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Name of the game: Customer Experience

 

With a plethora of companies offering similar services in the same market, the only way of differentiating the wheat from the chaff is the customer centricity of a company. Today, companies are realising this, and are striving to provide the best experience for their customers – an essential part of both the business and marketing strategies.

 

Dr Suresh Srinivasan

With competition intensifying across online business, we can now see a clear shift in focus from the discounting game to offering a superior customer experience. Large players have learnt this the hard way, often after burning billions of dollars of venture capitalist funds, that discounting rarely converts into customer
loyalty. Players across the e-commerce space are now moving resources that will generate ‘customer experience’ rather than offering steep discounting!
The online travel space, and the strategies of the ‘online travel aggregators’ (OTA), is a classic case that can be used to examine and understand what is currently driving the industry. Competition has intensified in this space last year, and as is seen across the e-commerce bandwidth, incumbents as well as
new entrants have been generously throwing in discount dollars to gain customer attraction.

How OTAs work
Online or digital aggregators are becoming ubiquitous. Be it Airbnb, Cleartrip or Oyo, they bring together a set of service providers as their partners, and sell their services under their own brand. Since the aggregator is a brand by itself, the OTA has to provide services which have a uniform quality and price. Here, it is important to understand that the service providers are not the employees of the OTA; they are partners to the OTA business.
OTAs act as a ‘general purpose’ contractor; i.e., they are the ‘digital front’ to the traveller, seamlessly integrating different service providers (airline, hotels, local logistics) through a sort of digital supply chain, to provide a superior experience to its customers.
Partners also have the freedom to accept or to reject the offer provided by the aggregator on a case by case basis. The contract that the OTA signs with the service providers in its value chain, and the service providers’ adherence to service level agreements, is crucial for ensuring that the OTA’s brand doesn’t get diluted. To that extent, the choice of the service provider and their portfolio in an OTA’s value chain is an extremely important choice that an OTA needs to make for its success!
Having realised that discounts are not sustainable in the long-term, companies are now breaking away from the pack and are now single-mindedly focusing on customer experience. Cleartrip, for example, is targeting customers by providing them with a theme where experience is the core. They strive to engage the customer deeply and offer them an outstanding local experience. The dimensions of local experiences range from fitness and other activities, events to food and beverage. Airbnb is also taking this route.

So what is customer experience?
In simple terms, customer experience is the interaction between the OTA as an organisation and the customer during the course of the itinerary, as perceived through both the customer’s conscious and subconscious minds. It is a blend of all the experiences of the customer across the service providers’ part of the OTA value chain (flight, hotel, cab, event, food, etc) — what excites the customer, what lets him down and eventually negate the overall emotions evoked — all of these measured against the customer expectations across the value chain.

What does an OTA strive to achieve?
Through technology, the OTA strives to deliver a highly customised and superior travel experience to the customer, without any friction between the service providers. Especially with the deep penetration of mobile phone and apps, the OTA provides the customer seamless travel, hotel transfers, managing their sightseeing and restaurant appointments. Events, fitness and specialised themes and itineraries like eco-tourism are also thrown into the value chain.
Individual service providers also have their own websites, and the customers can directly book from them as well. So, what’s different between these individual service providers (like airlines, hotels, cab operators) and the OTA? And where does the OTA add value?
The answer boils down to the ‘customer experience’ that the OTA orchestrates, which the individual service providers cannot match. The clear differentiator is moving away from ‘discounting’ to creating that enriching ‘customer experience’ that no standalone service provider in the value chain will be able to offer. This is not a short term game, and is achieved only through acquiring and retaining loyal customers through building enormous capabilities.

Delivering great customer experience
What capabilities need to be built by OTAs to deliver that superior customer experience?
Proximity to customers and precisely understanding their pain points is crucial. This is highly data intensive, and OTAs use high end analytics to achieve this. It is all about understanding the expectations of customer groups with different age profile, geographic locations, behaviour, lifestyles and precisely assessing what would attract and entice them. The OTA platform needs to remain simple, and yet at the same time powerful enough to deliver a superior experience across every stage of the OTA value chain.
‘Experience’ is thus becoming an emerging segment and a big source of revenue for OTA players. Are there any parallels to be drawn or learning for Indian OTAs from global examples as they go about building experiences segment?
The entire ‘digital supply chain’ from customer to the service provider lies at the heart of value creation by the OTA. This is heavily supported by digital technologies that include artificial intelligence, and deep machine learning supported solutions. Big data and predictive analytics are forming the backbone of any OTA, and they are spending billions of dollars to excel in such technologies. Passionate, innovative and customer-focused staff are also key ingredients to deliver this customer experience.
OTAs also need to carefully choose their service providers and align their offering to the customers they are pitching such services to. Providing a standardised quality of experience to every user is the objective. Unfortunately, most of the experiences turn bad when this part of the value chain is not strong enough.

A few examples
Priceline Group and Expedia group own a number of travel aggregators and meta-search engines like Trivago, and are highly focused on walking the talk in creating superior customer experiences. Unfortunately, they are still yet to perfect this art. The last mile connectivity is where such models fall short.
Partner portfolio management and integration is a crucial component in the overall OTA value chain. Customer reviews is a good tool that helps the OTAs to fine tune value. For instance, TripAdvisor is a classic case of how customer reviews wield enormous power in subsequent customer choice.
Effectively though, this is a vicious circle with a snowball effect — highly relevant and meaningfully differentiated services offered by the OTA will drive more customers, which in turn will improve the number and quality of service providers, resulting in better customer experiences which, in turn will increase the number of customers. This cycle goes on.

Challenges
Disruptions to the OTAs can emerge from many directions. The service providers’ part of the OTA value chain (say hotels, cab companies, etc) are also striving to convert their OTA guests on their own, by improving their own website experience and providing incentives to OTA guests to book directly. But what puts the OTAs on a different pedestal is their presence across the value chain and their ability to provide a complete experience to the customers, which individual service providers will be unable to.
In effect, customer centricity becomes the heart of OTA and their ability to differentiate themselves from the competition! In a digitalised world with artificial intelligence, machine learning and with analytics gaining prominence, technology will play that crucial role in achieving customer centricity.