The session was moderated by Steve Dunne, Digital Drums leading the discussion with:
The principal of selling more to an existing customer base is not a new one. From the very beginning of commerce, the idea that offering more to those you already trade with to increase revenue is a foundation stone of businesses innumerable across the globe. Why then is it that a conversation such as this is even relevant to agencies today? Surely this most basic principle of sales is one that has been explored ad nauseam by everyone in the industry?
Well, the travel industry finds itself in an unusual, and potentially powerful position. A perfect storm of factors has meant that a situation, almost unique in recent times, has been created. Many agencies, shorn of resource after two brutal years of pandemic trading, are now finding that as travel returns there is a gap between the resource available to service the volume and the volume itself.
As Suzanne Horner of Gray Dawes Group attested – the coalface of an agency right now is a tough gig. Agents have increasingly complex requirements to service, all the while with less colleagues around to support and deal with the rising volume. Whilst recruitment is ongoing to correct the gap, it would be fair to say that for many, agents are currently having to handle a higher per-capita workload than before the pandemic. This has a number of effects, one of which is that opportunity on a per-enquiry basis to sell more to those customers is difficult to sustain. This is where both technology and data can come to their aid.
The advent of platforms such as Jyrney and Grapevine mean that automated identification and offering of both ancillary (ground transport) and core products (hotels) can offset much of the missed opportunity at the initial point of sale. Indeed, these concepts and technologies would be relevant to any agency, regardless of the state of the industry post-pandemic, as even prior to the impact of Covid-19, the very nature of fragmented shopping meant that if the hotel or ancillary was not purchased at the initial point of sale, often it would not be purchased at all.
Having the capability to interrogate the trading behaviours of an agency’s customer base is now an increasingly important part of the agency architecture. Understanding the current metrics within an agency and knowing what is achievable against them is a critical capability for understanding the overall profitability potential of the agency itself. This has never been more important. Couple this requirement with the fact that data accessibility and connectivity advances made over the last five years means that it is now possible for platforms to enhance the agent’s offering touchlessly. By looking to pick up on the gaps identified in the data, the agency can offer content to customers in a way that allows the agency to fulfil its role towards their customers more completely.
This is a very important point. The pandemic has given agencies a position of power with their customers. They are not just order-takers or booking machines churning through the inbox to get the flight component booked and move on, and never really have been. But what has changed is that they are now visibly valuable points of information, of knowledge and support in a way that is a direct result of the reimagined requirements of the post-covid market. An agency’s stock has never been higher in terms of the potential of the value proposition. Increased complexity of trip borne out of longer itineraries being booked at shorter lead times means that the customer has a greater reliance on the agent to provide a deeper service level through the accurate provision of information such as covid requirement data, sustainability information or risk factors. These are necessary outcomes from market demand that has pivoted towards corporate responsibility as a reaction to the pandemic.
Carbon and risk factors are now key purchasing considerations for a trip. Knowing where your traveller is at all times is now just as important, if not more so for many corporates as cost. This again is an opportunity for the agency to enhance both the partnership with its customers and its own profitability. Increasing the number of components sold per trip has a myriad of benefits, not just to the agency bottom line. It also allows the corporate to attain better compliance to programme, and in so doing increases visibility not only of traveller movement. This in turn lowers risk as each trip component can be accounted for, but also raises the corporate’s ability to better manage their programme. It is a virtuous circle that improves agency profitability, customer programme compliance and enhances the agency-customer bond.
But what of the agent who must service all this? Already time poor due to increased per-capita workload, it is technology that must provide the solution. Most agencies right now will likely have a degraded balance sheet compared to 2019, and recovering back to healthy trading does not mean that throwing people at the problem through mass recruitment is prudent means of solving the issue. I personally have seen good friends and colleagues leave the industry over the last two years through either choice or redundancy, only to find more stable employment in other industries. These skilled heads will not return to an industry such as ours which is still so susceptible to shock.
An agency therefore must do a number of things, or indeed be able to if they do not have the capability. They must embrace the technology available to offer solutions that enhance the agent’s own skillset without additional burden of work. They must be able to offer the trip components throughout the booking cycle – a cycle that has been changing for years from all-at-once to fragmented purchasing of components over the timeframe prior to trip.
Whilst the shorter booking lead times may mean that currently this cycle is more compressed, the opportunity remains to use the datasets within an agency to offer relevant products to the trip in question. Offer what they want, when they want it, and make it easy to purchase, and people will buy it. Jess Bezos proved this back in the late 90’s by algorithmically analysing purchasing behaviours and in so doing proving that people respond to this mantra, and it has made him one of the richest men on the planet.
Whilst I do not believe that embracing this will turn any given agency into the next Amazon, it certainly makes an interesting point. The overarching concept of the conversation was to look at where agencies can make more money within their existing trading, and it is testament to the fact there is much to discuss here that in the hour allotted we were not even able to get onto topics such as supplier payment schemes where rebates abound or offering travel consulting services to existing and potential customers as a new revenue stream.
Suppliers have been brutalised by the pandemic too. They will naturally be looking for ways to reduce their cost base whilst raising direct customer engagement so to offer better, more personalised products. A good example here is NDC. As some powerful airline groups look to move away from the traditional and more costly distribution models, such as the GDS, to lower their own costs, it means that traditional pipelines of revenue within the Agency profit portfolio are under threat. It is here where really the thrust of the conversation was pointing.
Yes, we can look to sell more to existing customers but pure bottom line aside, why? Because as we look to enhance current or open up new revenue streams the agency is in itself creating a wider profitability base that is more resilient to shock.
Agencies simply need to do this to trade in the new post-pandemic world. They can achieve this though greater sale of existing product verticals such as hotels or car hire or ground transportation – and these are £billion industries in the UK alone as Dan from Jyrney pointed out – or through new streams that weren’t touched on in the conversation such as payment mechanisms that offer rebates, or consultancy services that offer expertise for a price.
And why? Well, if IAG group announced tomorrow that 75% of all bookings needed to go through an NDC channel as part of their strategy to reduce their own distribution costs, many UK agencies with high IAG trading percentages (ie BA) that are reliant on GDS revenue as the mainstay of their income would be likely unviable. This is not a prudent mode of trading.
It is here where the Diamonds in the Back Yard shine most brightly, not just as bottom-line profitability but as a greater, more viable way to trade across the spectrum of product and services that an agency can offer. This in turn makes the agency offer more complete, and more compelling. Data and technology enable, systems and mechanisms behind the scenes can be revenue streams too, but it is the people that interact. Let’s enable them to sell more, mean more and in so doing - protect our industry, agencies, and colleagues more.
Despite an extensive exchange we only scratched the surface of this topic, so stay tuned for the next session.
View the recording of the webinar here: