchpoint a consumer has with their brand, delivering an experience-based, emotional connection. These organizations are looking past traditional ways to attract and retain customers and designing compelling, personalized experiences — via advanced technologies — around products and services to better engage.
