Missing out on maximizing ancillary revenue? The digital conversion conundrum

Welcome to the good times.

Travel brands are surging ahead with $600 billion in online travel sales in 2014 (PR Newswire, 2015). Airlines, for example, have had their most profitable quarter since 2007, in large part due to the key role now played by extra add-on fees. 

On board retail, car rental, à la carte options and baggage fees are just a few of the ways airlines are cashing in on the ancillary boom. Ancillary revenue is up 21% year-on-year according to IdeaWorks company and the sky is seemingly the limit. Carriers which have been slow to utilize data-driven methodologies to fully maximize their ancillary revenues are already being left behind.

Simply having ancillaries isn’t enough anymore. In a market where the difference between budget seats on large carriers and added extra seats on low cost alternatives is shrinking, your experience has to stand out by understanding customer needs and reflecting their preferences.

Success depends upon going beyond cosmetic personalization and into a granular approach targeted to increase propensity to purchase those all valuable extras. Generic surfacing and blanket messaging will only limit your conversion success.

Fundamentally, travel brands need to be utilizing a data-driven approach to on-site personalization, with the ability to seamlessly identify cohorts and personalize to them accordingly. That’s table stakes but where the more innovative travel companies are seeing the greatest returns is from utilizing social proof. By tapping into their digital visitors’ real time behaviors to surface them in front of other relevant visitors, social proof can be a powerful point of differentiation.

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Knowing what customers have looked at and are looking for can inform your customer communications strategy. If a customer has previously viewed the extra legroom page but not selected it as an option, consider showing them how many other people have looked at the option. Better yet, place a finite limit on the seats, by showing how few are left and how many people have recently booked them. Well-timed urgency messaging can nudge undecided visitors into action.

Focusing on serving relevant bookers with specific ancillaries using social proof cohorts is doubly powerful. It combines the same urgency push with an appeal to the follow the leader mentality. If you’re going on a family holiday and know that 10 families are looking at a family insurance bundle or 24 have recently purchased it, suddenly it becomes a more attractive and rational prospect than before.

Harnessing social proof can deliver big ancillary wins. Intelligent merchandizing, in meeting customer expectations and needs at the same times as driving add-on-fees purchases, is a win-win for everyone.

Learn more about boosting ancillary purchases in our latest webinar: