The Allplane Podcast #13 - Conversion Optimization for Airlines with Iztok Franko
Airlines were among the first businesses to adopt the internet as a sales tool, yet, they are quite a diverse pack when it comes to optimizing their digital marketing and sales.
Iztok Franko is an expert in airline digital optimization. His firm, Diggintravel, looks at ways to help airlines make the best out of their digital channels. The 2020 Airline Optimization Yearbook looks at how different airlines approach this matter and identifies a number of patterns and best practices that can help us better understand the state of the airline industry when it comes to the digital sphere.
In this podcast we talk about the research he has conducted in this field as well as some underlying trends, such as the effort some airlines are doing to prop up their non-ticket business with different sorts of digital offerings and the always constant threat of disruption that airlines face from major digital platforms.
If you are into digital marketing and commercial aviation, block some time and get ready to listen to this episode of the podcast!
Download this episode on:
Apple Podcasts / iTunes, Spotify, Google Podcasts or Stitcher
What we talk about in this episode:
The 2020 Airline Optimization Yearbook
How airlines approach digital marketing
What it takes to be an airline that optimizes digital marketing and conversions
Are airlines becoming digital platforms and digital platforms selling flights?
Are major digital platforms like Amazon and Google moving into travel and how can airlines compete with them?
Why “ancillaries” is not the best word to describe non-ticket sales
Resources
Diggintravel, Iztok’s company
Ryanair saying it wants to become a digital platform (from 2016, but still valid 4 years later)
The 4-group classification of airlines based on digital proficiency (graph):
Podcast Music: Five Armies by Kevin MacLeod
Link: https://incompetech.filmmusic.io/song/3762-five-armies
License: http://creativecommons.org/licenses/by/4.0/
Interview Transcript
Hello and welcome to the Allplane Podcast, where every week we talk with an experienced aviation professional to learn about his or her area of expertise within the industry
But before moving ahead, a quick reminder that you can find this and all the preceding episodes of the Allplane podcast as well as many other interesting stories about commercial aviation on our website, this is Allplane.tv
Today’s guest is an expert in an area of commercial aviation that really matters to all of us: digitalization and conversion optimization
Why does it matter?
Because this concerns how most of us interact with the airlines’ and other travel operators’ websites.
In short, how we book our plane tickets and all the other services that often go alongside. What in industry jargon are called ancillaries…
Although we will see later in the interview why this may not be the most appropriate name for them!
Iztok Franko was the CTO and marketing manager at Adria, Slovenia’s flag carrier, and later went on to found Diggintravel, a consultancy and media firm that provides advice on digital optimization to the airline and travel industry.
Iztok is also the author of a podcast about digital marketing and conversion optimization called the Diggintravel podcast and of the 2020 Airline Digital Optimization Yearbook
This report, which is over 100 pages long covers the best practices of dozens of airlines from around the world in the field of conversion optimization.
So, today we’ll talk with Iztok about how airlines prepare to handle the challenges of digitalization and become more and more, digital businesses.
Without further ado, let me introduce our guest today:
-Hello Iztok. how are you?
-Hi, Miquel. I'm doing very well. Thank you.
-You know, this is a conversation that I wanted to have already for quite some time because I've been following you on different social media channels for some time. And also I follow your publications. And because you are active in an area that it's also of much interest to me, and that is the digitalization of airlines and how airlines are managing digital channels for marketing and commercial and optimization purposes.
-That's good to hear!
-Yes. And actually, that's an area that it's becoming, I think, more and more important. From what I hear in my conversations, and also some professional projects I have had the chance to be involved in, it's becoming more of an area of attention for many airline managers. And obviously, digital has always been the agenda for airlines from the very early start, but now it's becoming a lot more refined themselves, instigated with the help of tools like big data analysis, for example. So yeah, I just wanted to have a chat with you to understand a bit better what's, what's hot in this area at the moment. Because you published recently, and actually you annually write a report, a book, which is a survey and research about online digital optimization.
- Yes.
-Yes. So we're going to talk about this now. But before that, can we just go quickly over your background? So you are from Slovenia, you're based in Slovenia, and you used to work for the national airline, Adria, for some time.
-Yes.
-And now you are the founder and CEO of Diggintravel, which is a consultancy, and can we say, a publishing company too?
-Yeah, it's like a content platform for airline professionals that want to learn, especially in the areas of vehicles. homers digital optimization and let's say digital retailing and ancillary.
So basically you are providing a resource for all those airline managers that want to deepen their knowledge about digital channels.
-Yeah. So can you tell us a bit more about the work you do at diggintravel you have obviously publications, you have online, which includes a podcast, a very interesting podcast that I take the opportunity to recommend here, which is called the diggintravel podcast. I'm gonna post the link in the show notes anyway, and the survey, and you do some consulting work as well, right?
-Yes. So, first, thanks for introducing the intro. What I do within diggintravel is basically research in the area of airline ecommerce and digital optimization and in the area of digital retailing and ancillary revenue. So we do two-yearly research. Papers became research papers which we call yearbooks, because they're almost hundred pages of benchmarks and reports. And this is the core of our research and publishing. In addition, we do we talk about digital and ecommerce with various professionals on the digging trail podcast, and we do deep dives, in the form of articles on the website. What we are now developing also is taking this one step further, which is...the news are not out yet...But we will soon publish an online digital academy for airline professionals that want to really learn hands on with us about all things airline and digital. But like you said, Yeah, my background was airlines. So I worked for 10 years in Adria Airways, which was a small airline here in Central Europe. My background initially was in IT and in engineering, so I did various business analysis roles in an airline in environment, then eventually became the CIO, Chief Information Officer. But it was a funny story actually. Because Adria was a typical traditional airline, very bad on ecommerce digital and very strong on indirect agency sales. So we always struggled with ecommerce, how to increase our direct share, which was on everybody's agenda all the time...So our CEO at that time...he got a little bit tired of all the marketing people telling him about ecommerce with no results. So at one point, he got to me and said, “Okay, see, you're smart, technical, maybe we should try this approach to ecommerce”. And for me, it's really where I found my passion. So I started learning a lot about ecommerce deep diving into books on optimization, and really about this systematic data driven approach to how you build ecommerce sales. So after some initial good results, where we really grew ecommerce each month for 20 months, already at least double digit growth, the CEO said, “Okay, why don't you take our marketing as well”. So then at the end, I had the role of CIO, ecommerce manager are responsible for ecommerce, but also for the whole marketing. And what we did is we tried to combine these units in one. So the technical, the developers, the ecommerce, the data, with IT resources, together with the development and ecommerce and marketing. So this whole consolidation that I think it's crucial going forward and I still see a lot of airlines struggle because there are a lot of silences. So we had quite success with this, let's say combo unit with marketing and ecommerce. Until the company was privatized. It was bought by German funds. And when they came into the company, they said, “Okay, who is this strange guy? What is this guy doing in charge of marketing?” and they fired me and this is how I started to diggintravel. Basically, I started to think about about all the learnings about all the things that we learned in which was really a steep learning curve in the three, four or five years that we build the ecommerce from scratch on all the processes, and started putting this into research and content and this is still where my passion is. So, ecommerce and digital marketing and I'm really enjoying learning, researching the industry, the best practices, not only for airlines but in general, ecommerce and digital marketing best practices, and then getting back to their communities so we can learn together.
-Very, very interesting, very interesting story. One of the areas actually you focus your research on is actually how different airlines are approaching this digital transformation. Let's say in your report, you survey 110 Airlines from all over the world, roughly 40% from Europe, and then 20% each from the Americas, Asia Pacific and Middle East of Africa. Out of the 110 and correct me if I'm wrong. You divided them in four groups…
-Actually, we reached out to 110, but at the end it was almost 50. Airlines that participated. And then yeah, we do them in these groups.
-Yeah. And you then divided them in four groups, which is based on how proficient they are, how active they are in adopting all these digital innovations. So you have “laggards”, “challengers”, “visionaries”, and the “leaders”, right?
-Yes. And this classification is based on a number of different factors, different parameters,
-Can you tell us a bit more about how you classify them? And also, I think it would be interesting to define what the leading airlines are. I don't know if some specific names can be singled out here. But what are the shared characteristics of those airlines that are ahead of the pack?
-Yeah, what we do basically is like you said, we try to measure, let's evaluate the maturity of what we call digital optimization, or how airlines manage ecommerce and digital products. So here we are talking about development and optimization, not the typical digital marketing in terms of acquisition and advertising. So we are focusing on the website experience, digital experience, how they optimize conversion, how they do optimization. And you're correct. We have eight areas, so eight areas that we evaluate, so areas like how the team is set up, do they have experts, do they have a whole team that is dedicated for optimization, or optimization is just one of the tasks of the general digital marketer. So this is one area. Then the second is what kind of skills they have. Do they have specialized skills like analytics, UX research, development skills, or they have, again, generally skills? how they do analytics, how the data is their analytics, how they do user and UX research? This is one area, what kind of tools they use? And one of the most important in this research is how many experiments they do? Because a lot of time airlines say, “we all do this, we have the team, we have the skills, we have everything”. But then when we ask them, okay, how do you do in practice? So because the core of this optimization is running experiments and really being data driven to see what works and what not, because otherwise, you're just guessing. And when we ask airlines, “okay, how many experiments do you do?” and they said, “I don't know, none, or one or two per year”, then the maturity is not really high, you know? So we have, yeah, different areas. And then based on these results and some additional questions and evaluation, then we define the maturity. So the ones that are the beginning of this maturity we call them the “laggards”. These are the ones that don't really understand yet, what is the true value of this data driven, scientific almost, approach to building your ecommerce and digital product. But on the other hand, we have the leaders, the best ones, which really understand this whole process. And these are the ones that we try to look what are the best practices that they do and we try to share them with other airlines. Now going back to your question, which are these leaders and unfortunately, I cannot name them because the 49 airlines are anonymous in the survey. This is because if you want to have them to participate we cannot, of course, disclose their names, their data, their specific things they do. But there are some patterns that you can see which ones are the best? One of the patterns, for example, is that what we see in our research is that low cost airlines are usually much better. Why is that? I think it's different factors. But one of the factors is because digital and ecommerce was one of the only channels that they had for sales. While for others, ecommerce was the last channel to join the party. And it was always like an ugly duck, you know, so it was never this digital mindset, ecommerce mindset...So this is one of the reason…
-I just wanted to add a personal note here. I used to work at the ecommerce manager at a low cost airline for some time. And, yeah, when I was doing the research, I was actually surprised in some segments of the market still, the amount of indirect sales is quite high. And for someone like me that has always bought most of plane tickets direct online, that was kind of a revelation!
-And that's that's a challenge. Another challenge is also technical complexity, because they have this complex distribution. So indirect distribution GDS is and ecommerce solution because of this GDS background were built on by legacy providers on top of this GDS and they were not built to to be really focused on the customer, but they were built more to be able to integrate with all these backgrounds. So it's very difficult to do modern ecommerce on top of this ledge legacy setup. While some of the low costs, they build this ecommerce platforms from scratch and they don't get these complex back end systems. Basically one of the reasons that I think that low cost airlines are better is because they have much less complex IT background than the legacy carriers. The IT was built on the GDS to comply with indirect distribution with these legacy systems. And then ecommerce was built to comply with that, not to be really customer friendly or to be modern ecommerce like at the low cost airliners. They could build their own solutions from scratch and they are much more modern and easier to do modern modern digital marketing and ecommerce.
-And what about the human side of this? how the airlines organize internally to handle these types of activities, how different airlines have designed different types of organization and structure to handle digital activities and digital transformation? Is there a specific pattern that you have detected or what's the amount of resources that airlines devote to this? for example, obviously right now, pretty much all airlines have a marketing team. Some might even have a digital marketing team. And then you also talk about specific CRO (“conversion Rate Optimization) teams and specialists. What can you tell us about these?
-Yeah, I'll talk about this, but maybe first before because you were asking me Who are the best...one example that you can see out there of this real leap into maturity and this approach is Ryanair. Yeah. So Ryanair in 2011, I think was voted as the worst website amongst more than 40 websites in Europe and in the UK. They ranked for the travel website and Ryanair came last. But if you look at the Ryanair website now, it's one of the best I think in the airline world, also in the travel world. And you can see how they evolved through this really. So, in the digital teams, digital labs UX research, the whole process that I'm talking about, this was the evolution. Of course, it's a lot of very high scale. But you can see this evolution and the changing mindset. This digital optimization and digital products and digital experience really matters. Now, when you ask me how airlines are organized, for example, the laggards, the ones, they don't know the why yet, why this matters, why increasing conversion rates, increasing customer experience, really matters...this reflects in their organization...they don't have digital optimization roles, data analytics, UX, and UX research roles, experimentation and things like that. While on the other hand, the best ones, they evolve, and they build this, all the area. So the eight areas that we evaluate, they build resources and skills in all these eight areas. What I think is the biggest misunderstanding is that airlines think that, because of the term growth hacking in the last year says, you know that this can be done as a hack...that's why I don't like “growth hacking” as a term, because this is not really a hack. It's a process. It's a step by step process, where you need to build maturity in each of the areas. So you need to slowly build the skills, you need to build the team, you need to build the analytics maturity, you need to build and increase the number of experiments that you run. So it's a step by step approach. I really like some of the old school guys. Zig Ziglar once said, you know, there is no elevator to success, you need to take the stairs. And that's why we build our maturity model in five levels for each area. So you cannot jump from level one to level five, you need to go one, level two, level three, level four. And this is a lot of work and a lot of knowledge and a lot of learning to do. And what I see with most airlines is, vendors are especially selling us these silver bullet solutions, you know, “buy our new personalization platform and it will solve all your problems”. It has AI machine learning, all this stuff built in. And you will go basically from level one to level five...in reality, it doesn't work like that in the team, the skills.
-Yes. Can I stop you here for one second? because I think we haven't explicitly touched it ever. So these levels, this is part of your methodology to evaluate how airlines work. Can you tell us a bit more about these five levels?
-Yeah, basically, for each of the eight areas that we were talking about before, we measure maturity from level one, the least mature to level five the most mature. So for example, when you're asked about organization and teams, we ask “Okay, who is doing digital optimization or digital products in your organization?”. And Level One is “we don't have a special team we have a digital marketing general generalist”. Then level two is “we have a specialist who knows about digital optimization, but it's a part time employee”. Three is “we have a full time specialist who knows about optimization”. Then level four is “we have a small team for optimization, which is basically digital product manager, developer, analyst, UX researcher”. And level five is “we have a big team or several teams to do that”. So this is how we measure maturity. Similarly, when I was talking about how many experiments you do. So Level One is we don't do any or we do occasionally one or two per year. While level five is we do at least 10 per month, you know, and what I was telling you, you cannot jump steps. You need to go slowly invest in the people and knowledge and processes. To build all these capabilities in all of the areas, but what I was telling you before is what I see a lot of time in the airline industry, we think technology and new fancy tools will solve all our problems, you know. So, we buy these, we go into this huge technical implementation, implementing a brand new platform and things, all of a sudden, we will be ecommerce masters. While it's my opinion, it's only a tool and if you want to not use the tool, you need to have the skills. It's like, you know, if you can only ride a bike, and then somebody gives you either Valentino Rossi’s motorbike, you cannot drive it, so you need to build the skills if you want to be really the champion
-Yes, actually, this is also something that airlines are paying more attention to, perhaps now because of the need to become more efficient? Now with a pandemic situation and the crisis that pretty much every airline in the world is facing, do you think this is gonna put this in the center of the agenda? So you're gonna have airlines, maybe investing more in optimizing all these types of processes?
-I would like to say yes, I hope yes...I don't dare to say yes. But this is one of the areas that we say, of course, it should. Because basically, if you look at, let's say, at the typical airline marketing, digital marketing on ecommerce, what I still see is that the vast majority of funds and resources, typically about 80 to 90% of all resources, were historically put in acquisition. So in advertising, digital ads, content, all the stuff you know, while 10% or 5% of the resources were put in optimization. But in my opinion, it should be Equally important, and now with a pandemic, because everybody will have limited resources. The best way to make more with less is to make more out of your advertising, to increase the conversion. And the best way to increase the conversion rate is to put this systematic process of digital optimization in place, of measuring, experimenting, and doing this stuff, because this is the only proven way that really works. If you put this systematic approach in place, you will see what your customer problem was, the friction point, or what the data tells you with the user research, you will understand that you can optimize and improve. And this process, the best ones do it. It works. For example booking.com historically, and this data is on the Wall Street reports...why were they better than the competition? It was because they had two to three times higher conversion rates than their competition. This means that they can spend two to three times more either on acquisition or investing back in the margin has two to three times better margins. So when you are asking about the pandemic, I think airlines cannot afford to, you know, shoot blank bullets into advertising. And just hope, you know, the mass will cover it. So now I think it's the time to be smarter, leaner. And this approach, the whole optimization is really this is what this all is all about. So to really know what works to check the data to be really scientific, in this whole process.
And when you have all this data on, what about the implementation? My experience for example, working at an airline in the commerce side, was that often the systems that the airlines use can be quite complex. Thinking here, for example about the PSS and IBE, the internet booking engine. Often they are also connected to too many other systems around them to connect to other functions of the airline. So how important is it to have a system architecture and the type of system that allows for very quick and frequent experimentation? What are your thoughts in this field?
-I think it's very important, because one of the areas that we evaluate are the tools that airlines are using and the internet booking engine, how flexible they are. And for a lot of airlines, these systems are not flexible. So they want to do experimentation, but they just can't or they want to do personalized messaging. So, the systems need to be to agile, flexible systems, it's very important. What I was telling before. It's not only that if you have the agile and flexible system, it will make you be that much smarter, you still need to know what to do. And this is the second point…
-Sorry to interrupt. Just wanted to ask you what would be the main features here for when you will define flexibility? Is it about the, for example, the different people in the airline have the ability to alter, for example, the website?
-Let's think about the current COVID-19 situation. So what is happening now is and what we get in our research is that the one size fits approach wasn't working anymore, in my opinion. So what you have now you have different groups or different customer types that will have different fears. There are now more fears and friction points than ever. So what is the border situation or at destination? What is the situation with cleaning the plane or at the airport? So basically what this systematic approach is you need to identify these different segments in your data. You need to do user research to really agile user research to really understand what is the fear for a certain passenger type. So for example, what is the fear of a German leisure person traveling to Mallorca for his annual vacation. And once you know that, then you need to have a flexible system to have a custom message that will address this fear on the website or during other digital touchpoints. So this is how it all comes together. Yyou need to have the skills to understand the data and the user to identify this but then you need to have the systems so you can be proactive and address them via messaging, even via products. These fears and ads you know what we call the reach So it's always a friction versus reward model that we are using. So this is how it all comes together. What I'm saying is sometimes we even buy the Ferraris...the system personalization that will say, “okay, you as an airline ecommerce person, will be able to do one to one personalization, you will be able to do 100 custom messages”. But for us 100 custom messages, or 100 custom offers, you need to be able to create 100 custom messages and this is where marketing and ecommerce people usually struggle because we cannot create even five different segments or messages. So that's why I said you need to put all this together to do real good digital experience.
-And when you mentioned the customization, which is one of the hot topics in this industry for quite a while. What are your thoughts? Where are we now? Because there's a lot of talk about big data helping airlines to get to this sort of ideal situation where every passenger or every one that every potential passenger that is looking for a ticket is being offered exactly what he needs, exactly what he's looking for...the reality, actually, is, I think, we are still some way off from from that ideal.
-Yeah, but although there's always this potential of being more accurate or being increasingly more and more customized and more personalized.
-What are your thoughts on this? What's what you're seeing through that lens?
-As I said, it goes back to this maturity. I think we cannot jump step. So if we cannot go to one to one personalization, if we cannot even identify basic segments, so what do we advise to airlines when it comes to customization or personalization? I’d start with rule-based segmentation and experimentation. Why? So you identify four, or I don't know, four or five different segments like I was talking before. And then you need to experiment and see what kind of messages and what kind of products really resonate and work. Why is this important? Because if you do this route by, let's say, segmentation or personalization and combine it with a permanent experimentation, you will learn. So you will learn via the whole experimentation process, you will learn what works for either on segment A versus segment B, and the data will prove it you know, it's not like guessing, but you will really know and this is the whole learning process process and once you will learn the more experiments that are the more such cases you will do, the more you will not learn about your customers and the better you will be about this. What I think is our problem as an industry. If you don't do this whole process of learning and experimentation and really understanding why, sir, some message works for certain passenger types, we expect AI and machine learning to figure all this out for us. I think you need to be good basically at this first approach, then you can move to this algorithmic approach that everybody's selling us now. So that's why I said unfortunately there are not simple magic wand solutions, that you will buy a great Ferrari and it will do everything for you. But it's a process and if you do this process, you really go step by step. And fortunately, I see some airlines, the leaders in our service that are really understanding this and are going through this process and you can see in their digital experience, where you can see it's a good experience they have the right messaging, the hits on custom offers custom experience are not these one size fits all. It's all a project. We usually see it with most of the airline booking processes.
-Also, when talking about those airlines are a bit ahead of the pack. The thought that comes to my mind is actually how we have seen some some airlines, I'm thinking here, for example, in Ryanair or Air Asia, that have explicitly defined themselves as, as digital businesses, meaning that the expectation or the goal is to just be just a digital business, just not a simple airline, but actually to leverage this very transited digital platforms they have to do all sorts of commercial activities. At the same time. We are also seeing non-travel digital platforms that are becoming also very, very dominant, like Amazon, for example, or other big ones like Google, Facebook...and in Asia, you also have a number of what they call the super-apps. In China, for example, I think it's WeChat. And there are some others, I'm not too much up to date with Asian, Asian digital landscape. But there are a number of apps that people use to do all sorts of things. You can do everything you need in your daily life through one app...with I want to say that there is also the possibility that some of these non travel or non airline platforms get into the air travel in a much more significant way than they have done so far. So how do you see this unfolding in the near future? You have on one side, all these airlines wanting to do many more things. And then you have all these other platforms that do many things that might eventually want to do what airlines do now. So do you think we're gonna see some sort of convergence here?
-I think this is the challenge that these airlines face and what Ryanair that you mentioned or Air Asia figure this out. They build these huge audiences, so huge brands and direct traffic, huge ecommerce platforms, they have a lot of traffic. So in terms of Ryanair and airasia, more than, I don't know 10-20 million visitors each month. But, where they have a problem is a problem of frequency, you know, so even because the lower the tickets have the low costs are cheaper and we increase the number of threads that people take each year because travel became much more affordable. At a typical airline, leisure travelers will still take maximum two, three trips a year with an airline. While on the other hand, the digital platforms that Amazon's that you're talking about, you do purchases each week now with the pandemic, it was weekly monthly purchases for e-commerce. So it's much easier for them to have this frequency where they split their acquisition cost, on a lot of different transactions. So what, for example, Amazon's is doing with their prime subscription, they they can really discount the ticket and donate a negative margin, do good promotions for air ticket to get people to subscribe and become a member of Amazon Prime. Why? Because they know they will get back this customer acquisition costs that they paid for the subscription, when they will sell 10 times next week or next month, other products like electronics, retail, all this kind of stuff. So this is the real problem that airlines face in terms of competing with real ecommerce platforms because their frequency is low. And this is why you see them talking. “Okay, we want to expand our portfolio not only as an airline, but the whole travel, so transport, transportation, hotels, activities, all this stuff”. Airasia is talking even further going into some of the retail, going to concerts, financial services. This I think is the answer, because they want to build on this frequency and they want to monetize the audience. They have to be even more aggressive with their customer acquisition and build the platform even into bigger ones.
-And you also talk about experimentation in channel versus product level. By “product”, are you referring to these different types of bundles of services that airlines might be able to offer? Might be services and products together...it can be ecommerce of other merchandise.
-What I'm talking about is, basically, typical optimization, or the growth hacking that I said I don't like in theory, how it started was A/B testing on your website. So is button green versus red? What works better this version of the page in the booking funnel versus the other page? And this is how you start. And this is how you can build the first ROI. Because based on the high volume of traffic that airlines have, even a smaller amount of increase in conversion can bring you great benefits. But, what I'm talking here is that the next step, the real evolution in experimentation comes when you do this long enough. And when you do it really systematically, so you really understand the data. And even more you do agile user research to understand what are your user pain points, then you can build digital products to address these problems. And this is when I say move from the channel, basically from the website to the real product. So building the digital product solutions that address some of these challenges. And we've seen for example, some of the airlines, the more innovative airlines that build like digital solutions for some of the challenges that I was talking about before. For example, Volaris, a low cost airline in Mexico, with this subscription, the best product that is basically addressing the challenge of frequency for the airline, but also for the passenger to allow them with this flexible model, get very low cost for the airline ticket. For example, an unlimited travel or one flight per month in a very simple way of booking and also paying for this problem. You would include here all sorts of theories, for example, under budget bundles of different theories...I think the best theory, and this is what we preach when we talk to airlines, in my opinion, the best ancillary product, and I hate basically the word ancillary, because I think we should just talk about “product”. If airlines want to go into real retailing, we're talking about different products. No passenger knows what “ancillary product” even is. And we still see this word using being used in the airline booking funnel, you know “add ancillaries”...
-It definitely doesn't make justice to the importance it has.
-Yeah. Now. So going back, I think the best, let's say, so called ancillary products are not the ones that you make passengers buy, but the ones that solve some of the problems for the customers. So we see a lot of innovation. For example, one of the companies provides pre ordering of, let's say, food and coffee delivery at the airport. So if you think about it, you saw one of the friction points for the traveler, which is basically I don't want to stand now in line at the airport to get my coffee. Because I don't want to be in line with 10 people and I don't want to give cash or credit card to another person. So there is a digital solution where you can pre order and then you pick up this coffee or meal there. So, on one hand, it solves a digital friction point. But on the other hand is also a source of ancillary revenue for airlines. So this is what I'm talking about when this digital optimization experimentation evolves into building great digital solutions that not only solve problems, but are also revenue streams.
-And in this particular case, also an example of the sort of agility flexibility we were talking about earlier, so that you can come up with a whole new range of products that responds to a whole new set of needs in a very short period of time. Like in this case, for example.
-Yeah. And if you go back to this process of continuous loop of digital optimization, this is what it's all about. Do agile sprints of analyzing data in user research? So you know, what are the new friction points with your customers. Now this is more important than ever, because we have so many new friction points, we have so many new challenges, so many new questions that your passengers have. And if you don't really understand them, then you cannot address them, you know, and this is the whole point of this whole process that we are talking about today.
-So just to wrap it up, the people that would like to learn more about your work in the field about your report, and you're consulting, where should they find you? on the diggintravel website?
-Yeah, so the people that want to really deep dive into this digital optimization, I would advise them to download the 2020 Airline Digital Optimization Yearbook, which is available on our website diggintravel.com
-I'll add the link on the show notes.
-Thank you! For the other people that are just more in general want to learn more about everything digital ecommerce or digital marketing in our space, just check our blog and also our podcast where we weekly talk with various leaders not only from the airline world, but from companies like Google, Airbnb Skyscanner, so we try to provide them these broad insights into our travel industry and the digital world.
-Very good! Well, thank you so much, Iztok for the chat today! This is an area that is going to continue to be very current and important and it’s essential for any airline that wants to be ahead of the pack! I hope we’ll be able to revisit this conversation in the future and add any additional findings you may have come up with…
-Yeas, one more thing...some of the things we talked about today, they may sound scary to some, but I think one of the things airlines need to think about is opportunities...because now with all this covid thing, a lot of people want to do digital experiences...and traditional airlines struggle with digital adoption, online check-in...I think now is a really great time for all those people to take the mindset to the next steps. So, it’s not only a challenge, it’s a great opportunity and if we can learn all together we can come out of this on top...Thanks, Miquel, for the chat! Really enjoyed the chat and hope we can have it again soon!
-Of course! Talk with you soon!