Site Administrator serves CIOs. .
Visit Forrester.com to learn how we make CIOs successful every day.
Posted by Site Administrator on May 5, 2009
[Posted by Henry Harteveldt]
OK, the fact that I’m writing this blog post, and the fact I’m on Twitter (hharteveldt) is proof that an old dog can learn new tricks.
What inspired me to write this piece was when I received an email from an industry friend telling me he’d taken a job as a VP with ideeli.com. ideeli describes itself as an invitation only shopping Web site, offering “privileged access to sought-after products in fashion, home and beauty, as well as luxury lifestyle experiences.”
You can’t just join ideeli willy-nilly – you need to be invited. I think this is both practical and brilliant. It’s practical in that it allows ideeli to control the size of its customer base, which hopefully means that its members will have reasonably good chances of obtaining items of interest available on the site. And it’s brilliant because it creates the aura of exclusivity – we all want what we can’t have. Plus, ideeli sells a premium category – they call it 1st Row – which offers earlier access to all the goodies ideeli sells.
In a sense, ideeli isn’t a new idea. It, and its competitors, owe at least a teeny, tiny nod to the airline industry. In 1986, Eastern Airlines pioneered its “Weekender Club,” a fee-based membership program that extended weekly unpublished special fares out of key Eastern markets such as Baltimore, Boston, New York, Atlanta, and Miami where the airline had excess inventory. Other airlines, including TWA, implemented similar programs. In that pre-Internet era, the special offers were delivered by – get this – Western Union telegrams.
OK, so back to the 21st century. I think ideeli as a concept has some value to the travel industry and offers a way to invigorate travel eBusiness, especially in this tough commercial environment. Why? I’m so glad you asked.
Travel eBusiness is mature. Forrester’s 2008-2013 Online Travel Forecast estimates that by year-end 2009, we’ll have 68 million US leisure or unmanaged business travel Bookers (Bookers are travelers who go online at least once and month and both research and buy travel online). That’s an increase of only 2 million more people from year-end 2008. OK, yes, getting two million more online customers is great, but it’s a sliver of the net new number of online customers compared to even three years ago.
So anything that can be done to increase online travelers’ engagement with the channel is, as Martha Stewart would say, a good thing. Forward-thinking travel firms can adapt ideeli’s model for themselves, using it to:
- Drive traffic and volume to and through preferred channels. Travel sellers can use this type of a program offer to drive traffic through whatever channel they choose. This is particularly relevant for travel suppliers, such as airlines, hotels, and cruise lines, which can use a program like this to “right channel” customers through their own Web sites, versus those of third-party intermediaries (TPIs). Multi-channel TPIs can play this game as well, using it to drive traffic to Web sites and away from call centers.
- Develop or strengthen business partnerships. Travel suppliers can reach out to partners – for example, an airline, a hotel, and an entertainment company – to create distinctive experiences. TPIs could partner with their preferred suppliers to create distinct promotions or packages as well.
- Force behavior in a defined timeframe – AKA you snooze, you lose. Ideeli’s offers are limited – items are available for only a set time frame or until they sell out, whichever comes first. Members receive email alerts that alert them to when items will go on sale. Travel companies can send similar email or SMS text messages to program subscribers. Either they act, or someone else gets that fantastic deal.
- Test pricing. Ideeli operates in private: only its members know what’s for sale, and at what price (some items are even giveaways). Travel firms can use a program like this to experiment with destinations, products, and price points in a relatively private setting. Sure, a member can tweet or publish on her Facebook page about the great deal she just found, but that will be after the fact – and the offer may be over by then. It may also be possible to test slightly higher price points compared to what you’d have to advertise in a public promotion.
Get around “full content” distribution requirements. Most airlines are contractually required to sell all publicly available fares, including so called “Web fares,” through global distribution systems (GDS) and travel agencies. GDSs can be valuable distribution partners, but not necessarily when low-margin distressed inventory is being sold. A private, membership-based program like this may be exempt from full-content requirements.
Create, increase and sustain loyalty. Travel organizations constantly bemoan the lack of customer loyalty. In an industry that’s awash in a glut of choices and product, travelers – especially infrequent travelers – have little need to be loyal. A program like this may be able to engender loyalty to the company. And, while this can of course be linked to a travel seller’s loyalty program, it doesn’t have to be.
Create artificial demand. ideeli’s “1st Row” premium access program is similar to having access to a “priority screening line” at an airport. 1st Row members get first crack at ideeli’s offers. 1st Row membership costs between $83.88 a year and $93.88 a year, depending on the subscription payment option the member chooses. Not only can travel sellers limit the number of memberships they sell to their club – thereby creating the desire to have something that another person can’t – but they can stimulate this further by offering a premium, fee-based tier which would also have a limited number of slots.
Travel companies – mostly airlines – have experimented with bits and pieces of what ideeli offers, but no one currently offers anything quite like ideeli. In 2000, Northwest Airlines introduced its NWA.com Club, an online-only fee-based club that offered access to unpublished offers. It was an idea ahead of its time, and the 9/11 terrorist attacks and following recession didn’t help. Continental Airlines has The Continental.com Club, which includes a soft-dollar “cash back” component and access to travel and merchandise offers. Southwest Airlines’ highly successful DING! downloadable desktop application provides free access to limited-time special Southwest fares. And of course we have two travel agencies operating in the US specializing in helping suppliers move excess inventory: Priceline.com, with its unique “name your own price” model, and Hotwire.com.
What do you think? I’d enjoy learning your perspectives – and, if you’ve been trying something like this, whether it’s met your expectations.
Thanks for your time.
search forrester's blogs
- Alex Cullen (5)
- Andrew Bartels (70)
- Bobby Cameron (2)
- Chip Gliedman (12)
- Chris Mines (36)
- Claire Schooley (39)
- Craig Le Clair (4)
- Dan Bieler (55)
- Dane Anderson (5)
- Doug Washburn (1)
- Frank Gillett (29)
- Fred Giron (1)
- George Lawrie (1)
- Holger Kisker (1)
- James Staten (14)
- Jennifer Belissent, Ph.D. (106)
- John Brand (12)
- John McCarthy (17)
- Khalid Kark (5)
- Manish Bahl (28)
- Marc Cecere (10)
- Michael Yamnitsky (1)
- Mike Gualtieri (1)
- Nigel Fenwick (80)
- Peter Burris (6)
- Philipp Karcher (12)
- Rob Koplowitz (35)
- Sharyn Leaver (33)
- Stefan Ried (13)
- Ted Schadler (122)
- Tim DeGennaro (3)
- Tim Sheedy (25)
- TJ Keitt (41)