Back to Air Transport IT Review - Issue 2, September 2010
Evolving from cross-channel to multi-channel: Forrester
By Henry Harteveldt*
Vice President & Principal Analyst
Forrester Research
We are evolving as an industry from cross-channel to multi-channel. Simply put, cross-channel is where travellers might 'pull' content or purchases or information through distinct channels. In other words, to be cross-channel, you might sell through the GDS, your website, perhaps a kiosk, perhaps mobile, through a travel agency or over the phone.
Multi-channel is different in that it's omni-directional, it's both 'push' and 'pull' - and it is between the travellers and the airline regardless of the channel they use. So, for example, the ability to use a website for one function, shut that down and resume it through a different channel.
The implications for technology professionals are that the systems and the various departments involved have to be prepared for increasingly complex and dynamic interactions - between passengers, between the organization and the companies the airline does business with and, of course, between departments within the airline.
Three challenges
Multi-channel passengers have three needs: information, the ability to effect a transaction and a source of help. These are the same for any passenger. But there are three challenges.
First, goals for the multi-channel system need to be seamless and consistent access to the airline's products, to its service and to the support the travellers require. The airline has to be prepared for omni-directional 'pulling' and 'pushing' to take place. Is it going to be easy? No. Not at all. And by the way, our research at Forrester shows that there's a lack of executive support or buy-in - many airline CFOs and CEOs don't get it.
Second, goals or objectives are not aligned across the organization. As we do our research at Forrester, we find that it's often common to see different departments have their own functional goals, very few of which align across other departments' goals. It may map to something like reducing cost or growing revenue, but it stops there. So there's no idea or thought process given to the consistency or quality of the passenger experience.
The third challenge is inadequate funding. See challenge number 1. If the CEO doesn't get it, it's harder to get the funding needed for the basics, let alone some of the new challenges.
And finally, there are incompatible systems... we deal with spaghetti networks of systems and vendors and technologies and languages and so on. Ours is not an easy life.
The threat from Google?
Make no mistake about it. We are increasingly living in a multi-channel world, and airlines must join in. What's more, mainstream technology companies are believed to be showing an interest in travel. Bear in mind that Google is used by more people in their travel planning than an OTA, and that Google is acquiring airfare information provider ITA Software, bringing the company into the realm of vertical travel search. With Google in the act, they have the potential to take the market-maker status away from OTA and own it themselves. Google and others have enormous levels of awareness and credibility. Their marketing budgets and, frankly, their marketing talent far outstrips anything a single airline can do.
To counter this, airline flight search must evolve. That's going to pose a challenge for technology professionals. Flight search today is pretty much as it was 10 years ago - based on 'where are you starting from?', 'where are you going to?', 'what are your dates?'.
We need to be more non-linear in our approach - for example allowing a traveller to search by destination category. 'Where do you want to go?' 'I want to go to a beach'. 'Why?' 18% of travellers don't have a destination in mind when they start their travel planning.
So we need to make it easier for those one-in-five travellers to find a solution from the airline or alliance network. in addition, 46% of US online leisure travellers say they allow their budget to dictate where they go on vacation. Airlines don't offer the ability to shop by price - third party sites do.
The arc of opportunity
We need to provide more clarity and context around the choices. It's becoming increasingly difficult for people to make informed decisions that they feel good about. They come away feeling like they've gone through a torture session when they've bought their tickets. They don't know if they've got the best value and some of them, by the way, may have been willing to pay more for something that might have included bundling.
Imagine an arc spanning the different channels that create an opportunity for the airline to sell and support the multi-channel customer. But are the IT systems and channels ready? Or will they be ready over the next couple of years, whether e-mail, the Web, mobile, a kiosk, ticket office or even on-board?
Because to successfully tap this ancillary potential and do it well, we have to go back to that multi-channel organization. The airline's marketing teams have to understand the art and science of cross-selling and up-selling, but the technologists have to understand the systems and when to extend that offer - and when not to extend that offer.
*Based on contributions to the 2010 Air Transport IT Summit and Industry Insight Sessions.
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