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Archive for the ‘The Offer’ Category

More than 90 people converged on Miami earlier this month for the Farelogix “Controlling Your Offer Symposium”. This was the industry’s first event dedicated to technology for airline-controlled offers, and it was a huge success. Attendees included senior executives from 23 airlines, representing IT, revenue management, pricing, e-commerce, merchandising, and NDC/distribution.

The event kicked off with our CEO, Jim Davidson, explaining that the offer is a virtual, electronic contract between an airline and its customers. An offer is unique, dynamically created in real time, and relevant. And since most airlines today do not control the offer, they cannot guarantee the price of an offer in search until later on in the process. The big takeaway for attendees was that it’s really hard to stand behind an offer if you don’t create it.

Henry Harteveldt, Principal at Atmosphere Research Group, spoke about activating the offer and its role in distribution and revenue management. He explained that airlines are “doing business in the era of Beyoncé, but are constrained by Beatles-era technology.” He discussed the factors enabling a new era of active retailing, and in particular focused on the importance of mobile as both a channel and catalyst for building better relationships between consumers and airlines.

Mike Wittman with the International Center for Air Transportation at MIT focused on the science behind the offer and dynamic pricing. He explained that dynamic pricing goes back to “who’s asking” – looking at everything from the point of origin and search pattern to frequent flyer number. He also examined the role of offers in driving revenue gains, increasing yield, reducing load factors, and more.

Scott Garner, President, Data & Analytics at ADARA enlightened attendees on the Traveler Value Score, a powerful new metric that accurately assesses the customer’s potential value as a traveler. Following an overview and then live demo of the next generation Farelogix pricing, merchandising, availability calculation, and schedule building engines, spokespersons from American Airlines, Air France-KLM, WestJet, Emirates, and United shared their stories of innovation after taking control of their offers.

For a quick glimpse into the Symposium, watch our recap video:

Thank you to everyone that took the time to attend our event.

We look forward to seeing you again soon!

Previously, I discussed that airlines must be the single source of truth. The question is how do you get there?

Existing airline technologies and processes are perhaps the biggest challenge. Legacy systems and ideas were not designed for this new world of hyper-connected customer relationships. Just think about it – data is not integrated with the pricing engine; control of the offer is outsourced to the PSS or GDS; and there’s no dynamic pricing. IATA’s New Distribution Capability (NDC) to the rescue!

The hyper-connected relationship demands personalization. But the reality is that your airline might have some great CRM data, or maybe even some good analytics and propensity scores – but how do you integrate these into the pricing engine that creates your offer when it’s sitting at your PSS and outside of your control?

What about Dynamic Pricing and the new science of Revenue Management? I know some of you who live and breathe this stuff are mumbling at me right now or thinking: “Gee, everything you’ve said sounds great, but it’s not reality! We live and breathe filed fares, 26 inventory buckets, and pricing engines that can’t possibly handle the billions of requests of the hyper-connected consumer! Get real!”

Yes, yes, I hear you and yes, that’s a challenge.

In some cases, the airline is still outsourcing these essential elements to a third party – if not the GDS, then the PSS. And if it’s outsourced, guess what? You’re on somebody else’s product roadmap, not your own. That’s a problem.

And how about the airline as the single source of truth? This is where NDC and all the work that has gone into it comes into play. NDC is a giant leap forward in solving that challenge.

So how does an airline get control? Game-changing, transformative innovation! For example, Farelogix provides technology that enables better revenue management – from filed fares to dynamic pricing. Our next generation offer engine optimizes all aspects of the offer including merchandising, pricing schedules, and availability. And of course, artificial intelligence and predictive analytics will soon be the new normal.

I think Henry Harteveldt of Atmosphere Research put it best: “Dynamic pricing will require the ability to conceivably create and publish endless prices/offers in a frictionless manner tailored to a customer of one.”

As long as you remember that you and your airline are the single source of truth for your hyper-connected travelers, we’ll get there together.

To succeed in today’s hyper-connected customer environment, you must be the single source of truth, dynamically determining and delivering your best offer, in real time, through any channel.

What does this mean?

It means that you – and only you – must create your offers. You can’t outsource it to anyone. You create offers based on your knowledge of your products and services, knowledge of your customer, and strategic use of big data and predictive analytics.

Then, you deliver that offer to all the channels and points of contact with your traveler so your customer knows that no matter how they interact with you, it’s still the same relationship. They can rest assured that you will be consistent. In other words, you are the single source of truth.

If you don’t step up to this challenge, you will fail. If you delegate the creation of your offer to a middleman, your consumer relationship will be faulty and – you will fail. This is the competitive terrain we’re in now. It’s the world of the hyper-connected consumer. Consumers today are hyper-connected because they want to connect to the source – and that’s you.

The New Science

 Dynamically creating and controlling the offer is the new science of Airline Revenue Management. In a study published last year, Atmosphere Research Group reported that airline executives see that the impact of Dynamic Pricing and Predictive Analytics will drive the biggest change in their distribution strategies. There’s a reason why scientists at leading universities around the world are being recruited by airlines to help redefine how they create their offers.

This is the way our industry – at last – is transforming into the world of retailing. Without question, this is the single most transformative time since the Internet was created. It’s not going to be easy and we all know why.

In my next post, I will address the challenge that airlines face in becoming the single source of truth.

 

In my last post, I told you how technology is changing your conversations with hyper-connected customers. I also promised to tell you what your biggest asset is.

You might think your biggest asset is your airplanes, or your people, or your newest business class seats. But no, the most vital asset that any of us in the airline industry have in our relationship with customers is “The Offer.” Without the right offer, nobody buys and nobody stays loyal. Without the right offer, you lose the relationship and the revenue.

The offer is what flows from you to your customer throughout this conversation and this relationship. The offer is truly your biggest and most important asset.

The concept of an offer is not new, of course. Offers have always existed. But in the past, an offer was a price on a product or service, and everybody who came to shop in your store – or even your website – generally saw the same prices or close to the same prices as your competitors.

Today, the offer is complex. In fact, its every bit as complex as the customer relationship you are in now. Every offer needs to be personalized and optimized – created specifically for a specific situation, person, product, and service. In other words, every offer is unique; just like people are unique in their own ways; just like every customer you have is unique. You could even say the offer has its own anatomy, or DNA. Every offer is unique and created dynamically in real time.

Think about it this way. Every single time you interact with your customer, a new strand of DNA – a new offer – is created. And what goes into the manufacturing of this offer? A lot!

We’re talking about Merchandising, Dynamic Pricing, and Predictive Analytics. We’re talking about loads and loads of data! There’s customer data – things like demographics, shopping and buying history, and loyalty. There’s data about your products and services. What’s the aircraft or the load factor on the flight, and how many premium seats are left? These might impact what you offer and for how much. There’s also data that comes from Predictive Analytics. What is this traveler’s propensity to buy this particular product?

All of this data is assembled and analyzed, and an impactful offer is dynamically calculated in real time. Hopefully, this unique offer delights the traveler and makes you some money in the process. This is the future of Revenue Management, and it’s the holy grail for the world’s leading airlines.

And guess what? Nobody except you – as the supplier with access to all of this data and intelligence – can ever create an offer this good or this impactful. You can’t outsource this to a third party or a GDS, or even a PSS – because they don’t have all the data! They are not in this specific, hyper-connected relationship. It’s you, and only you, creating your offer – your biggest asset. Think about it!

Of course, you can also request an invitation to attend our exclusive event dedicated to technology for airline-controlled offers in Miami, Florida, April 5-6, 2017. Visit farelogixoffersymposium2017.com/ for more information.