Note: The original version of this post appeared on Tnooz.com.
Mobile is transforming many industries, travel probably as much as any. The out-of-home, often in unfamiliar places, nature of travel has made it almost a perfect fit for mobile as a technology.
But of course in the smartphone era, the method and style of user interaction is improved by orders of magnitude and whether it be via apps or the mobile web.
Now anything that could be done on the web can be done on mobile providing better customer engagement and enabling mobile commerce.
The travel industry, historically one of the most aggressive adopters of technology to enhance the business, was perfectly position to ride the wave of mobile commerce.
And in looking at the landscape of mobile apps and mobile web sites from airlines, hotels, OTAs and the like, you’d think that mobile bookings is the primary “job to be done” (using the theory by Clayton Christensen, noted author and Harvard professor on innovation trends) that travelers hire mobile devices for. But you might not be right.
There have been a number of surveys that you can point to that support booking as a primary purpose on a mobile device. There was a recent survey released by JiWire that would convince you that this is happening in large quantities today.
But this information, I submit, is wildly optimistic and more likely is representative of future intent, rather than actual behavior.
Just last year Atmosphere Research surveyed intended usage of mobile in the booking process and while actual ‘bookings’ weren’t at the top of the list of activities they would use a mobile phone for, they did score respectably.
And this survey doesn’t even cover many other activities that people use mobile devices for such as Maps/driving or walking directions, destination information, itinerary management which are crucial to the traveler during their actual trip.
But neither of these surveys comports with actual transactions. Henry Harteveldt of Hudson Crossing recently released a report entitled “Travel’s Mobile Centric Future” in which he stated that only about 2%-3% of bookings are actually generated by mobile devices, citing 4% for Marriot, 1.6% for IHG and an un-named network airline that came in at 2%.
The fact that mobile isn’t a material part of how travel companies drive revenues today, doesn’t invalidate it as a channel. From a technical and business process perspective, the pieces are already in place to make this happen. That is not the constraint.
So what are the constraints?
- Product complexity and comparability: In mobile, even more so than on the desktop, time is the enemy of conversion. Much of the trip planning and booking process is terribly complicated. The number of results from an air itinerary or hotel returns hundreds of results. The tools for sifting through the results on mobile devices are mostly mediocre. The ability to compare different choices is further challenged by merchandising strategies to obfuscate the total price of an airline ticket and vast differences in hotel products. This is one reason why Hotel Tonight has been so successful. They have curated the choices to the consumer to 3, vastly streamlining the decisioning process for the consumer and increasing conversion.
- Product cost: When looking at mobile commerce statistics there is a reason that things like making a dinner reservation and buying movie tickets are pretty high on the list. The lower the cost and commitment at the time of conversion, the higher the propensity to complete the transaction. As hotels and car rentals (at least in the US) are generally easy to cancel without penalties they psychologically easy to execute. But making air reservations for a family of 5? The high cost and high change fees increases the perceived risk and encourages the traveler to double-check if it’s “a good deal” before committing to the purchase. Flipping multiple tabs open is easy in a desktop environment, but not so much on a mobile device, particularly if you are using an app.
- Time on device to complete the task: When people use their smartphones, the normal time per session is usually a couple of minutes. The more you can speed the decision and remove friction from the transaction, the better your results on mobile will be. Again Hotel Tonight’s ability to complete a transaction in the time a Mike D’Antoni team takes to put up a shot, greatly contributes to their success.
- Immediacy: If the traveler is in an urgent need to complete a transaction it gets done. It’s why day-of hotel bookings or making reservations at a restaurant for a meal later that day get done. If it’s a decision that can get put till later without any consequences, it’s more likely it will get deferred.
- International Roaming Data Charges: This is a bit of a tangential, yet real constraint. International roaming rates are really high and many people will turn off the data plans during their trip. It’s hard to convert when you are offline, but that’s why God created WiFi.
What is the Job Travelers are Hiring Mobile For?
Convenience and context. Where you are and what you are doing at a given time heavily influences what people use their mobile devices for. Sometimes it’s to make their life easier (mobile ticketing rather than carrying printed tickets), to kill time (Angry Birds and Candy Crush), share special moments (Facebook, Instagram), communicate (email, phone) or just checking the time.
The key is tying convenience and context to the mobile experience. For many travel companies, the short term focus should be on matching their mobile offering to things that actually impact the traveler’s experience post-booking.
Many of these post booking interactions can not only generate quite a bit of revenue, but can also comprise a lot of the profit potential for a travel supplier:
- Support the whole trip: Trips are composed of many steps Remembering them all is hard and carrying around paper documents is anathema to the digital traveler. Hence the importance of itinerary management. TripIt is not the most beautifully designed app, but it is one of the most used by travelers because it solves a real problem for them. But there is still much opportunity to enhance these products beyond ingesting emails and maintaining the itinerary of the traditional travel elements (air/hotel/car). And if can be done from a supplier side rather than an intermediary, it would tighten the relationship between the customer.
- Use location and context as upsell triggers: This is the biggest supplier opportunity. Many times people aren’t ready to purchase all the ancillary products at the time of booking. But there are many opportuntites to serve up those offers at the opportune time that travelers will not only accept, but would welcome them. Here’s an example: A traveler has a flight at 9am from their local airport. The airline knows when they are leaving and what time they should arrive at the airport. Now with mobile you have their location and you can tap into traffic reports and in some airports, the length of the security line queue. So it would be pretty easy to figure out whether the traveler would be crunched for time when they get to the airport. If so, push out an offer to purchase expedited security lines that anticipates their need. This is an opportunity to derive revenue while reducing stress. I’d buy that every time.
The Last Word
While it feels like smartphones have been around forever, the truth is that we’re still in relatively early days. Mobile technologies are where web technologies were a decade ago. That many companies are still evolving their understanding of mobile technologies and how it integrates with their business and consumer behaviors lag their intent should surprise no one.
Nor should it dissuade anyone from continuing to invest in their mobile. But investment doesn’t mean hiring engineers to build apps. Mobile analyst Bob Egan of Sepharim Group recently noted: “Thinking about building an app is strategic, but building and deploying an app is tactics, not strategy.” Exactly right.
Many companies rushed to build their first app and now simply iterate. Go back and re-evaluate the strategy. Mobile IS strategic. Mobile (devices, not necessarily on the go) bookings will eventually become a mainstream. But it’s not today, so look for other opportunities to leverage mobile in your business. This is a long game. And one day it will be the only game in town.