Ringing Online Travel Bells
The Spark! advisory, research conducted by marketing research firm Compete and released today, sites Southwest Airlines' DING! program as an innovative leader in marketing online travel. Compete found that DING! helps drive customer loyalty. The average online travel prospect engages in 27 percent more cross-shopping activity than two years ago, according to the report. "Consumers no longer trust that a single site can provide them with all the information and resources they need," says Gregory Saks, senior associate at Compete. "Travel suppliers have traditionally turned to rewards programs to create and maintain loyalty, but it's not having that kind of effect. Today, it is clear that marketers need to look beyond [simple] rewards to maintain strong customer relationships."
Compete's analysis of some of the leading hotel loyalty programs found that the shopping behavior of travelers was nearly identical for rewards program members and nonmembers. Rewards members evaluate 5.9 supplier or agency sites compared to the 6.3 that nonmembers consider, and some programs have no effect.
Since launching DING! in February 2005, Southwest's program had roughly 1 million downloads; DING! users are 45 percent more likely to book through Southwest, according to the study. At current usage levels the incremental bookings driven through DING! are estimated to be roughly $60 million per year. Consumers download the free program from Southwest's Web site and get access to special deals not listed elsewhere. The opt-in strategy is mutually beneficial and helps drive loyalty, Saks says. "DING! is a method for Southwest to deliver to its customers hot deals [and] low fares, so customers think, "This is great. No other program gives me access to this. For Southwest, they find a chance to [offload] their inventory that might otherwise go unused or sold at a much lower discount. It's an effective mechanism to distribute to this loyal customer base."
Once customers download this program, they click on five or more offers per month, indicating a level of engagement they are seeking to continue and are not annoyed by. In its current form the program still sends messages to some users that may not be relevant, but most are willing to overlook that for the bargains they do find. "It's hit or miss whether they offer destinations that I'm interested in, but when they do, I get bargain-basement steals," one customer writes.
Desktop applications have been successful in other industries like search engine marketing, according to Saks, and offer marketers an opportunity to extend their brands beyond a Web site. "As long as they deliver relevant and timely information, these new always-on services will be embraced by customers," the study says. "Desktop applications offer marketers a permission-based glimpse into how consumers react to and use their programs, potentially enabling precise, behaviorally targeted communications."
"Travel marketers who are on the fence about deploying this type of program must realize that a race to establish desktop relationships has already begun," Saks says. "Certainly a lot of other travel providers will be investing in this type of program. There is certainly a race to own customer relationships [but] there is a limited amount of real estate the consumers will be willing to give up on their desktops. Southwest definitely has the first mover's advantage."
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