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Reaching for the sky with social media

February 26, 2012

It is a rare day when some airline somewhere does not get flak for a range of woes, real and imagined, felt by customers. Often overlooked is the regularity with which ill-behaved customers  set about ruining the service experience for both the airline and other passengers as is documented in a Wall Street Journal report headlined "Cracking Down on Crime in the Skies". Even more welcome is the rare customer service initiative that attempts to crack new frontiers. That at least appears to be the case with KLM's (officially known as Air France-KLM since the 2004 merger) recent announcement.

In announcing KLM Meet and Seat, the airline attempts to take the use of social media including networking sites like LinkedIn to new heights with perhaps considerable potential for similarly situated industries like hospitality. The airline's website promoting the initiative notes that  its  "Meet & Seat lets you find out about interesting people who will be on board your KLM flight such as other passengers attending the same event as you at your destination." 

While pointing out that their offering is the first of its kind, KLM asks passengers interested in partaking of the feature to  share their Facebook or LinkedIn profile through the "manage my booking" function.  They could then check the profile details of other passengers to see where they will be sitting while also choosing their own seats. By looking at the profile details of others who have consented to being a part of meet and seat, passengers could choose to sit next to someone with similar interests and/or work. 

Privacy advocates may be leery of the offering but there seem to be adequate safeguards on tap including an assurance from the airline to not use the data for any other purpose much less give it to third parties. The settings also allow prospective passengers to limit the amount of detail on their social media sites visible to fellow passengers. Further, all data is erased 48 hours after departure.

The potential for hospitality is self-evident as F&B in particular could stand to benefit from guests at a hotel, particularly large convention and resort hotels, where folks with similar preferences may look to spend an evening with or even share an activity with fellow guests.  Obviously, there is no compulsion and those who value their privacy after work could ignore the feature.

Real time deals and irrational consumers

February 19, 2012

Two recent though disparate developments affecting consumers could enable marketers across diverse fields to better attract the attention of consumers' whose behavior is even labeled as "irrational" by some researchers.

The Huffington Post has an article from the Yale Center of Consumer Insights saying that the received wisdom of economists and marketers has "long assumed that potential customers rationally weigh the costs and benefits of every possible choice before deciding what to buy" needs to be turned on its head as "recent discoveries in behavioral economics and psychology demonstrate that consumers seldom behave rationally, meaning that neat frameworks are not, in fact, useful for predicting consumer behavior."

Among the pointers to look for per the Yale Center is a need to factor in environmental stimuli which "can have a more powerful impact on shifting shopping goals than previously understood". Yale offers the example of upscale department store Nordstrom, which works hard to provide cues to shoppers whose goal is luxury. Nordstrom's fashionable settings, attentive service, classical music and other factors are all aimed at putting consumers into a goal-oriented mindset as they shop. Environmental stimuli like these help shift consumer mindsets that carry over into their purchase decisions."

Another aspect to consider per Yale is exemplified by the differences in the way a browser and a buyer or consumer considers an object or service to buy. The former is deliberative taking costs and benefits into account while the latter is subject to "shopping momemtum" meaning the decision to buy has been made but could be persuaded to get on a shopping roll by "creating compelling front-of-store displays that offer "no-brainer" items for purchase. Placing  complementary items nearby also ensures momemtum. The Center also urges marketers to pay attention to the "psychological" distance from the time of purchase as a central or core message resonates better the further away the consumer is from the moment of purchase as opposed to "peripheral" marketing claims when they are close to that point.

Such seemingly fickle and fast changing momemtum in consumer behavior perhaps underlies Groupon's recent purchase of Hyperpublic, a company that builds databases of local information and provides locations and daily deals to marketers. As the New York Times blog reporting on the deal notes "figuring out how local markets work and using public information from the social Web to understand consumer habits and interests is becoming a hot area for many companies. It’s not hard to imagine that Hyperpublic would be able to help Groupon better target subscribers in some of its coming products.  Groupon Now, a soon to come service that lets users see deals happening in real time, based on their location is expected to be a significant beneficiary. 

Similarly the hospitality industry, racked by a continually deal conscious consumer, just saw the launch of a "Deal Distribution System" which allows for flash selling and equips hoteliers with a powerful new tool to effectively drive real-time bookings or confirmed bookings, which allows hotels to better manage their revenue optimization and margins. While it undoubtedly will move "excess" inventory and provide real time deals it is unclear that it, like most real time deals, will be earnings accretive.

 

 

Consumer disloyalty: on the ascent?

February 11, 2012

Last week Time magazine ran a story based on Accenture's 2011 Global Consumer Research Study headlined "Most Consumers Switched Service Providers in 2011" and went on to suggest that "if you stayed the course last year and never switched banks, wireless companies, pay TV services, or any other providers, then you’re in the minority. And if you actually feel “very loyal” to your providers, then you’re part of an even smaller minority." 

Accenture's survey zeroed in on "five blind spots" that could "predispose" customers to being a rolling stone.

    - Missing the chance to set the right expectations at the onset of a customer relationship.

    -Not noticing subtle changes that matter to customers' need for recognition, special treatment and reward.

    - Failure to offer consumers opportunities to engage with a provider

    - Relying on technology point solutions to satisfy and keep customers.

Accenture's suggestions to improve in these areas are largely intuitive and self-evident but nevertheless, missed by a surprisingly large number of companies.

Time's article did not mention hotels or airlines but Accenture had included them in their study and the findings with regard to these two industries were, unsurprisingly, not substantially different to any of the eight other industries included in their survey. Only 23% of survey respondents participated in at least one hotel or airline loyalty program. Similarly, the percentage of respondents who stuck to their hotel or airline loyalty program came in at 53 and 51 respectively.

An area not covered by Accenture is the tendency to change goal posts in loyalty programs. Airlines are arguably the most notorious in that area. What were formerly 120,000 mileage award tickets now "cost" the customer 350,000 miles in the case of one leading legacy carrier. (Accenture suggests "rearchitecting programs to stagger promotion to elite levels.)  And that does not include a raft of taxes and service fees that were conspicuously absent a few years ago. Some of the big hospitality players too practice that dodgy art by changing requirements for attaining premium levels.

Time ascribed the disloyalty on the part of US consumers  to their being "commitment-phobes". A phobia stemming from economic uncertainty resulting in renters rather than buyers of housing, lessees instead of buyers of automobiles and, in general, consumers who who abhors long term contracts in a range of consumer necessities such as banks, cable companies and wireless providers. Maybe so, but that is the new reality across industries not only because of financial uncertainty but also because of a continual flow of new entrants whose expectation levels are different when the select few were able to partake of heretofore luxuries.

Via Brazil: the inbound travel traffic jam

February 05, 2012

Last month the US announced with much fanfare an initiative to hasten the visa process for the burgeoning middle classes of China and Brazil. While both countries have seen increased outbound travel to the US it is, more often than not, despite the efforts of the US government and even private sector initiatives like US Travel and Brand USA

Unfortunately, anecdotal evidence gleaned by interacting with tourism professionals, particulalry journalists, in Sao Paulo and Rio reveals continuing frustrations at the many barriers thrown the way of the nearly 100 milion strong Brazilian middle class most of whom are well disposed to traveling to the US.

The common refrains include interminable waits for a visa interview (can be 2 1/2 months in Sao Paulo), long distances to one of five far flung consulates/embassy (the contrast with 9 consulates for France, a visa waiver country is telling) and the inability to transit via the US onward to other destinations.

The 2003 US decision to suspend (TWOV) Transit-Without-Visa indefinitely has proven to be a boon to Canada, Panama and Punta Cana in the Dominican Republic resulting in lost revenue both from transit activity and potential visitors and spawned websites that cater to these transit points.

The supposed public-private initiatives manage to fall short despite increased resources. Fees from visa waiver countries along with funds from the private sector helped form the Corporation for Travel Promotion re-christened after a year as Brand USA. But the new sobriquet has done little to take in Brazil as its website for customers, Discover America , has no language options for either Portuguese or Chinese while having the old staple of Japanese, French, German and Spanish. US Travel, the travel industry's umbrella association has long pushed for visa free status for Brazil and Chile to no avail but here too international efforts seems sparse with representation only in 3 countries including Brazil but none in China.

Meanwhile, other developed countries like the UK, New Zealand the Schengen visa zone have all attempted to fill the gap by offering visa-on-arrival status for Brazilians.

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    Member of the board of Directors - Hotel Association of New York.


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