1. 32 RETAIL STRATEGY
Passenger Terminal World | MARCH 2015 passengerterminaltoday.com
SAUL WORDSWORTH
target
audienceAre 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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2. RETAIL STRATEGY 33
MARCH 2015 | Passenger Terminal Worldpassengerterminaltoday.com
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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3. MARCH 2015 | Passenger Terminal Worldpassengerterminaltoday.com
RETAIL STRATEGY 35
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.
Collaboration
While 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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4. 38 RETAIL STRATEGY
Passenger Terminal World | MARCH 2015 passengerterminaltoday.com
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 options
In 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 strategies
Identify 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.”
Successful
marketing
doesn’t just
happen – it’s
a lot about
learning by trial
and error
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