By Luke Griffiths, General Manager at Klarna UK
A generation ago, booking a holiday meant visiting or calling a local travel agent to purchase tickets. Today, travellers can book their own flights, holidays, rental cars and accommodation online.
Technology advances have made it easier than ever before to shop for, and buy, travel. It has also meant that travel brands have had to get smarter and adapt, as customers expect better service than ever before. Unfortunately, not everyone has been quick to meet the needs of consumers. Recent research by Klarna has revealed that the steep upfront cost of buying travel online is having a negative impact on people’s holiday experience.
So, what can travel companies do to help their revenue take off?
Focus on finance
Consider this: Choosing a holiday is all about options. From choosing a preferred airline, travel time, stopovers and accommodation, to deciding between more leg room or no leg room. Travelers have lots of choices. Too often, however, this flexibility fails to extend to payments.
The final stages of purchasing are often the most irritating for customers. Travel usually carries a high total cost which is peppered with additional fees at the checkout that can turn what should be an exciting purchase into an unpleasant surprise. In fact, unexpected costs are the biggest source of frustration for travel shoppers — specifically hidden airline charges (31%), additional costs at checkout (27%) and credit card fees (20%). Klarna’s research also shows that as a result of such costs, almost 1 in 5 travellers are being forced to scrimp and save when they arrive at their destination. High upfront spending also means having to settle for a lower standard of trip – with over 1 in 10 saying they’d prefer to upgrade, but can’t afford the upfront cost.
This has a negative effect not just on holidaymakers, but travel vendors too, with 15% of people revealing they’d be more likely to pay full price if they could spread the cost over time. It’s clear that merchants would benefit from offering shoppers more ways to pay — including the option of convenient and easy consumer finance.
Innovate and disrupt
New tech is now key to the travel industry. Take smartphones, for instance. They have become a natural part of the travel booking process, with travellers now able to check-in and keep their ticket on their mobile. Travel companies are becoming increasingly better at adopting more innovative technologies such as e-tickets and mobile check-in. However there is still a long way to go until the entire travel purchase experience is streamlined for online.
With comparison sites and aggregators like SkySkanner also muscling in on the travel market, it’s vital that merchants do everything they can to stand out. That means embracing solutions which will boost convenience and make the shopping journey as painless and smooth as possible for would-be holidaymakers — such as streamlining steps in the checkout flow, enabling one-click repeat purchases, optimising for mobile and more.
In today’s fiercely competitive travel landscape, it’s the merchants who embrace change and create better customer experiences who will win the battle.
Travel vendors can’t afford to stick to the status quo in the current business climate. With 1 in 5 shoppers saying that they’d feel more excited to book travel if they could pay over time, as well as less guilty about making such a large purchase (20%), now is the time to offer more payment choice to win new customers and differentiate from competitors. This includes allowing customers to pay in installments at the checkout, which would significantly ease the stress of upfront travel costs. Travel vendors who take these things into consideration will see a rise in sales conversions and, in turn, better customer loyalty.
The digital revolution has impacted the travel sector by making us all DIY travellers who plan, manage and book our own holidays online.In order to stay ahead, travel merchants need to optimise the online channel to offer a frictionless and convenient booking experience. Those who take action and actively engage with this new generation of holidaymakers will see their revenue, and client base, soar.
Global Banking & Finance Review
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