Change is often difficult to reckon with, and when it comes swiftly across an entire industry, its effects can be challenging to adapt to. While things might have once felt simpler or better in days gone by, when the changes you face are being shaped by the wants and needs of your own customers, there is no chance of going back to the way things were.
Last week I had the pleasure of participating in an industry discussion on the future of travel and hospitality with a group of industry experts. The travel space has been the subject of some scrutiny recently regarding the role of global OTA players, and how they facilitate or contribute to the evolution of consumer booking patterns.
But to date, we’ve been fixated purely on looking at the impact OTAs have made on the industry. Instead, we should be analysing what is fueling it.
There are a million and one things that a person might want to do when they are online, but many of these activities can be grouped into two categories – browsing and transacting. In both instances people are demanding the best possible experience, but that looks quite different depending on which activity they are undertaking.
When browsing, they are seeking to gather information, and tend to respond best when all options are grouped together in one place. This trend is demonstrated clearly in the ecommerce sector, where in the US the top ten sites account for approximately 70 percent of transactions, and the top two ecommerce retailers are aggregators (Amazon and eBay). By grouping a huge number of products and services into the one place they make it as easy as possible for the consumer to find what they are looking for. It is also worth noting that more than half of Amazon’s sales volumes now come through its market, where retailers who might otherwise be its competitors use its services to reach the aggregated audience.
If people are transacting however the key factor is speed. Hence we have seen developments across many sectors that have served to accelerate the path between the expression of what a consumer wants and its realisation. This is seen in the demise of DVD rentals and CD sales in favour of streaming services, and can also be witnessed in the travel industry, where it has been many years since you needed a travel agent and a paper ticket in order to board a plane.
And because the internet puts almost all possible suppliers of products and services at a consumer’s fingertips, they can now see how good the best providers really are, and have come to judge all suppliers accordingly. And, they expect it to keep getting better. Recent research in the US by Accordant found that 88 percent of consumers expect their experience with the companies they use to keep getting better in the future, while 83 percent of consumers think best-in-class experiences raises their expectations for all companies.
That is a huge burden for any business to keep up with, let alone a small business whose resources are already stretched thin.
It’s interesting to note then that in the digital age, it is the companies that can best gather, analyse and utilise data that are succeeding, as this capability gives them the best insights into audiences and what they want. For a small business then, which lacks capital and resources to reach to the scale of big ecommerce players, the key is in finding partnerships that can both give them access to the data they need to understand and cater to customer wants, and the ability to deliver a service that meets their expectations.
These examples might be drawn from the ecommerce industry, there is no reason why the lessons they hold don’t apply to many others. We already see banks, airlines, insurers and many other categories forming relationships to gain the best possible access to consumer data and then tailor their offerings accordingly.
And there is no reason why travel and accommodation should be different. Whether a provider is big or small, the forces of digital disruption do not discriminate.
That means all organisations much adapt to the new normal and focus on providing the best possible experience. They must put themselves in the places where consumers are looking and utilise data to gain the best possible insight into what they are looking for. And for smaller businesses, that means partnering with organisations who can give them the scale and reach they need.
Because the genie of customer expectations cannot be put back in the bottle.
Drew Bowering is Senior Director Market Management, Expedia Group