Skift CMO Interviews: Avalon Waterways on Offering an Alternative

Editor’s Note: Following our previous CEO interview series in online travel, hospitality, and destinations, Skift has launched a new series, this time focused on Chief Marketing Officers.

To better understand the big marketing challenges facing travel brands in an age when consumers are in control, Skift’s What Keeps CMOs Up at Night will talk with the leading voices in global marketing from across all the industry’s sectors.

These interviews with leaders of hotels, airlines, tourism boards, digital players, agents, tour operators and more will explore both shared and unique challenges they are facing, where they get insights, and how they best leverage digital insights to make smarter decisions.

This is the latest interview in the series.

The fast-growing river cruise industry has earned significant attention from consumers in recent years largely due to the television presence from one main player, Viking River Cruises, which scored with tie-ins to the popular program Downton Abbey.

Smaller competitor Avalon Waterways didn’t want to just reap the benefits of interest in a rival, so the operator — part of the Globus family of brands — decided to run its first ever television ads late last year. The commercials focused on the views on Avalon ships and positioned the brand as a river alternative. A second run followed earlier this year.

Steve Born, vice president of marketing for the Global brands, said Avalon saw a nearly 200 percent increase in traffic to the site during the first run and realized it needed to be better prepared to take advantage of that interest.

“That volume of interest in search for the first flight was a little bit surprising to us,” Born said.

Skift spoke to Born about Avalon’s push into TV, pricing pressures as competition heats up in the river cruise segment, and how travelers feel about going to Europe this year. He mentioned last year’s attack in Paris, but the interview was conducted before the bombings in Brussels earlier this spring.

Skift: What were some of your biggest successes, unexpected and otherwise in 2015?

Born: From a marketing standpoint, the biggest success was actually our foray into TV. We had made a careful plan to not just do mass TV and just create awareness for the category, but really to be super targeted with capitalizing on some category demand that has already being created by a competitor at Viking. We call it “Smart TV,” and it was really our orientation to be, can you use a mass medium to be laser-focused on a very specific demo? Not only demo, but kind of mindset of a prospective traveler.

Our strategy was around the fact that there’s an insane amount of media going into a relatively small category for river cruising, which has really risen very quickly onto the radars of travelers, and that’s great. What a great position to be in, that a competitor has established category interest. You can get washed away by that if you don’t plant a flag for your brand and identify — wait a minute — there’s an alternative choice.

The whole approach of a way to do that was acknowledging there was already some category awareness, a lot, actually. But then representing an alternative to those that we felt like had the mindset that they were open to an alternative, that it wasn’t the traditional approach.

Skift: You talked about being a little surprised, during the first flight, with some of the reaction, the volume of interest and search. That didn’t sound like a failure, that sounds like a good problem to have. What were some learning opportunities last year ranging from things that really went poorly that you were able to figure out how to do better, or things that you feel like you had the potential to be better and you just weren’t prepared to do that at the time?

Born: Learning that we live in a really instant world in that the spikes were literally, they matched up exactly with the spot schedule, and that there was a little bit of lingering effect the week after the flight, in terms of traffic. There’s really a danger once you go here, of being out of sight, out of mind. Knowing that all marketers have the reality of a budget, trying to walk that line between knowing that there’s a real dramatic impact that happens once you’re on the air, and then the danger of you falling off the mat after you’re on the air.

We were already doing this prior to this, but really emphasized the importance of: Capitalize on the opportunity, but in terms of leads in that interest that you’re going to harvest during the flight, so that you have activity once the flight ends.

We have a distribution network of about 7,000 travel agencies around the country that we really needed to mobilize with our sales team during the flight to make sure that they’re taking advantage of the inquiries that they’re getting during the flight to store that up for the time period following so that they had activity downstream.

Again, these are things that we had anticipated but just how dramatic that was, we found during the flight was a little bit surprising.

Skift: What are other challenges that you have run into in the past year and ways that you found to respond to them?

Born: That was related to the question about what keeps me up at night, which I want, because it’s almost like a therapy session when I get to talk about that.

The supply and demand scenario has changed almost overnight, in that all river cruise operators as recently as 2014 couldn’t build ships fast enough. It was really a situation where the category was in high growth and demand outstripped supply, particularly when it comes to new ships and the interest in these premium cabins.

Overnight, as the 2015 travel season started to be sold in the summer of 2014, there was a dramatic increase in new ships and a little bit of shift in the mindset of travelers that they could wait and see what deals came by. The market quickly shifted into this discount mode. I’m very concerned that the brand message is getting blurred with the discount and that the category has gone to almost a desperate place of discounting.

It’s a reality in travel, particularly in cruising, that there has to be a call to action and an offer to get things going. But the degree and the voice around discounting, I am very concerned that this had sent a message to all cruise prospects that they can wait and see, that the brands aren’t worth the retail price, that there’s a little bit of desperation in the category.

Really being a marketer in the cruise category and knowing that there’s a little desperation about we’ll just put people into those cabins, at whatever cost, it really blurs the story of your brand. It really does because everyone’s got a story, and we think ours is really compelling with it’s hardware advantage, with it’s view. In order to compete in that discount world, sometimes I think we sacrifice our souls a little bit in pushing up way too much of that discount message.

Skift: When you just look at the river cruising segment, [Cruise Lines International Association] I think said in its forecast for this year that there were 18 new river ships due, and I think you guys have a couple of those.

I’m guessing that that increased capacity is playing into those pricing pressures, but do you think it’s just a function of the market getting really crowded or people being used to it, and how does Avalon stand out in that as that niche segment keeps growing?

Born: To put some framework around it, so even with those new builds from the U.S., there’s roughly in a given year 600,000 cabins available in the river cruise category. Overall to kind of paint that picture in cruising from the U.S., there are about 12 million cruisers in a given year. I think it’s that number right there about the difference in scale between river cruising and cruising overall. That’s what drove the new builds. There’s one company that really was the driving force behind a lot of those new builds.

But every cruise line was obviously seeing strong growth over the previous years and focusing on that idea that we’re still a small player with a lot of potential in the overall cruising market. And so I think what changed a little bit with that is the market is kind of normalizing right now, river cruising occupies a very finite segment of the overall cruise market that is really, it’s high income empty nesters who are savvy cruisers who have done a lot of other types of cruises that are looking for a more intimate alternative.

The market is not broad-based, it’s very finite. The category hasn’t done a good job of even converting Boomers to that market. Where Boomers right now are the driving force in international travel, they’re underrepresented in river cruise right now.

Now, so the category has to grow into that Boomer delivery. Short term is kind of fighting for that more mature market. The big ships did something wonderful back in the ’80s. They started changing their hardware dramatically in their delivery to broaden their  age base. River cruising hasn’t quite come to that. There are limitations of a river cruise ship. There are just not that many things you can do in terms of amenities to correct that. In a way, river cruising is handicapped a bit by that in that delivery isn’t as tangible for a Boomer as it would have been for a big ship.

I think and then in the short term, if I were to look at the category, they kind of panicked and instead of telling that story about how the experience is really relevant to a Boomer, they just resorted to discounting.

We’re definitely, our orientation’s more focused on what is it about river cruising that hits the sweet spot for a Boomer traveler. Trying to keep that in mind. In other words, we want to stay more focused on the customer, the guest, as opposed to what the competition is doing and trying our best not to get too trapped in a battle of discounts.

Skift: Which digital channels, other than TV which sounds like it’s doing well for you, are you finding effective or are you turning to? Is Facebook working for you? I don’t know if Snapchat is even on your radar at this point.

Born: Right. Our sophisticated, international traveler, cruiser, 55-plus market, decision makers skew female. That market very active on Facebook, but from a social media perspective, that’s it. That’s our focus.

We use it in a couple ways. One is as a branding tool. The other is a customer relationship tool. I wouldn’t say we’re that sophisticated in terms of being able to convert our Facebook activity into leads per se, but as far as social media, that’s definitely our playing ground.

We have someone on our staff full-time that manages that and we have mostly folks in our agency, our online agency who are more dedicated to that tactic. Overall, just in terms of our digital strategy, it’s really about our first and foremost focus is on search, particularly for our branded terms. Retargeting is a wonderful tool that we found a lot of strong results in being able to be obviously very targeted and cost effective.

In terms of our resources, the vast majority, the largest percentage of our resources are dedicated to online search. Again, that’s kind of where the category has a lot of interest still and that continues to grow, but the challenge is that a lot of that interest, especially in Boomers, who are off the charts in terms of their interest in river cruising, it hasn’t led to conversion yet. We’re trying to use the online media to move that interest to conversion.

Skift: Let’s just talk about Europe in general and we hear a lot, especially here in the U.S., refugee crisis in Europe, the attacks in Paris, last summer [low] water levels in the rivers.

When things like this are going on in Europe, what is your role and how do you respond to any of those things, and when your potential customers just hear ‘Europe’ and maybe aren’t thinking a specific river?

Born: What we found over the years and really the reality of dealing with international travel, particularly after 9/11, is that there could be no such thing as a year without anything going on, without concern or incident.

Our market, it’s in most cases not first-timers to international travel. With that comes the fact that we found they’re practical. What that means is, as opposed to more of a general ‘Something happened in Paris, I’m concerned about a trip to Europe,’ it’s more about ‘Is there an imminent threat to my vacation? Is there something very specific going on that could sidetrack my trip in any way?’

As opposed to more general concerns such as for instance, let’s use last year we had some ships on the Danube with low water. For us, thankfully it only resulted in like one in ten cruise ships were affected on a trip. There are a lot of things that can be done on the river to maneuver around. Cases like that and in some cases that leaving a port might be delayed a bit or substituted with an experience from the ship to land or something like that. Very few in reality are truly cancelled.

The thing about our folks is that I think they’re really good and especially with our agent distribution of separating general concerns form very tangible concerns. That’s a huge asset for us that when something more broad-based happened, like a general concern about, ‘Oh, I’m nervous about potential low water affecting my cruise experience,’ that our brand, we don’t have to be the ones to try to really in a brand sense try to combat that directly or be the ones to comfort everyone in that situation. It’s more about the story of, if something were to happen, you are in very good hands.

Skift: You hear so much from companies about the strength of the dollar in the U.S. Even Skift has declared 2016 the Year of the American Traveler. Do you see that playing out? Is that who your target market is and are you trying to create messaging or marketing that capitalizes on low oil prices and strong dollar and maybe Americans have an appetite to go overseas because they’ve been holding back for a few years?

Born: Our prices for Europe this year are 10 percent lower than what they were in 2015.
We’ve made that a part of our message. That’s the sweetest marketing message of all because it’s so clear there’s no gray area when it comes to pricing. It bears out.

We’ve seen that idea, it’s almost like the market is a little schizophrenic this year in that yes, it’s a great time to be an international traveler, but when they get to the decision about putting their deposit down, we have to overcome more specific things like the state of the stock market right now, like the Paris situation back in November, like news that they heard about the water last year. Those two things, they’re battling each other it seems like right now when it comes to European travel. Overall we’re up this year, slightly in Europe compared to this time last year, but you initially might’ve thought that that increase this year would’ve been more dramatic because of the price difference and because of the kind of pent-up demand that we saw from last year.

It seems like there’s a portion of the market that knows this is a great year to go to Europe, but they’re still sitting on their hands.

This series is presented by Boxever. The Skift content team maintains complete editorial control over these interviews and the selection of subjects.

For more insights from Boxever, please see the following reports:

• Free Skift Report: The Psychology of Customer Experience
• Free Skift Report: The Habits of Travel Bookers: How Americans Take Vacation
• Free Skift Report: What Travel Brands Can Learn from Behavioral Economics