I may subscribe to just about every hotel industry and marketing news feed out there. In one of the many emails that arrived in my inbox last week, this headline, “The trouble with travel distribution” by McKinsey caught my attention. Intrigued, I downloaded the article to find out what it is that is wrong with travel distribution.
The storyline for this article is that the travel sector has reached the next phase in its evolution, and some creative destruction is necessary. The authors of this paper suggest that industry incumbents (suppliers, aggregators and service providers) move away from a model focused almost exclusively on reducing channel costs and toward one that seeks to maximize returns by best serving customer needs.
Wow! This is so relevant. What the authors are saying is “stop focusing on delivery costs and start focusing on customer needs”. To me this is fundamental to a marketing driven approach to business and one that I fully support and have evangelized throughout my business career.
To truly focus on customer needs one needs to better understand the experience consumers go through – the whole customer journey which starts well before purchase and extends well after purchase and travel. As they point out and I agree with – consumers increasingly find that they don’t have what they really want: “all travel options at their disposal in one place”.
The authors offer 4 imperatives for travel companies in order to evolve their business to the next phase… but I really think they summed it up on their first imperative: Focus on customers not channels. Spending an inordinate amount of resources pushing consumers toward lower cost and more uniform distribution channels based on structured homogenous content is the wrong response to a growing mandate for product differentiation.
Here are a few suggestions I offer the industry for future success:
Focus on customer-based ROI. Ask yourself how much you are going to invest and what results you want to produce. Then decide which capabilities and which customers to target. Focus your ROI on customer segments instead of channels.
Engage and stimulate customers. Think broadly about the kinds of solutions that really engage and stimulate customers. Consumers are empowered by information: they have near-instant access to content that allows them to play suppliers off against one another. The game is now about delivering a superior customer experience that engages.
Technology can help. Innovators deploy technology to shape the customer experience, not just to conduct booking and customer service transactions.
Do you believe the travel sector is too focused on delivery costs, and not enough on customer needs? Why or why not?