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This is an excerpt from our recent trend report, What Travel Brands Can Learn from Behavioral Economics, brought to you in partnership with Boxever.
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If you ask a travel marketer about the tactics they use to drive online bookings, what do you expect to hear?
It’s likely you’ll get a rundown of the usual suspects—email marketing, programmatic advertising, improved search functionality—all of which are perfectly acceptable answers, but fail to address the root of the purchase journey: the consumer and the decision to actually book with you.
We can’t predict customer behavior with absolute certainty, but we can help form their decisions by understanding how choices are made and designing solutions around them. This is where behavioral economics, the study of how and why we make choices, becomes an advantageous tool for marketers.
Retailers have been applying these techniques for years, namely with anchor pricing.
When Steve Jobs announced that the first generation iPad would be priced at $999, critics scoffed. He must have been crazy to think ordinary consumers would pay that high amount. Then, on announcement day, he revealed that the pricing would actually start at $499, with a slightly upgraded model available for $599. Putting the $999 price tag into the minds of consumers was a strategic play to offer more reasonable tiers of pricing. All of a sudden $599 seemed like a bargain.
Travel brands, whether they realize or not, are starting to employ some of these cognitive tactics. Airlines and hotels push these pricing tiers out to consumers all the time. A visitor browsing a booking site may not have considered a flight at the silver-tiered fare, but when stacked next to the more expensive, premium option, the mid-level price becomes much more favorable.
With behavioral economics, travel brands have a huge opportunity to drive revenue by applying minor cognitive techniques.
“I think there is huge opportunity to be able to merchandize more effectively online based on behavioral economics,” says Dave O’Flanagan, CEO of Boxever. “Presenting products in these different ways, looking at the ways people pay for things—it has a really, really dramatic effect on conversions.”
It starts with understanding consumer behavior…(Read More)