Today, I read an interesting article in the McKinsey Quarterly titled – The trouble with travel distribution. In the article, authors, Robert Carey, David Kang, and Michael Zea go on to explain what ails the travel industry.
Broadly speaking, they talk about the following:
- The ecosystem is completely fragmented. No trust between the players (airlines, hotels, travel agencies, aggregators).
- Instead of working as one integrated supply chain, they are fighting with each other on topics like how much should each of them pay each other and who owns the customer, which results in each of the participant trying to woo the customer.
- All of these leading to a situation where everyone is competing on price, which is not good news for any industry, specially, for any service provider.
Though I agree on all of the above, I think there is much more that ails travel distribution in India.
- The level of service provided in India by any of the service providers is a far way from world standards.
- The models on which the loyalty programs are based are flawed. These models do not take into consideration important pieces of information like corporate contracts, frequency of service usage, advocacy, engagement, referrals, etc.
- Though Indians are an emotional lot, we rarely see any of the players actively emotionally engage their customers.
- The only comparison that customers get to see are around the cost. So, they need to take a decision on the basis of cost, which is not good for the entire industry.
The authors of the McKinsey article offer a 4 point solution to address this issue:
- Focus on customer and not the channel.
- Use the data that they already have to customize the customer experience for customer segments.
- Sort out the differences and partner with other players in the value chain to work and provide seamless customer experience.
- Own the entire experience (not just selling the service, but the entire cycle including pre-sale, service delivery and post service delivery.
- Travelling is tiring. Try and make it as much comfortable and fun as possible. Connect with your customers at an emotional level. Make them laugh, make them cry, but surely, have fun with them.
- Work towards service excellence. Never forget that you are a service provider. So, provide exceptional service. At every touch point with your customer.
- Make life easier for your corporate customers. Integrate with the back-end systems of your corporate customers so that your actual customers save their time entering their travel details in their corporate ERP system. If planned and executed well, this could also free up a lot of cash for the airline and their corporate clients.
- Stop competing just on price.