May 2019, London
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‘Search friction’ in the booking process: a long-term goal?
Very often online companies are told they must reduce friction for customers and for the moment that seems wise, but the future may look different, writes Tom Bacon
Many e-tailers, including airlines, continually try to reduce friction in the online experience, but this may not be best way to boost revenues. Thales Teixeira and Donald Ngwe, both associate professors in marketing at Harvard Business School, however, have written in the Harvard Business Review about how ‘search friction’ can boost revenue performance. In other words, making it more difficult for customers to buy lower priced items; or, put another way, making it easier for customers to pay more rather than to pay less. So, all customers may see the same items for purchase on the base site, while more price sensitive customers can find the lower priced deals, but only by doing some extra legwork.
Needless to say, their study does not include customer satisfaction. And, indeed, there is a risk that such search friction may be perceived negatively – customers resent friction that makes it more difficult for them to purchase what they want. Too much friction can also drive abandonment, thereby lowering conversions. Still, it is intriguing to know how airline sites currently exploit ‘search friction’. Do airlines, in fact, make it easy for customers to pay more?
Search friction: what works and what doesn’t
- Coupons and membership
Spirit Airlines posts coupons (promotional codes) to customers via an e-distribution list that offer discounts on published fares. Spirit also has a membership club that entitles members to lower prices. Neither of these techniques is used broadly in the industry but both are great examples of search friction. Both require extra work to access the lowest fares. Spirit may be perhaps the best example in the industry of exploiting search friction.
- Branded fares and the upsell
The three large US global carriers - United, American, and Delta - have all adopted a prominent display of branded fares on their sites. Branded fares are a menu of fares representing different bundles of amenities (checked bags, priority boarding, seat assignments, and so on). Customers can easily compare the amenities and purchase an upgraded fare if they need to check a bag, for example. Similarly, it is easy for customers to see and book the lowest fares. A customised bundle - an ala carte selection - on the other hand, significantly lengthens the booking process; such bundles involve the purchase of a less complete fare along with an added optional service. Branded fares are designed to be easy to book - but also to drive more upsell as customers may buy a bundle of amenities that includes items that the customer wouldn’t buy on an ala carte basis (more mileage credit, the second checked bag). Effectively, pre-packaged bundles represent some search friction.
- Basic economy
Basic economy fares, the lowest fares offered by the three legacy carriers, are a branded fare that may appear to violate the search friction rule, since they are widely available and appear prominently in results. They are the lowest fares and, in many cases, often the easiest to book. Of course, they are the result of intense competition and the historic commoditisation of travel. Search friction doesn’t work well if many or most customers exhibit significant price sensitivity. Travellers are accustomed to seeing the lowest fares in response to their searches on both airline sites and online travel agent sites.
To mitigate the impact of displaying the lowest basic economy fares, airlines have done a good job of underselling this fare – cautioning customers that they may, in fact, not adequately meet the traveller’s needs. Rather than promoting them as ‘best value’ they are more likely positioned as less desirable, which makes the upcharge for standard economy look attractive. The legacy carriers generally are pleased with strong customer buy-up behaviour.
Currently, airlines have a mixed record on their use of search friction. In general, searches display the lowest price alternative along with various upsell options. At this point, the booking process is still too complex; abandonment and low conversion rates remain a huge issue for airlines. Airlines should continue to focus first on reducing friction, and making booking easier for all. But, longer term, search friction remains a potential opportunity for increased revenue.
Tom Bacon is an airline industry veteran and has been in the business for 25 years. When he isn’t penning his regular column for EyeforTravel, he is an industry consultant in revenue optimisation, and leads audit teams for airline commercial activities including revenue management, scheduling and fleet planning. Want to find out more? Email Tom or visit his website