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Online Travel Companies Need To Reform Their Approach To CX

In the online travel industry, customer satisfaction is often overshadowed by hefty marketing budgets. This article advocates for shifting this focus, emphasizing the importance of improved customer service for achieving long-term success.

Display board at an airport showing delayed planes
28 July 2023
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A Major Expense for Online Travel Businesses

Online travel companies spend a phenomenal amount on marketing. I don't mean that their marketing budget is just a few per cent more than you might see in other industries - marketing is an enormous outflow for these companies. Look at the numbers from the top four brands: Expedia Group, Booking Holdings, Airbnb, and Trip.com Group. In 2022, just these four companies alone spent over $22 billion on marketing efforts to retain existing customers and attract new ones.

If you compare this level of spending with revenue, then the data looks even more surprising. Expedia Group spent 52% of their entire revenue on marketing. Booking Holdings spent 35% of its revenue on marketing. In both cases, the percentage has been increasing since the travel disaster of the Covid pandemic.

High Spending, Low Ratings

If you compare this level of spending with revenue, then the data looks even more surprising. Expedia Group spent 52% of their entire revenue on marketing. Booking Holdings spent 35% of its revenue on marketing. In both cases, the percentage has been increasing since the travel disaster of the Covid pandemic.

Airbnb spends less of its total revenue on marketing - the latest figure is 18% - but then Airbnb has a unique image in the travel market. People that already use Airbnb are likely to return without the need for any marketing. But now look at the Trustpilot scores for some of these travel brands.

92% of Expedia customers rated the company 1/5. The average of around 7,500 customer reports is 1.1/5. Booking.com has reviews from almost 44,000 customers, but the average rating is just 1.2/5. 69% of all those customers rated the company 1/5. This is troublesome but also confusing.

 These major travel companies appear to be offering a terrible service to their customers if the feedback ratings are to be taken at face value. At the same time, they are spending billions on marketing to attract more customers.

Rethinking Priorities - Customer Service Over Marketing

Why not divert a small amount of that marketing budget into a comprehensive customer service strategy that will shift all those 1/5 ratings to 5/5? If most customers are satisfied with the service they receive, they are much more likely to return to the site again and tell their friends that it's a great place to book travel.

Here is the kicker: Most of these travel sites offer the same flights and hotels at about the same price. If they genuinely want to generate customer loyalty and keep spending vast amounts on marketing, presumably to create some loyalty, then they need to engage the customer. Build a relationship. Differentiate their site from all the others offering the same service.

If you dig into the Trustpilot reviews, then it is clear that there is a recurring issue. When customers have a problem and call for help, it is rarely resolved on the first call. Customers find that they are bounced around from one agent to the next, so their issue is eventually resolved, but only after the customer has torn their hair out trying to talk to the right person.

Unraveling the Problems in the Existing CX Practices

There are only two fundamental reasons why this should be happening. Either the CX process is poorly designed, so it's hard to find the right person to help, or the agents are not trusted to go off script. If they are forced to follow procedures so closely that they can never make a decision, they will likely prefer to hand the customer to someone else just because they don't want to. Any brand wanting to tap into customer lifetime value (CLV) has to think of this. What is the value to your business if you can build a solid group of customers who only ever use your service for all travel bookings for the next few decades?

Key Strategies for Enhancing Customer Satisfaction

We can't fix a complex CX process in a short article like this, but here are two ideas for the travel companies that are spending a fortune to promote their business and yet being rated poorly for their customer experience:

Two simple ideas. They might sound obvious, but look again at those marketing budgets and Trustpilot reviews. Online travel agents must start nurturing their existing customers rather than endlessly marketing to new ones.

The Value of Nurturing Existing Customers

Many board executives struggle to see the value in a CX improvement. They know improving customer service is good, but all they see is the amount required to invest in the customer service team. If a small slice of those marketing budgets went towards a reform of the CX process along the lines I have described, then I predict the results could be phenomenal - the increase in loyalty will drive revenue up. Building long-term customer relationships has to be the goal, and that comes from enthusiasm, competence, and engagement.

If you want to learn more about embracing yoummday's talent-tech approach to CX, please visit our website or contact me directly.

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