“Customers change and without data & tech we cannot track these changes”
If there’s one thing we can be certain about current times, it’s that our behaviours have changed significantly because of COVID-19. The pandemic, or rather the restrictions it imposed, led people to reassess their priorities, needs, buying and consumer behaviours, and how they use information and entertain.
Change in customer behaviours is particularly important in the Travel Sector. According to a recent McKinsey consumer survey: “customers are twice as likely to try new brands and experiences as a result of COVID-19. More to that: 75 percent of US consumers tried a different store, website or brand during the pandemic”. Travel, with its strong reliance on loyalty programs therefore is affected heavily.
Furthermore, the behaviours change also due to non-direct effects of restrictions on consumers: operational capacity constraints, staffing challenges, increasing airline complaints, supply issues in rental cars, decreased amenities and services in hotels, and most of all, the cost increases and inflation.
Knowledge of how all these factors influence consumer behaviour is key for the Travel Industry.
Google identifies two types of change in consumer behaviour based on the likelihood of maintaining the new habit. As we enter 2023, we still observe uncertainty around travel, restrictions, vaccinations, and at the same time our perception of security. Google identifies that some of our behaviours may likely become our long-term habits, and some may change with the restriction situation. For example, it seems that video conferencing is one behaviour that seems to remain, as it proved to become an efficient solution to do business and to reduce business travel. According to Precedence Research global video conferencing market size was estimated at USD 6.85 billion in 2021 and is projected to be worth around USD 18.56 billion in 2030. Almost triple in 9 years.
While Google and e-Commerce are perfect in tracking and analysing customer behaviours online, the Travel Industry struggles as the majority of data, is obsolete historical information.
In such circumstances travel business owners and managers try to react the best way they can. I have observed these three types of reactions:
The first, the easy one, is to simply assume what is the new demand or what is the new buying behaviour. The assumption may be based on observations, opinions, gossip, personal experience, and sometimes on some data analysis. This approach may seem to be correct, but it carries a risk of missing very important trends, which may be crucial for businesses.
The second is trying to ask customers about their change in habits. However this approach also seems to carry a risk. As per Google asking people what new habits they’re likely to keep might not lead to accurate answers. Research has shown that there is a gap between our intentions and what we actually do. According to Swift/McKinsey research of travel reviews “despite high satisfaction ratings, negative sentiment is on the rise” – there is a contradiction between performance and satisfaction.
The third reaction is the hardest one and possibly the only solution for the Travel Industry. It is to utilise all the technology that is available to aggregate the data from across all data points, normalise it and interpret it into actionable and meaningful insights. Understanding why and how people form habits can help us better adapt to their expectations, at the right time, with the right product proposition, and at the right price, and further predict how people may react in and after other novel situations.
To succeed in technology and data aggregation and analysis, the Travel Industry must respond proactively in five strategic areas:
- First, ensure that all your business is data. In other words, ensure you track every sales activity in a data-oriented manner. Not on printed pdf, but tables of databases.
- Second, look beyond traditional KPIs. Use other sources for external data to power up your internal conclusions.
- Third, combine the data into meaningful insight. One of the recent projects we have worked on at Aggregate Intelligence with our customers is the aggregation of customer-owned data with our rate shopping information and events. The result not only standardises the Business Intelligence of the company, but helps read signals of customers behaviour.
- Fourth, ensure that the organization is more flexible, responsive, and entrepreneurial, capable of adapting quickly and efficiently to changes in customer demands. 2023 will not be about who first comes back to 2019 state, but who will innovate to gain competitive advantage.
- Fifth, develop new partnerships to grow data as you evolve. 2023 will not be about big data, but about smart data that will help follow consumer’s evolving shopping and buying behaviour.