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Helping thousands of travelers to find and book the best flight is what Travix, a Netherlands-based global online travel agency (OTA), does on a daily basis. The company’s focus on merchandising is directly responsible for up to 50% increase in its revenues, says CEO John Mangelaars.
In addition, merchandising also allows Travix to offer a better experience for its customers and to build a stronger relationship with its airline partners.
Mangelaars oversaw Travix’s shift towards flights more than six years ago and was instrumental in Travix becoming an early adopter of Amadeus’ merchandising technology.
In a competitive online travel market, Travix differentiates itself by focusing on air travel and prioritizing customer service.
“Many OTAs have gone the direction of hotel, but we decided six years ago to really focus on flight and everything that comes with that”, says Mangelaars.
With flights as its focus, Travix has worked with Amadeus to not only optimize the air content offer with effective merchandising but also work better with airlines. Mangelaars believes that an innovative approach to partnerships is behind its successful adoption of merchandising - helping to understand what airlines want to sell and how they want to sell it.
“We are between the airline and the customer…We try to understand what the airlines are trying to accomplish not just next year but in the next five years. We identify what the customers need and then we try to bring that together.”
“Travix is flight, it’s online, it has global scale and a very diverse culture. That’s us.”
Serving 5.0+ million passengers a year, Travix has focused on understanding the needs of those customers and then merchandising the right product and fare in the search, shopping and booking flow. This focus on customer understanding, and the delivery of more sales to Travix and the airlines, has proven to be a three-way-win for Travix, its customers and the airlines.
Mangelaars defines merchandising as “displaying specific elements like a bag or a seat or the entertainment or the meal to actually sell it or promote it.”
The travel sector is dynamic. Industry patterns and consumer trends are always changing. Travelers continue to be price-sensitive but also more and more demanding when it comes to the value of a trip. They want to be offered personalized options, a more customized trip. With OTAs striving for higher conversion rates and better customer retention, merchandising is an effective way to satisfy these demands and deliver the tailored offering that travelers are looking for.
Some airlines are selling their flight inventory in components, adopting a menu-pricing or à la carte approach. Starting with the base fare, passengers can add elements such as checked baggage, priority boarding or seat selection.
Other airlines are finding that fare families or branded fares – pre-packaged bundles – are as effective and resonate strongly with customers.
Increasingly, airlines are offering both options, giving passengers the chance to customize their travel experience according to their specific needs.
Travix identified this trend early on and built a specific strategy around merchandising. Mangelaars observed: “Six or seven years ago you would have a ticket, everything was included, there would be a high margin for the airline. People could say the airlines have taken stuff out and now they charge for that. I would say there’s much more customization possible for the customer, there’s much more transparency.”
A carefully considered and well executed merchandising strategy can support a win-win situation - the traveler makes an informed choice and books the right fare; the airline sells the right fare but at a better yield; the OTA gets a satisfied customer and better conversion rate while building on its relationship with the airline.
OTAs which integrate merchandising as part of the online offer give customers more transparency. It is easier to compare the price and value of different fare families when they are displayed next to the component-based prices.
OTAs therefore play an important role in helping their customers make an informed choice when purchasing their air tickets, by offering complete visibility for each fare throughout the booking process.
"For us, it’s not about merchandising per se as a goal, it is about displaying the elements of a product. We combine merchandising from an airline with other products, so this whole ‘portfolio of things’ can help the customer decide which ticket they want to buy. This is for us why merchandising is a very important component in selling or offering the right product to the right customer."
Over the past few years, Travix has implemented three Amadeus merchandising solutions and integrated merchandising content from airlines worldwide using the Amadeus Travel Platform:
Travix started its merchandising journey with fare families because it knows that different customers had different needs for different trips.
“Some customers want the lowest price and then add a bag, but there’s quite a few customers that don’t want to go too complicated, they want a reasonable price and some assurance that they have the right fare - that’s where fare families come in”, he explains.
Together with its airline partners and Amadeus, Travix was able to use its fare families know-how to successfully add new merchandising options – bags and seats. Integrating the bag into the booking flow or letting travelers select their seat directly from the seatmap, gives more customers the chance to truly tailor their flight purchase according to their needs.
The graphical seatmaps also give travelers control over their travel experience, allowing them to easily select their preferred seating. OTAs can deliver a superior level of service by displaying accurate, real-time seat information.
Merchandising the bag separately handed Travix an unforeseen benefit: as travelers knew exactly what was included in the fare, traffic to Travix’s call center decreased significantly and customer service rating improved.
All participants in the ecosystem – traveler, seller, airline, tech partners - benefit from merchandising. Travix serves its customers better by giving them options to easily personalize their trip online, without any need to contact the call center, generating strong word-of-mouth recommendations. In turn, Travix becomes a better partner for airlines by securing higher value bookings which include additional components.
Other than the revenue lift from merchandising, Travix benefits from serving its customers better. Merchandising means that the offer is transparent with the customer knowing precisely what they are buying. Fewer calls to the support line reduces cost, and less confusion at the airport means happier customers. Additionally, Travix customers also benefit from better comparability of fares across all airlines, as the offer is displayed in a consistent manner.
Merchandising also allows a seller to satisfy the differing needs of the same customers. “When I’m a business traveler and I’m searching for Amsterdam to Chicago, Monday morning out, Thursday afternoon back, I probably don’t need a bag, but I do want a bit more leg room. But I am also a leisure traveler, searching for my wife and three kids, I want to have a nice in-flight video screen, and I’ll be ok with a three-hour layover where I can save $500.”
Airlines meanwhile can guarantee a consistent product offer across all channels, while having clarity into which third party distributor is securing the most additional revenue.
“There are four reasons why an airline wants to work with a distribution partner,” Mangelaars explained. “Bring it customers, increase its yield, showcase its product and take costs out. If an OTA does any of those four, you have a conversation. If it does all four, you have a great conversation.”
Over 80% attachment rate: Across Travix’s entire business, less than two in ten flight bookings are basic fares only,without any type of merchandising content attached to them. All other bookings have at least one extra component, added via the catalogue or included within a fare family.
“There’s a strong partnership opportunity for us to make more margin and for the airline to increase their yield significantly" he adds.
Passengers will continue to demand: the ability to customize the airline product to suit their specific needs; curation to remove options of no interest; sub-second response times; a consistent and personalized experience across all channels; a seamless purchase experience.
Airlines will continue to innovate on product and will prioritize sellers that can not only accommodate the airline’s business model but also bring incremental business.
Travix’s customer-centric flight-focused approach is able to generate fresh revenue opportunities for airlines by sharing data points, based on how visitors to its websites search, shop and book. This allows airlines to make better commercial decisions.
IATA’s new distribution capability (NDC) and One Order initiatives will enable new merchandising techniques and bring them to market more quickly. And Travix, a driver customer of Amadeus' NDC [X] program, has had live NDC bookings in production since November 2018 via the Amadeus Travel API.
Mobile continues to present specific challenges around curation of results and the user interface. Mangelaars believes that “at some point customers will want to have less choice…we have to be able to show the two or three ticket options which are the best match for that particular customer, on that little screen.” Smartphone use and the demand for personalization will continue to grow, for all customer segments in all markets.
“...at some point customers will want to have less choice…we have to be able to show the two or three ticket options which are the best match for that particular customer, on that little screen.”
Travix has a long-standing partnership with Amadeus, often helping to co-design new products and services, allowing quick market validation for Amadeus technology. It also works closely with airlines, sharing consumer data insights, allowing them to differentiate across Travix’s websites. Travix, the airline and Amadeus are all working toward the same goal – providing the right fare for the passenger and a seamless path to purchase.
Working with best-in-class technology partners is a building block of success. This can include startups which can often serve niche or specialized use cases. But Travix believes that many of the core merchandising functions are best handled by established players such as Amadeus.
In summary, Mangelaars says: “Merchandising requires a long-term vision, a long-term execution and a long-term partner. The past five years have been a great ride with Amadeus. Now we are at the point where we have a very complete and comprehensive portfolio that actually offers the right fare to the customer."
“Amadeus’ strength is its technology but also its people, partnerships and discipline. It is also very adaptable. It is a great partner company, full stop.”