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BlogIndustry

Thriving in the digital era: Why OTAs still have lessons to learn from retail travel

Apr 16, 2019

If you thought retail is in decline, consider this: in the US the retail travel sector has seen continued growth in not only sales since 2010, but also increased profits, with overall revenue growth predicted to increase by 42% from 2010 to 20201. The pressure from ecommerce on stores selling consumer goods may be well-publicized, but the retail travel model is very different from that of most physical stores.

A travel agency’s value proposition isn’t in selling commodities. It’s in service, consultation, and expert advice. Indeed, that’s what’s been behind the shift from ‘agent’ to the preferred term, ‘advisor’2.And plenty of advisors are continuing to use that edge to thrive. Here are some lessons that online-only travel businesses can learn from the retail sector.


Make service pay: Loyalty rules in retail

 

The obvious differentiator for agents has been – and still is – customer service. Even in a digital context, that’s still a powerful proposition; it doesn’t have to be face-to-face. Of course, the idea of providing tailored, attentive, human customer service remotely isn’t that new. Homeworking travel advisors have been around for decades, and they’ve always understood the value of customer retention. In fact, the retail agent’s approach to tailored, considered customer service is an obviously enduring one. And there’s every reason to think it will continue to be.

That’s because it’s not just ‘nice to be nice’. Every service business knows the value of happy customers, won through attention to detail and personalized service. In short, they know the importance of customer lifetime value (CLV). As retail advisors adopt a more digital approach to customer service and find new, more accessible and efficient ways of providing personal service, don’t be surprised to see advisors continuing to thrive – Phocuswright research predicts 13% growth in retail between 2017 and 20213. The online sector will need to continue to find ways to keep pace with the service edge that retail keeps sharpening. Streamlined customer service has long been an efficiency for digital businesses, but the need to keep up with offline service will place greater pressure on OTAs to innovate, whether through automated service or using technology to explore the fullest possibilities of personalization.


Make retention and repeat booking primary KPIs

 

For digital businesses it’s easy to get tunnel vision on generating revenue. Of course, conversion rate and transactions are vitally important – but they shouldn’t distract from the crucial business of developing customer loyalty. That’s something that’s inherent in the retail model. Many online businesses can learn from this by placing a greater emphasis on repeat bookings and customer retention as priority key performance indicators (KPIs). There are plenty of tools at an OTA’s disposal that provide a uniquely digital slant on traditional retention initiatives, and a loyalty program and members-only deals are just two standard offerings that should be part of an online retention strategy.

 

42% of US travelers say that “expert and insider information on destinations” is the number 1 reason they contact a travel advisor

ASTA,How America Travels, 2018

 

Demonstrate expertise: The right destinations and the right products

 

Research from Phocuswright has shown package travel, tours, and cruise to be particular strengths for advisors4.That makes sense. These are all more complex products than flight- or accommodation-only bookings, and the reassurance that comes with personal, human service can be the difference that closes a sale. For many travelers, the expert knowledge they get from speaking with an advisor is an essential factor in making their purchase decision5. While OTAs may often focus on great content and effective conversion strategies, being viewed as an authoritative source of information on all things travel is evidently still a challenge. In a recent survey by the American Society of Travel Advisors, the number 1 reason that respondents contacted an advisor was to get access to “expert and insider information on destinations”6. But this isn’t beyond the reach of OTAs. One way to make inroads is increasingly tailored content that demonstrates more authority than generic ‘travel guide’ content that gives a superficial overview of a destination. Itinerary-specific tips and personalized automated emails based on a traveler’s trip are just a couple of ways that OTAs can show their own expertise.

At Expedia Partner Solutions we provide specialist customer support services to help travel businesses of all kinds provide first-class service to travelers. That includes both agent-to-agent support tailored specifically to travel advisors and traveler-facing support for fully outsourced customer service.

 

[1] statista.com/topics/1859/travel-agencies/

[2] skift.com/2019/01/29/asta-is-giving-the-entire-travel-industry-advice-on-an-important-rebrand/

[3] ftravelmarketreport.com/articles/Travel-Agents-Arent-Only-Surviving-Theyre-Thriving

[4] phocuswright.com/Travel-Research/Research-Updates/2018/Where-Travel-Agents-Still-Rule

[5] vox.com/the-goods/2018/9/21/17879864/travel-agency-millennials-transformative-travel

[6] travelpulse.com/news/travel-agents/asta-releases-new-how-america-travels-survey.html