Airline revenues could soar with better merchandising

Airline executives have even more evidence that there are opportunities to improve their digital customer experience and, by default, improve their revenue performance. A new Datalex study highlights a clear gap between how consumers see the online travel retail experience and how airlines see themselves. Tellingly, only 11% of consumers think airlines are ahead of other online retail experiences. This is compared with 24% of airlines who think they're ahead and another 60% who think they are at least on par.

These perception gaps are important because they result in substantial revenue leakage for airlines that are not enabling best-in-class merchandising across all distribution outlets where their content is presented.

A universal truth in merchandising is that visually compelling displays of products and services will generate better engagement and revenue performance than commoditized displays focused solely on price. Consumers vote with their wallets, and they want more control over their travel experience. They want transparency, options, and a clear understanding of what their travel experience will be under different purchase scenarios.

When presented with a shopping experience that is merchandized well, consumers choose the products and services that best fit their desired travel expectations. Those choices benefit the airlines, as airlines with enhanced visual merchandising realize better branded fare upsells and the attachment of ancillary services than those airlines who do not.

On the other hand, when presented solely with a price, a schedule and a logo, consumers look for value and spend less, or they select competing offers with more compelling merchandising.

ATPCO has worked with travel retailers on a global basis and the feedback is consistent - they realize better revenue performance and customer satisfaction when they present rich visual content, like pictures, icons, tours, etc., compared with presenting only price and schedule.

Product investment paradox

For most things sold online, the customer experience follows a standard playbook - vivid, engaging pictures of the product, ratings and reviews, price comparisons, easy checkout, payment options and online exchanges or returns. The same can't be said for the airline purchase journey.

Let's use a simple example of the construction nail. On Home Depot's website , a customer doesn't just get a written description of the product and a price, they get pictures, they get a full 360-degree view of the nail, full specifications, ratings, reviews, the list goes on. All of this for a piece of metal that costs as much as the box that it comes in.

Compare this with the average airline shopping display - no visuals, no 360-degree views of the aircraft cabin or airport lounge, little to no visualization of the travel experience or differences between branded fare product offerings, and no ratings or reviews. The lack of investment and meaningful change in the airline shopping display is disproportional to the investment in designing, building and presenting those airline assets to the customer.

The price of the airline products is 100 time or even 1,000 times that of our construction nail, but nails are better merchandised than most airline products. What can we learn from the nail merchandisers?

Customers want more. ATPCO’s research shows consumers want to better understand what they are buying. They want more control over their travel experience. They want more imagery of what they can expect during their journey across the travel ribbon. They just want MORE! The majority, 86%, are more likely to book if they see targeted visuals, with imagery of the seat itself as the number one consumer request.

The good news is that airlines have options. The implementation of a compelling branded fare strategy is a great start. Using a simple good-better-best grid approach, airlines can effectively help consumers feel more comfortable with their options. Since 2017, ATPCO has seen a 218% increase in the number of airlines leveraging branded fares strategies to improve revenues. But there are still over 200 airlines that have not joined this proven revenue optimization game. What's more, travel agencies that integrate branded fare data with relevant and compelling visual merchandising have recorded a 35% increase in upsell performance for airlines that are actively merchandising ancillaries and flight options compared with those who rely solely on displaying the price.

The airline industry has invested billions to create and offer a compelling brand and travel experience. How is it possible that the most important step in monetizing these investments gets the least attention when it has the most impact on the airlines return-on-investment? There is a big opportunity for airlines that use customer preferences to merchandise the flight experience.