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SAUL WORDSWORTH Q

targetaudience

Are airports missing a trick by relying too heavily on mass promotions and discounts,

as opposed to more individually tailored marketing campaigns?

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According to a recent report by global loyalty marketing specialist ICLP, airports are far more

likely to take a mass promotional and discounted approach to their customers than provide tailored and relevant information based on solid research. This is a glaring omission in many airport’s aeronautical revenue streams and one that all too many continue to neglect.

“Airports that tailor their offering pave the way for developing communications that provide genuine benefit to each individual,” says Mignon Buckingham, managing director at ICLP. “Effective marketing doesn’t begin and end with discounting promotions. While discounting and offers can of course be an effective way of motivating spend on unplanned purchases, it can have the opposite effect if perceived as unsolicited or poorly targeted communication. A business traveler who is in a hurry to get to the gate will have little use for a 10% discount on a meal, whereas this promotion might be welcomed by a family traveling on holiday.”

Discounts have the potential to be dilutive. A passenger could already have planned to purchase a camera at the airport, but if that same customer receives and redeems a voucher for a 15% discount, the retailer would effectively

only receive 85% of the amount the customer was prepared to pay. If this behavior could have been anticipated, a more effective promotion might have been to offer this customer a discount on a camera case to encourage additional spend.

“With the advance of mobile technology, it is easy for customers to compare prices and check they are getting the best deal, rather than assuming airport prices are the most competitive,” continues Buckingham. “Being able to develop a relationship at an individual level ensures that the customer doesn’t make a decision based on price alone. Any communication should reach customers via their preferred channels whether online or offline, rather than those selected by the marketing department. Digital channels can often be more timely, personalized and cost-effective, but without data on passengers and customers, airports often have to rely on offline and above-the-line campaigns.”

London Heathrow in the UK is one example of an airport that is using mobile technology to reach individual customers. The Heathrow Airport Guide App, launched in early 2015, features retail offers

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and deals based on passenger details such as flight number and the terminal they are flying from, as Chris Annetts, commercial services director at Heathrow Airport, explains: “At this stage we do not require passengers to give us their personal information just to receive an offer, but we will include the option for people to sign up to our loyalty program, Heathrow Rewards. Passengers will have the option to download the offer/promotion and place it into their e-wallet, such as the Apple Passbook, and by using iBeacons we will remind passengers to use the voucher in a certain shop or restaurant in the departure lounge.

“Based on our passenger app feedback, we will introduce features on an ongoing basis that will personalize the digital airport experience for passengers traveling to, through and from the airport.” Heathrow Rewards has already proved profitable for both the airport and its passengers – over one million members received £1m (US$1.5m) worth of free airport shopping in 2014 and made an average of five visits to Heathrow per year – and the app will enhance this program.

Dubai International (DXB) has also launched an app, myDXB, that enables passengers to locate commercial services in the airport according to their favorite retail or food brands. Available for free on Apple and Android devices, myDXB was designed by Airport U, which creates airport apps that are a “vital tool in increasing commercial revenue, improving airport product quality and even marketing the airport to airlines”, according to Airport U director Ian Lowden. Airport U’s mCommerce platforms can be used for campaign management and for passenger profiling, to tailor products and promotions to individual consumers.

CollaborationWhile mobile apps may be one way to connect with passengers to understand and increase their spending levels, another way of ensuring retail success is through collaboration. James Ingram, director of DKMA, a leading marketing consultancy to the aviation industry, “continues to be amazed” at how few airports are taking an active role in developing and improving their commercial offering and experience, especially as growing non-aeronautical revenue streams remains such a key priority.

“From my experience, the best results are achieved when airports and retailers work hand-in-hand and adopt a long-term vision of how they can build the sort of commercial

RIGHT: Changi Airport offers targeted marketing campaigns at its 120 food and beverage outlets to encourage spending

experience their passengers want,” he says. “It’s not just about having brands, it’s about creating a whole airport and retail experience that puts passengers in the mood to shop. This is especially true in more mature markets like Europe and North America, where passengers travel a lot and are increasingly becoming bored by seeing the same brands and concepts at every airport.”

In order to target individuals, a very detailed picture of the customer must be created. This is only possible if the

airport has taken the time to conduct research and create a detailed demographic profile of passengers that goes beyond the usual ‘where are you flying?’ and ‘how often do you fly?’ model.

“One airport that really does this well is Copenhagen,” explains Ingram. “The mix of brands/shops and how these

are woven into interesting F&B concepts are really spot on to me. And this isn’t just there by pure chance. They have ongoing surveys that interview an astronomical number of passengers each year and it’s this vast amount of data that helps them have a very clear understanding of who their travelers are, picking out the core segment they want to focus on and providing exactly the type of commercial experience that these passengers want.”

According to Ingram, airports also need to start imitating retailers and brands from other industries and build as detailed a database as possible on their passengers. “I believe airports should aim to provide

the sort of shopping experience that online brands like Amazon do. Time is one of the major constraints in the airport retailing environment. From our research, we see that lack of time is one of the key barriers to purchase. So airports would have a lot to gain if they were able to proactively provide tailored recommendations and information on the shopping offering similarly as to what Amazon does when it recommends that you buy things based on what other people like you have.

“Passengers don’t have time so you have to bring the product to them in a way that demonstrates true value to them. To do so, airports would need to invest a lot more time and energy into collecting data on their passengers and finding innovative ways to connect with them than they are today, although that is slowly changing,” Ingram continues.

It’s not just about having brands, it’s about creating a

whole airport and retail experience

that puts passengers in the

mood to shop

experience their passengers want,” he says. “It’s not just about having brands, it’s about creating a whole airport and

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on-ground publicity boost for the service, as well as an opportunity for those interested to register their details.

“We integrated iShopChangi with existing programs such as Changi Millionaire and Changi Rewards to further incentivize shoppers to use the service through seamless integration across platforms,” says Wong. “Shoppers on iShopChangi automatically have their points credited to their Changi Rewards account and qualify for Changi Millionaire as well. All this enables us to better understand our customers’ spending behavior and tailor future promotional messages according to their profiles. We have adopted several promotional models over the past years, and through the retail receipts and redemption rates we were able to discern what was popular with shoppers and what was not.”

Innovative optionsIn the past couple of years, several airports and airlines have been experimenting with beacon technology to enhance customer experience through the provision of information at relevant touchpoints throughout the airport. Virgin Atlantic, together with London Heathrow, is using beacons to send

Top tips for better marketing strategiesIdentify key characteristics and preferences: With so many factors influencing a consumer’s motivation to spend, it is essential to identify the key variables and characteristics of a trip, combined with the preferences of individual passengers and their past activity, to better understand their current and likely future behavior. This insight will enable improved targeting and a more relevant approach to motivate increased expenditure. The ultimate goal should be to create a single customer profile.

Track marketing promotions: When offering marketing promotions, it is vital that tracking is in place to be able to evaluate performance against objectives. Many airports and retailers will send out and accept discount or promotional vouchers, but often it can be difficult to obtain the data on those redeemed to obtain a view of the overall success of the campaign. Research conducted by ICLP in 2014 with European passengers found that nearly half of those questioned said the vouchers and discounts they were offered did not incentivize them to shop or dine more than they would normally.

Tailored communications: To encourage spending from passengers who currently don’t spend, communications need to be even more tailored and relevant. It will be more challenging to change the behavior of those passengers who appear to have a more negative attitude to spending, so a more innovative approach will be needed. Use all possible opportunities to communicate: The best performing airports look at all touchpoints with their customers to ensure that every opportunity to communicate is utilized. This includes examining the commercial opportunities to be gained by incentivizing direct booking of airport parking, for example, or other relevant products and services such as travel insurance.

tailored Bluetooth messages about commission-free currency exchange deals to passengers in the departures section of the airport. Meanwhile, a further recent innovative effort that combines online and offline channels is Helsinki’s grocery service.

Passengers can order through online store Alepa Kauppakassi and pick up the groceries in the arrivals hall after touching down.

“Helsinki Airport clearly understands that many passengers share concerns about having to replenish their fridges after coming back from a trip,” says Marco Serusi, senior consultant with SimpliFlying, a global airport consultancy. “With the

grocery service, the airport seeks to make the travel experience easy and smooth, while developing itself as a shopping location that meets the various needs of passengers.”

In a similar vein, Stockholm ARN’s Arlanda Food Trucks initiative saw its F&B operators take to the streets and head downtown to show local residents the best of what the airport had on offer. This was a simple yet effective way to reach out to potential passengers and get them to consider the airport more in terms of a shopping-dining destination than simply a place where you go to catch a flight.

“There is clearly scope for innovation in the industry, but successful marketing doesn’t just

happen – it’s a lot about learning by trial and error,” comments Ingram. “Airports need to have a system in place to keep track of how their consumers are behaving and how they react to the various promotional efforts being implemented. This means not only tracking who is purchasing what, but also linking actual purchases to promotions, which can be done via QR codes and discount codes. This will help them build a detailed picture of which promotion is most effective for their key segments. Airports need to stop seeing themselves as simple landlords and get much more involved in managing their commercial experience.” Q

Successful marketing doesn’t just

happen – it’s a lot about

learning by trial and error

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