mindtree Brief 2016

Winning in the Age of PersonalizationGlobal survey compares traveler expectations against travel and hospitality company initiatives

About This Report

In the fall of 2015, Mindtree commissioned independent market research firm Vanson Bourne to discover: Where do most travel and hospitality organizations fall on the digital transformation timeline? How do the travelers using the services or products of these organizations perceive the digital experience? What do travelers expect from these organizations moving forward?

To obtain this valuable insight, Mindtree surveyed 180 buyers from travel and hospitality industries. In addition, Mindtree also surveyed over 3,300 travelers. The regions/countries where the interviews were conducted included the U.S., Europe (U.K., Germany, Benelux), and APAC (Australia, New Zealand, India, China). Respondents from the organizations that were interviewed had at least 2,000 employees.

Due to rounding, not all percentage totals in this report equal 100%.

About Vanson Bourne

Vanson Bourne is an independent specialist in market research for the technology sector. Their reputation for robust and credible research-based analysis is founded upon rigorous research principles and their ability to seek the opinions of senior decision-makers across technical and business functions, in all business sectors and all major markets. For more information, visit www.vansonbourne.com

Introduction ........................................................................................................................................................................................ 04

The Phy-gital Journey Begins and Ends with Personalization ............................................................................... 05

Mindtree Phy-gital Journey Survey: Traveler Expectations vs. Seller Initiatives ........................................ 06

Travel and Hospitality Survey – Global Highlights ...................................................................................................... 07

Travel and Hospitality Survey – Region by Region Highlights ............................................................................... 10

What Our Travel and Hospitality Survey Results Mean to You .............................................................................. 14

A Personalization Framework for Travel and Hospitality Companies ............................................................... 15

Summary – Winning in the Age of Personalization ...................................................................................................... 16

Table of Contents:

www.mindtree.com [email protected] 04

Age of Personalization: Survey Travel and Hospitality Global Report

Introduction As e-commerce continues to drive new revenue opportunities around the globe for travel and hospitality companies, travelers are gaining more control of their purchase experience. Unlike traditional travelers who were limited to arranging travel plans at offices, or by phone, today’s travelers demand more convenience and less friction across their “phy-gital” (physical + digital) journeys. They want to use their favorite mobile devices to shop from anywhere at any time. And they want companies to understand their needs and suggest personalized recommendations based on their history and preferences.

A new study by Mindtree (www.mindtree.com) suggests that travelers expect to reach their ideal balance of online versus offline commerce over the next three years. To maximize profits and drive new opportunities in this traveler-driven landscape, travel and hospitality companies must develop strategies to deliver a truly personalized experience.


1Cindy Waxer, Direct Marketing, September 1, 2015 – It’s Time to Face Marketing’s Impact on Customer Experience. http://www.dmnews.com/customer-experience/its-time-to-face-marketings-impact-on-customer-experience/article/435386/

It’s a well-known business axiom that repeat customers drive current profitability while new customers drive current growth and future profitability. Yet, acquiring and retaining customers is harder than ever before. That’s because travelers are expecting personalization―experiences tailored to their needs and preferences based on their implicit behavior and explicit permission―across all their interactions with sellers. Not delivering on this appears as a failure in the eyes of the traveler. The impact can be huge: for every customer experience failure, companies will lose an average of 65% of that customer’s wallet share during the following year.1

In the past, travelers have been invited to travel offices, websites and mobile apps controlled by travel and hospitality companies. But over the next few years, travelers will push companies beyond these boundaries―from social media “buy” buttons to over-the-top messaging services with integrated payments such as WeChat to concierge services and full-fea-tured mobile wallets, these will all become selling channels.

In return, travelers are willing to provide rich digital body language―online and offline behavior that signals their inten-tion and preferences. However, this digital body language is all but lost on sellers, especially in-store. That’s because until now personalization has largely been the domain of online travel retailers (Kayak, Expedia, and so on) or the e-commerce teams of brick and mortar companies.

To stay relevant, companies need to embed themselves in the ongoing phy-gital lives of travelers and earn the right to be part of a continuous stream of engagement. But, they can’t do it by following traditional means of marketing, communications and customer service. Personalization is their way in.

The Phy-gital Journey Begins and Ends with Personalization



Mindtree Phy-gitalJourney Survey: Traveler Expectations vs. Seller Initiatives

To help travel and hospitality companies understand and capitalize on the changing nature of how travelers explore, engage, purchase, and advocate a product or service, Mindtree surveyed 3,317 people across the U.S., Europe and Asia-Pacific (APAC). To gauge how companies realize how traveler behavior across the phy-gital journey impacts their business and digital investments, Mindtree also surveyed 180 decision-makers from travel and hospitality companies in those same regions.

The survey provides several key insights that point to a digital divide between travelers and those who serve them. For example, Over half (58%) of the decision-makers at companies identified themselves as pioneers in adopting and investing in digital technologies. However, while these companies are in a digital transformation mode, there is a mismatch between what travelers want from online channels versus what companies are investing in. Let’s take a closer look at the survey findings.



Providing more targeted promotions (59%) is the most common way that travel and hospitality organizations have improved their online sales over the past 12 months. To encourage online purchases, companies are using personalized promotions on relevant products or services travelers have not purchased before (92%), personalized promotions for products or services travelers have purchased before (92%) and recommendations from peers (87%). Organizations are using a variety of personalized ways to engage with travelers including social media campaigns (51%), subscription-based mobile app-based notification (43%) and recommendations for suitable purchases (42%). Traveler data is captured by several methods to support targeting and personalization: customer profile data (91%), loyalty (88%), social media usage (83%) and others. 57% of respondents are planning to enhance the purchasing experience by sharing their customer data with other companies within and across industries. Contrary to their apparent conviction of the value of targeted, personalized customer engagement, just (26%) of decision-makers confirmed that their organizations are investing in personalization to improve the online purchasing experience, compared to expanding payment options (39%).

Personalization is driving revenue growth for companies, but they don't invest in it nearly as much as other features that have an unknown impact on revenue.

02

01 Companies are finally starting to understand that their online presence is about serving customers as much as it is about selling to customers. The study found organizations are adopting digital technologies to improve:

64%ACCESSIBILITY

63%CUSTOMER SERVICE LEVELS

53%ENGAGEMENT WITH CUSTOMER

49%VALUE OFFERED

Travel and Hospitality Survey – Global Highlights

The traveler survey included approximately 3,300 adults from each of the three regions who made online purchases between October 2014 and October 2015, and 180 travel and hospitality decision-makers from each of the three regions. Here are several valuable insights the study revealed:



Travelers see ease of comparing products and pricing (49%), or the ability to quickly target the product or service they are seeking (43%) as benefits of shopping online over in-store. Travelers want simpler, cleaner interfaces (41%), better search functions (38%), and compare and aggregate functions (38%). In contrast, decision-makers reported that their organizations are investing in features such as the ability to pay in different ways (39%), shopping cart additions (38%) and creating ‘shopping lists’ (34%) to improve the online experience.

Most travelers crave better search and compare or aggregate functions, but many companies are investing in things like shopping lists, wish lists, and social features.

06

The vast majority of respondents (81%) said they cancelled their transaction due to a price change at checkout (44%) or coupon redemption error (24%).

Incomplete transactions for online customers are largely due to unexpected surprises at the last step.

05

There is huge potential for companies to find growth in mobile apps. 04

Travelers reported they made online purchase based on personalized promotions on relevant products or services they have not purchased before (78%), products or services they have purchased before (80%) or recommendations from peers (69%). Around one-fifth (22%) travelers expect a more personalized customer experience to come from online purchasing that would from direct agent transactions. Similarly, 25% of travelers see personalization as a website or application feature which would improve the online purchasing experience.

Personalization is making customers spend more, but companies don't yet value personalization as an important feature to improve online experience.

03

X

Over the next three years, research shows that twice as many travelers (growing from 6% to 15%) will be using this channel to make purchases from travel and hospitality companies.


BUY


Around half or more of the organizations surveyed confirmed that web (78%), mobile (58%), social media (48%), in-store (47%) and kiosk (21%), are key channels for digital marketing campaigns. Digital marketing campaign effectiveness metrics such as revenue per cost of impression (40%), cost to acquire a new customer (31%) and brand awareness metrics (22%) are useful, but not as influential. For companies, customer satisfaction (53%) remains the most commonly used and relied upon metric to measure digital marketing campaign effectiveness. Almost eight out of 10 companies (78%) want travelers to help them develop content creation strategies.

Travel and hospitality companies have a huge opportunity to redirect digital marketing campaign spends to improve their return on marketing investment (ROMI).

09

A significant number of traveler respondents said the most common reasons they provide a positive review are a good purchase experience (57%) and really useful offers and deals (48%). However, 50% are likely to leave a negative review because of a poor purchase experience, with 54% doing so for misleading product information.

Customers are most likely to post positive reviews after a positive purchasing experience, but are also likely to post negative reviews due to poor quality product or service.

08

More than half of survey respondents reported that they share their positive and/or negative experiences across digital platforms. Travelers are also sharing positive (71%) and negative (66%) views on independent websites, where they can influence both current and potential customers. While 88% of travelers say they read reviews on the seller’s website, 86% also look at reviews on independent websites before committing to an online purchasing decision.

Customers highly value online ratings and reviews (positive and negative) from other customers and seek them out before making a purchase. While word of mouth (83% positive or 78% negative) is still the most common method of sharing, digital platforms are catching up.

07



Travel and Hospitality Survey – Region by Region Highlights

Here are some of the lessons and messages from the travel and hospitality survey of 60 industry decision makers and nearly 1,000 travelers across each of the three regions of the United States, Europe, and Asia Pacific.

01 Companies doing business in the three regions are finally starting to understand that their online presence is about serving customers as much as it is about selling to customers. In fact, more than half perceive their organization to be adopting digital for various reasons:

64%

53%

ACCESSIBILITY

75%

66%

53%

CUSTOMER SERVICE LEVELS

70%

45%

51%

SHOPPER ENGAGEMENT

63%

55%

42%

VALUE OFFERED

49%

U.S. Europe APAC


Providing more targeted promotions (U.S.: 63%|Europe: 48%|APAC: 67%) is a common way that sellers’ organizations have improved their online sales over the past 12 months. Approximately 9 out of 10 decision-makers said personalized promotions on relevant products travelers have not purchased before (U.S.: 95%|Europe: 88%|APAC: 93%), products travelers have purchased before (U.S.: 97%|Europe: 85%|APAC: 93%) or recommendations from peers will encourage online purchases (U.S.: 90%|Europe: 83%|APAC: 88%). Decision-makers reported that their organizations are using a variety of personalized ways to engage with their travelers: recommendations for suitable purchases (U.S.: 55%|Europe: 38%|APAC: 33%), social media campaigns (U.S.: 40%|Europe: 43%|APAC: 70%) and subscription-based mobile app-based notification (U.S.: 27%|Europe: 38%|APAC: 63%). Traveler data is captured in a wide variety of ways to support targeting and personalization: customer profile data (U.S.: 87%|Europe: 85%| APAC: 100%), loyalty (U.S.: 83%|Europe: 87%|APAC: 95%), social media usage (U.S.: 80%|Europe: 78%|APAC: 92%) and others. A wide range of respondents across the three regions (U.S.: 60%|Europe: 50%|APAC: 60%) are planning to enhance the purchasing experience by sharing their customer data with other companies within and across industries. However, decision-makers in the three regions (U.S.: 32%|Europe: 25%|APAC: 22%) confirmed that their organizations are investing in personalization to improve the online purchasing experience compared to the ability to pay in a number of ways (U.S.: 47%|Europe: 30%| APAC: 40%) and shopping cart additions (U.S.: 37%|Europe: 30%|APAC: 48%).

Personalization is driving revenue growth for companies across the regions, but they don't invest in it nearly as much as other features that have an unknown impact on revenue.

02


Personalization in each of these three regions is making travelers purchase more, but travel and hospitality companies don't yet value personalization as an important feature to improve online experience.

03

A large number of travelers believe personalized promotions on relevant products they have not purchased before (U.S.: 80%|Europe: 69%|APAC: 84%), products customers have purchased before (U.S.: 83%|Europe: 69%|APAC: 87%) or recommendations from peers will encourage online purchase (U.S.: 68%|Europe: 60%|APAC: 78%). A much smaller number (U.S.: 16%|Europe: 13%|APAC: 35%) expect a more personalized traveler experience to come from online purchasing that would not come from in-store. Similarly a growing number of travelers see personalization (U.S.: 23%|Europe: 20%| APAC: 32%) would improve the online purchasing experience.



Around half or more of the traveler respondents from all three regions see ease of comparing products and pricing (U.S.: 55%|Europe: 43%|APAC: 50%) or being able to search for the product they are looking for (U.S.: 45%|Europe: 41%|APAC: 45%) as benefits of shopping online over in-store. Around one-third or more of the travelers want better search functions (U.S.: 38%| Europe: 38%|APAC: 38%), simplicity in interface (U.S.: 39%|Europe: 37%| APAC: 47%) and compare and aggregate functions (U.S.: 45%|Europe: 32%|APAC: 39%). On the other hand, decision-makers reported that their organizations are investing in features such as shopping cart additions (U.S.: 37%|Europe: 30%|APAC: 48%), multiple ways to pay (U.S.: 47%|Europe: 30%|APAC: 40%) and creating shopping lists (U.S.: 33%|Europe: 37%|APAC: 33%) to improve the online shopping experience.

Most travelers in the U.S., Europe, and APAC crave improved search and compare/aggregate functions, but many companies are investing in things like shopping lists, wish lists, and social features.

06

Shopping cart abandonment for online customers in these three areas of the world is largely due to unexpected surprises at the last step of checkout – such as shipping costs or price changes.

The vast majority of traveler respondents (U.S.: 79%|Europe: 77%|APAC: 88%) have ended the transaction process early, predominantly because of price change at checkout (U.S.: 43%|Europe: 38%|APAC: 52%) or coupon redemption error (U.S.: 21%|Europe: 18%|APAC: 32%).

05

There is huge potential for companies in the U.S., Europe and APAC to find growth in mobile apps.

Over the next three years, Around three times more (U.S.: 3% to 9%|Europe: 3% to 9%|APAC: 10% to 24%) travelers will be using a mobile app channel to make retail purchases.

04



CANCEL


Two-fifths of U.S. and Europe and three-fifths of APAC traveler respondents reported that they sometimes share their positive or negative experiences across digital platforms. While word of mouth (positive - U.S.: 81%|Europe: 77%|APAC: 89%) and (negative – U.S.: 75%| Europe: 74%|APAC: 83%) is still the most common method of sharing, digital platforms are catching up.

Travelers are commonly sharing both positive (U.S.: 67%|Europe: 62%|APAC: 82%) and negative (U.S.: 61%|Europe: 59%|APAC: 75%) views on independent websites, where they will have influence over current customer base and other potential travelers too. A large number of travelers (U.S.: 84%|Europe: 86%|APAC: 93%) look at the reviews on the seller’s website and (U.S.: 83%|Europe: 83%| APAC: 91%) look at reviews on independent websites before committing to an online purchasing decision.

Travelers in the three regions highly value online ratings and reviews (positive and negative) of other travelers, and seek them out before making a purchase.

07

Around six in ten traveler respondents surveyed said the most likely reasons encouraging them to provide a positive review comes from having a good purchase experience (U.S.: 59%|Europe: 51%|APAC: 62%) and for offers and deals (U.S.: 51%|Europe: 41%|APAC: 54%). However, most respondents (U.S.: 56%|Europe: 61%|APAC 58%) are likely to leave a negative review because of a poor experience coming from what was purchased, where more than half (U.S.: 56%|Europe: 54%|APAC: 58%) are likely to do so because of misleading product information and about half (U.S.: 52%|Europe: 45%|APAC: 52%) would do this if they experienced a poor purchase experience.

Region by region, travelers are likely to post positive reviews after a positive shopping experience, but most likely to post negative reviews due to poor quality product or service.

08

Significant proportions of the organizations surveyed confirmed that web (U.S.: 82%|Europe: 67%|APAC: 87%), social media (U.S.: 50%|Europe: 35%|APAC: 58%), and in-store (U.S.: 43%|Europe: 48%|APAC: 50%) are key channels for digital marketing campaigns. Kiosks are key channels (U.S.: 12%|Europe: 7%|APAC: 45%). Digital marketing campaign effectiveness metrics such as the cost to acquire a new customer (U.S.: 30%|Europe: 13%| APAC: 48%), revenue per cost per impression (U.S.: 27%|Europe: 42%|APAC: 52%), and brand awareness metrics (U.S.: 33%|Europe: 13%| APAC: 20%) are useful, but not as influential. For sellers, customer satisfaction (U.S.: 63%|Europe: 40%|APAC: 57%) remains one of the most commonly used and relied upon metric to measure digital marketing campaign effectiveness. Around three quarters of sellers want travelers to help them develop content creation strategies (U.S. 75%|Europe: 75%|APAC: 83%).

Travel and hospitality providers have a huge opportunity to redirect digital marketing campaign spends to improve their return on marketing investment (ROMI).

09



What Our Travel and Hospitality Survey Results Mean to You

There are a lot of lessons to glean from our study, but when it comes to meeting the three-year window travelers targeted for the ideal mix of online and in-store purchasing, we at Mindtree believe that a focus on personalization will be crucial. We all know there is great value in personalized services for improving customer engagement―better targeted pricing and promotions of products and services, and purchase processes tailored to individual preferences―to help make the decision to buy an easier one.

Driven by data from multiple sources fed into smart algorithms, personalization allows travel and hospitality companies to target the right people, at the right time, in the right place, on the right device, with the right content, creating seamless commerce and a community of advocates.

There is no shortage of marketing, analytics and personalization solutions. But, without a standard framework that can help drive a personalized customer experience across channels, organizations are forced to use a patchwork of disparate systems that limit agility and increase cost of ownership.

Successful personalization will only work if companies have the right digital underpinnings at the broadest and deepest levels. At Mindtree, we believe there are four cornerstones crucial to achieving true digital transformation and success:

SHAPEnew innovative

business modelsand partnerships

DEVELOP“sense-and-respond”

systems

DIGITIZEthe value chain across the front and back end

CREATE digital customer experiences



A Personalization Framework for Travel and Hospitality Companies

Our experts have developed a framework for omnichannel personalization based on years of experience with helping global leaders transform their customer experience. This four-part framework guides organizations to successfully develop and execute successful personalization strategies.

To get started, travel and hospitality companies can add relevance and trust to the shopping experience. This framework can help them get there.

1 Customer Context: Travelers leave a rich trail of their “digital body language”, which companies can use to expand the shopping experience. Constructing a unified view of customer profiles, preferences, purchase and behavior data is the foundation of the framework. By combining data such as location, weather, social media sentiment and demographics, companies can learn the context in which travelers engage with them.2 Personalization Engine: With a better understanding of traveler motivations and communication preferences, companies can supercharge their messaging and engagement strategy for individual customers or segments. Organizations can acquire this understanding using a combination of analytic tools and proprietary algorithms that tie customer analytics to their business model.3 Offer and Content Execution: To succeed with omnichannel personalization, organizations need consistent, flawless, cross-channel, multi-format offers and messages. Companies can overcome channel and device challenges with marketing automation tools, digital content repositories and service level agreements (SLAs) with partners to help cost-effectively manage marketing IT operations.4 Code of Honor: Companies must balance greater personalization of the traveler experience with the inherent risks associated with managing large amounts of customer data. Specifically, they must begin by being more open about how they use traveler data to personalize the shopping experience, give customers more control over what data is used, and go beyond current regulations to ensure the highest data security standards.

3Consistent, cross-channel,

multi-format, device-optimized execution of personalized offers and

messages

1A unified view ofcustomer profile,

preference, purchaseand behavioral data

4More participative,

transparent customerdata management

practices

2An enabling platform

of analytics tools,proprietary algorithms and human creativityCustomer

ContextPersonalization

Engine

OmnichannelPersonalization

Framework

Offer & ContentExecution

40%

Code of Honor



Summary – Winning in the Age of Personalization

Winning the global connected traveler in the age of personalization is critical for gaining an advantage in an increas-ingly competitive environment. Travel and hospitality companies need to think about how to deliver personalization for travelers across their purchasing journey. They also should focus on creating unique customer personas using the huge number of data streams they have access to. And they should apply analytical models to finely segment custom-er preferences.

In addition, travel and hospitality companies should use segmentation knowledge to deploy an activation layer to engage customers with the right information and offers. Finally, companies should do all of this beneath a code of honor―maintaining the customer’s trust about using data to personalize services and offers.

With the right framework for omnichannel personalization, travel and hospitality companies can shape innovative models and develop systems to deliver an experience that meets traveler expectations and drives growth.

Mindtree was “Born Digital” and continues to bring an extraordinary depth of experience across the entire digital value chain. With its strong blend of planning and execution, Mindtree can steer companies like yours through the personalization journey.

ABOUT MINDTREEMindtree [NSE: MINDTREE] delivers digital transformation and technology services from ideation to execution, enabling Global 2000 clients to outperform the competition. “Born digital,” Mindtree takes an agile, collaborative approach to creating customized solutions across the digital value chain. At the same time, our deep expertise in infrastructure and applications management helps optimize your IT into a strategic asset. Whether you need to differentiate your company, reinvent business functions or accelerate revenue growth, we can get you there. Visit www.mindtree.com to learn more.

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mindtree Brief 2016

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