Angry Online Travelers Consider Abandoning The Web

Hello again everyone.

Our most recent research report, "Using Digital Channels To Calm Angry Travelers," has been getting a lot of attention.

To put it mildly, travelers are so angry with poor online travel experiences they're approaching a breaking point.

Check out the steady decline in the number of US online leisure travelers who enjoy using the Web to plan and book trips, and who feel that travel Web sites effectively present choices and trade-offs to them. These are critically important given the tepid economy and the increasingly complex way consumers are forced to buy travel. And now, notice how we see a small, but meaningful, increase in the number of people considering using offline travel agencies.

 

I've been asked a lot of questions about this report -- who's to blame? How could this happen? What will happen? Does this mean that online travel dead?

Let's start with the last question: Online travel is certainly not dead. However, if travelers' frustrations are not correctly addressed, it's future becomes increasingly uncertain and potentially less valuable -- and thus less useful and profitable.

So, who is to blame? All of us. End-user companies, mostly the online travel agencies and suppliers, for failing to push themselves, and their technology partners, to innovate, and for failing to ask their customers the right questions when researching their online experiences (or ignoring what your customers tell you). Technology firms, including both travel industry specialists and general tech providers, for failing to demand more of themselves, and for failing to educate and, yes, push their clients to consider new processes. eCommerce integrators and interactive marketing design firms have contributed to this problem as well.

How did this happen? Simple -- we got fat and happy. Online travel kept growing thanks to the organic growth of online travelers, spurred by the growth of broadband connectivity, and pricing structures and fees designed to push consumers to the Web. US online leisure travel spending grew from approximately $28 billion in 2002 to nearly $84 billion last year. Too many travel organizations failed to adequately invest when times were better. Now, many have had to trim eCommerce budgets as their organizations curtail spending due to the recession. We fiddled while Rome burned. Meanwhile, the traveler stewed.

So what will happen? Either incumbent providers get their act together -- now -- or else they lose in the future to smarter, more creative competitors. Among the firms we think understand what travelers want are InsideTrip.com, TravelMuse.com, Uptake.com, Kayak.com, Travelzoo.com, Bing.com's travel search, and Imagini.net, parent of Youniverse.com and provider to Hotel.com's UK visually-based booking engine. Air Canada also wins for how easy they make it for travelers to understand product choices and trade-offs, and for its effective online merchandising. By no means is this list exhaustive, but note who you don't see on it:.major travel agencies, airlines (except for Air Canada), hotel chains, cruise lines -- you get the idea. And guess what? Those firms rely on major travel tech firms, general tech providers, and eCommerce Integrators and design firms. Cause and effect? Or unlucky coincidence?

So, what do you think? Where do you see the opportunities or road blocks? How much of the challenge is due to front-end limitations, and how much is due to challenges posed by back-end or middleware? If you're an end-user company, do your technology partners understand your challenges? If you're a tech provider, do your clients listen -- and act -- on your recommendations? Let's open a dialog and see if we can't solve all the problems of the world. First one to do that buys drinks for the rest of us.

As always, thank for your time.

Henry

Your 2009 To-Do List

[Posted by Chad Mitchell]

My colleagues and I continue to receive questions from eBusiness managers about prioritization in 2009.

There are 3 common questions:

• What should we do to survive and succeed?
• What should we do first?
• Does my priority list make sense?

Allstate is currently running an ad about getting "Back to Basics." The spot states that "after the fear subsides" people enjoy the small things such as home-cooked meals and time with family. "And the basics are good."

eBusiness and channel managers should follow this logic and focus on the fundamentals.

Here are my thoughts on getting back to the basics in 2009. Call it a honey-do list for eBusiness and channel managers:

• Focus on retaining profitable customers - In a Q1 2008 Forrester survey of CMO's (well within the economic downturn), improving customer retention and lifetime value were ranked in the bottom 3 of the top 9 CMO marketing objectives. Amazingly, CMO's were still focused on acquisition, product development and brand awareness. That is upside down and backwards at the same time. Focus on retaining profitable customers by evaluating key metrics like total products per customer, late payments, and total customer service inquires.  Then "cut the fat" because not every current customer is profitable.  Convert single account owners to multi-product customers with email marketing retention programs and personalized x-sell product recommendations on the Web.  Stop investing in marketing or customer service time on unprofitable customer segments.
• Improve the multichannel customer experience - Many companies are restructuring marketing, sales and service teams around the Enterprise Customer Experience (ECM). A senior level executive is responsible for all customer-facing channels and content. I wrote about this recently in my trends 2009 eBusiness research and shared a sample org chart from a top 5 US insurance company. The insurer has realized increases in customer satisfaction and retention after implementing ECM.  Major reorganizations take time and can be painful as many companies downsize.  eBusiness managers are also investing in enterprise search tools that deliver more relevant content from Web customer inquiries.  Better search results can reduce call center volume and improve profitability.
• Leverage analytics across the Web and all channels - The priority list is simple to create when you are measuring what is wrong within your company. Lower online conversion rates? Increased customer attrition? Increased online cost per sale ? If you don't know what is wrong, start their first. Leverage the customer data available within the Web and other channels. Web site analytics, call center tracking and other business intelligence tools are must-haves for any eBusiness and channel manager.

The prioritization is up to you because you know your business better than anyone else. These are proven strategies supported by our research from consumers and executives across several industries.

Take a deep breath...remember that the sun is still shining and focus on attainable goals. We will all be OK...some times we just need to "get back to the basics."

Do you agree or disagree?

Fair Isaac - A Truly Innovative Online Banking Function

[Posted by Brad Strothkamp}

For years now, every new secured site function has had a business case built on getting users to access their accounts more often. So much so that you'd think every online banker would now spend half of their day checking out their accounts online. The reality is that there are just a few functions that can really drive incremental increases in activation.

I am happy to say, I have found one. Here the story.

Everybody is painfully aware how much accessing credit reports is becoming a common desire among consumers. Television commercials from companies like Experian with their FreeCreditReport.com Web site are raising the awareness of this important piece of financial information. A few weeks ago, Fair Isaac briefed us here at Forrester about their service called FICO Scores on Statements. The poor name they choose for this function overshadows how innovative of a function this really is.

The gist of the function is simple. Financial services firms can integrate a user's credit scores into their online banking session so that every time the user logs in they can easily get access to their credit score. Credit scores are updated on a monthly basis (as they are for other services), and the user can pay to get more detailed access to their credit history.

Why do we think this is such an interesting function?  Because it:

·       Is relevant and related.  Credit scores and account balances go hand in hand. It makes sense to access credit scores through online banking because both reveal the financial health of a consumer. Having these two functions integrated brings together two pieces of highly relevant financial information.

·       Makes for better educated consumers.The more consumers see their credit score the more educated they become. Washington Mutual and the Consumer Federation of America have conducted at study the last two years that consumers are becoming more educated about the credit scores, but could save billions if they knew more.

·      Is revenue generating. Not only will consumers visit a site more to view their credit scores, but also they will pay to view more detailed information about their credit. The opportunity to generate incremental revenue is easy to see.

·      Leads to cross selling opportunities.There is a very good chance that a consumer accessing their credit scores is doing so in preparation of a purchase they want to make. Firms could use this fact to target their products like loans and cards to this group.