A Conversation about the Nuts and Bolts of Digital Retailing, Season 2, Episode 5

PROS Travel Podcast, Season 2, Episode 5: A Conversation about the Nuts and Bolts of Digital Retailing
A key puzzle piece in the digital transformation process is the customer experience. Airlines and IT providers alike are exploring new and innovative ways to drive customer experience and in turn revenue. To explore that topic, we have lined up Tomi Maaniemi, Principal at PROS, but also former eCommerce leader at Finnair. 

Tomi joins us to discuss the nuts and bolts of airline digital retailing and how airlines can take steps to accelerate and scale innovation across their organization. We touch upon topics like improving conversion and the digital experience, building the business case for innovation projects and measuring digital success through various KPIs. Take a listen and reach out to Tomi after, if you want to continue the conversation.

You can listen to The View from 30,000 ft. on Apple Podcasts and Spotify. Or listen to the full audio version below.

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In This Episode

[03:48]: Are low cost carriers more advanced than full-service carriers?
[07:15]: How airlines can become better digital retailers
[08:24]: Best practices when it comes to the user experience
[10:13]: How to build a winning team
[11:56]: Introducing and scaling innovation
[14:18]: What to prioritize and where to invest
[15:28]: Making the business case to accelerate innovation
[17:28]: Disrupting traditional legacy processes and technologies
[19:51]: Measuring success
[20:47]: How AI can help
[22:54]: What data should airlines look at?
[24:41]: Emerging trends
 

Full Transcript

Aditi Mehta: Hello, and welcome to the PROS Travel podcast, The View from 30,000 feet, a podcast series featuring airline industry experts tackling the real issues around airline digital transformation. This is our second season. I highly recommend listening to the last season if you haven't yet, and we're focused on big and small changes around travel IT, data, products, and retailing. Now sit back, relax, and enjoy the flight....

Stanislava Yordanova: Hi everyone, and welcome to another episode of the view from 30,000 feet. My name is Stanislava Yordanova, and I'm excited to deep dive into some great conversations with industry experts all around digital transformation.

Stanislava Yordanova: A key puzzle piece in the digital transformation process is the customer experience. Airlines and IT providers alike are exploring new and innovative ways to drive customer experience and in turn revenue. To explore this topic we have lined up Tomi Maaniemi, Principal at PROS but also former e-Commerce leader at Finnair. He joins us to discuss the nuts and bolts of airline digital retailing and how airlines can take steps to accelerate and scale innovation across their organization.

Stanislava Yordanova: We touch upon topics like improving conversion and the digital experience, building the business case for innovation projects, and measuring digital success through various KPIs. Take a listen and reach out to Tomi after if you want to continue the conversation.

Stanislava Yordanova: Hi, Tomi it's great to have you on the second season of The View from 30,000 feet. Thank you for joining on this exciting topic around digital retailing. Before we start, can you just give a brief introduction of yourself to our listeners? I know you've led the eCommerce efforts of Finnair in your experience, so I guess everyone is excited to hear what you have been doing before joining us.

Tomi Maaniemi: You thank you for inviting me. This is actually my first podcast ever. I recently joined PROS after successful acquisition of Travelaer, and at PROS I work as a Principal in Travel division focusing in retail and distribution of airlines and setting the direction in travel space for PROS. I've worked a couple stints for different companies, for Honeywell and Finnair in various commercial and detail positions. At Finnair, I was leading global sales, e-commerce, and also some digital transformation initiatives. After that I joined Travelaer, and there we really focused on user experience and we created the best in class booking engine platform for airlines and also many other retail innovations. So that's my experience.

Stanislava Yordanova: Great. So you have been a lot involved around digital sales in the airline space and yeah, airlines were the forefront of eCommerce, but I somehow feel that on average the digital experience really is lagging behind the other industries. Maybe not with all airlines, but in general that's the general perception. I feel like it's often painful to book or change a flight. What do you think is missing for a great retail experience? What are the challenges to get there and where is the complexity coming from in the airline space? Would you say that, for example, low cost carriers are more advanced than full service carriers? And if yes why? What's the case?

Tomi Maaniemi: Okay, so, well first of all, I definitely don't believe that technology would be an issue. There are many great retailers online, and every one of us uses those services even every day. It also seems that every airline has put a growing amount of focus in digital and customer experience overall. But maybe there hasn't been enough innovations in airline retail fields. And really, if we look at the history, there has been only a couple of products to choose from. I mean from an airline perspective and those retail products games from so-called traditional airline IT companies and in those companies that UXD side has never been a strong area or a focus area, and maybe this has led into a situation where airlines have decided to build those retail solutions in house. And that's again probably not the best idea to build a product in house.

Tomi Maaniemi: The cost of maintaining it and keeping it really up to date with your customer requirements gets more and more difficult. Regarding the low cost carriers, are they more advanced? Well, I do hear often that they are able to start from scratch without this legacy of traditional airline IT. Yeah, I'm sure it has made some difference in some areas like direct distribution overall, but when it comes to retail technology? I really don't see the LCCs being more advanced. Actually not at all.

Tomi Maaniemi: They are focusing more on certain sales service elements definitely. But if we look at the technology, what they use or how they present it to their customers, I would say that there are many good and bad low cost carriers in that area in the same way as the traditional network carriers, the low cost carriers who have been focused in their direct channels more than the traditional airlines.

Tomi Maaniemi: That's natural because most of the sale is coming from their website. And there are definitely a couple of great examples how some low cost carriers have even used their mobile applications as their primary channel. And that definitely enables a better experience in a native platform once you have a team who can actually build a good experience. But yeah, overall I believe that the low cost carriers started earlier to put more focus on the website, and on a mobile application user experience. So maybe that's the trick, why the low cost carriers might have a small advantage over the network carriers.

Stanislava Yordanova: Yeah. So it seems that if there is a retail strategy behind the business model that really helps deliver that better customer experience. So what kind of projects do you think airlines need to embark on to become better digital retailers? What should they actually be working on?

Tomi Maaniemi: Well, from a customer point of view, there are so many areas that still amazes me. For example, it is still extremely difficult to find the best flights. As a customer, you have to try multiple channels like search engines, online travel agencies, and then the airline website, just to figure all the options. And what really amazes me is that often I find better offers outside of the airline own direct channel, the website.

Stanislava Yordanova: Yeah. It's sometimes it's much easier to find the best flight on a meta-search channel, for example, because the experience is more user friendly and you kind of find the best price and also what you're looking for in terms of like schedule or ancillaries.

Stanislava Yordanova: But we look at other industries. Tomi, what do you think airlines can adopt as approach and like best practice when it comes to the user experience and the overall end to end shopping and booking process?

Tomi Maaniemi: Well, where should I start? That's a big question to me to open here and now, but to its essence, maybe everyone should start asking themselves when is really the last time you tested your own digital services? Or when did you actually see your customer use those services? When did you do a real customer testing in front of you, and what could be done better there?

Tomi Maaniemi: So, after understanding all the customer pain points, then yes, make those quick enhancements, test, analyze, and keep doing it. That's really the basics.

Stanislava Yordanova: So do you think airlines are not used to that agile testing approach?

Tomi Maaniemi: I think that airlines do collect a lot of customer data. They collect a lot of those customer requirements, and then they definitely have a huge backlog on their IT department full of business requirements and customer requirements to enable through the digital. But I at the same time see that not too many airline actually use these type of tool. I mean listing customer as a base pool in their daily operations.

Stanislava Yordanova: So do you think airlines should actually just rethink their entire organizational charts and kind of look at where the talent gaps are, what kind of people they need to recruit so that they actually make use of this data and change how they have been doing business around digital?

Tomi Maaniemi: Well first of all like talent acquisition and team building, it takes a lot of time to really make a functional good team. It is time consuming and but then again you can only start this work too late. So if you haven't been doing it already, you should immediately. But before building an organization chart, of course, the airline has to have its vision and strategy in place, and only after you know where are you going and how to get there, you should analyze what changes are necessary to make, and what competencies are missing, and how to shift up this whole support organization.

Tomi Maaniemi: All that can be really over-engineered, and you can put way too much emphasis on it, but really the question is how to build a winning team. I believe more in power of right kind of a culture, the working culture and the way you're working, like how teams work together and open communication and transparency especially in a delegation of decision making and failing fast as well.

Stanislava Yordanova: Yeah, so it seems that for the digital mindset to work, airlines need to be quicker in bringing innovation. How did you look at this process back in Finnair when you were heading the eCommerce department? Can you tell our listeners tips on introducing innovation across the organization and scaling it from a project to really a full functioning process?

Tomi Maaniemi: Well, if you haven't yet, place a visit to some successful digital B to C company such as Spotify or Netflix. I mean we did actually meet Spotify, and it's really eye-opening visit to those who haven't worked in a for a new digital companies or startups. Innovation sounds something that only a genius can do. But innovation really isn't that. Any improvement is an innovation. Meaning that everyone recognizes issues. I mean, we are so good in complaining when something is wrong, right? So, the same way everyone can propose how to improve, fix these issues, and that's innovating. What you need to do in your organization or in your team is to give some time and place for innovation work.

Stanislava Yordanova: So how does this work in the airline and organization? What are some of the best practices you've seen back in your Finnair days?

Tomi Maaniemi: Yeah, well small teams actually give that time to innovate. Working together and finding those issues is the one thing. But using some of the design principles, which we started only in the later years of my Finnair career to really start at Finnair clarify the process and gave us more tools how to interact with customers, how to quickly build small prototypes and test if those thoughts were correct or not.

Tomi Maaniemi: And then we, again, we went into this cycle of testing, analyzing, and then going back into the enhancements, and it seemed to work really well. But again, the team had the power, and they had the budget to do it, and they had the right to do it. And so of course you need to power your teams and again give the time and space for innovation.

Stanislava Yordanova: And how did your work with the team to decide which projects or which technologies to prioritize and where to invest and how to scale that when it comes to the different departments?

Tomi Maaniemi: That is a great question. I mentioned earlier the decision-making being one of the main reasons why airline industry lags behind in digital retail, but again prioritization is really a process. Once you set up a framework for it, which everyone should follow, then you should look into what is the most effective way to implement these projects. And definitely which ones have the strongest business cases. And in some cases there are just must to do things is it generally called requirement, or another roadblock that needs to be solved before you can move forward.

Tomi Maaniemi: In a C-level though, it's all about money. As long as these initiatives support the airline strategy, the business case matters the most.

Stanislava Yordanova: So what should e-Commerce leaders look for when building the business case for the leadership and how to get the buy in from the, what is it the CDO or the CEO or the CIO and even procurement just to make sure that they accelerate this innovation project?

Tomi Maaniemi: Big airline organizations are really process oriented. So, every airline has its own process to fill these, let's say the different requirements that come from different teams and C level. So of course you need to follow that basic rule. But from the eCommerce standpoint, there are many other teams and many other initiatives that the C level is looking after.

Tomi Maaniemi: So you just need to be really transparent and open with the numbers and the business case itself and show what and how fast you can actually move forward with that, and what are their targets and your KPIs. So really building a really in depth business case helps the most.

Stanislava Yordanova: Do you look at building scenarios? Because sometimes it's hard to project how the market will turn out.

Tomi Maaniemi: Yes, of course. Scenarios help to understand. Like any use case, what you are aiming at, what is the target, and what are the benefits. So that should be a part of the process as well.

Stanislava Yordanova: Yeah, and to go back on the airline organization, I feel like this industry is traditionally risk averse. It's really focused around safety. So really accelerating around innovation projects like doing pilots or startup projects. It's something that airlines are a little bit cautious doing, but what are the steps? How to actually disrupt a traditional legacy processes and technologies and move faster because the market is changing fast. The consumer expectations are changing fast. What should airlines look to take steps and what were the risks? What should they look out for?

Tomi Maaniemi: So the real driver is really your airline customers and their requirements. The acceleration part then, how to accelerate these projects that will require a new way of working. And I mentioned this one also earlier and we started practicing this at Finnair after seeing how the digital companies do, it's failing fast, so not trying to target a huge long project, but instead they're taking small steps, and steps that you can immediately fail and start all over again. That's actually part of the risk communication as well because if you can fail fast and more forward with a new idea, it's also very cost efficient.

Stanislava Yordanova: That sounds interesting. Can you give examples of smaller projects like I don't know, changing something during the shopping window or maybe a step in the booking process?

Tomi Maaniemi: Yeah. One of the last projects that I started driving at Finnair was including a very simple addition to date peak calendar. So when you book a flight and then you pick the dates, and in this calendar we added this starting from fares, which by the way, at that time, Google flights did not have, so we did this before Google did. Really proud of that by the way. Great team, great ideas.

Tomi Maaniemi: So really small step added starting from fares and we saw that conversions to that step increased a lot. So small initiative and we could test that with our customers. Of course not online but with the fake data and saw that they liked the idea and they never came back to check again the flights and see new flights when they could see the starting from fares already in this data peak calendar.

Stanislava Yordanova: Okay. That's a very interesting project that really drove conversion. What are some of the other ways to measure success from those digital projects? What KPIs should airlines set beforehand and look as a result from all the pilots they're running?

Tomi Maaniemi: Well customer satisfaction, obviously. Revenue for the lesser of C-level. Costs, those do matter as well to be efficient. And maybe also automation level because you actually beat these innovation initiatives. You start with the small, so there might still be some customer service, real people to be involved and then you continue enhancing it and making it more of a full automated search service tool. So I would also pick up an automation level as being the fourth KPI.

Stanislava Yordanova: And I feel that this is an area where artificial intelligence can really help. What are some of the other applications of AI that you have seen around digital retailing? How can it improve, automate? What are your thoughts on this?

Tomi Maaniemi: This type of predictive modeling, massing, learning, and all these algorithms which people talk when they talk about artificial intelligence hasn't really been seen, at least in airline industry except of course in revenue management. That's where it's been used for years and years. But even if we go into the marketing tools or where you should be able to predict or really doing a shopping and merchandising, there are still many great areas to improve the efficiency of your predictions, your offer optimization. So I believe that's the next area really to be like a big change in airline industry, to optimize the offers using the artificial intelligence.

Stanislava Yordanova: Yeah. If we look at other industries, they're really driving value through AI. I mean other digital retailers. What does it take for airlines to get there? I mean is there an issue with the data they use? How can they implement AI successfully?

Tomi Maaniemi: Well, call PROS and and I'm sure we have enough scientists who can tell you how to do it. That's what I would do first because I'm definitely not an expert what comes to artificial intelligence, but some basics that I do have learn is that first of all, collecting data. You really can't have enough data even from your customers how they behave and the history of your bookings and so on. So collecting data, that's where it all begins from. And then our guys, they can start crunching the data and using the artificial intelligence to efficiently predict the future.

Stanislava Yordanova: When it comes to digital retail, what data do you refer to? Is it around the customer or around transactions? What should airlines look at?

Tomi Maaniemi: Pretty much try to track all your website pages, all the clicks. Also the behavior of your customers, how they flow through your website and the booking flow. So I would say that very much everything that you can. You can also collect the PNR data from offline sites and you can use other tools, commercial tools like personalization engines to enhance all this data. Plus from the marketing sources. You can collect more of this behavioral data through Google or Facebook for example.

Stanislava Yordanova: Yeah, you mentioned a lot of sources. I feel like there was a big opportunity for airlines to really improve that end to end digital retail experience from shopping to booking to post travel.

Tomi Maaniemi: I definitely hear you. It's not about booking only, it's really the whole flow, and it actually starts from the acquisition of customers, even from the brand marketing, getting into more tactical marketing, dreaming, and then planning the trip, then booking the trip, and then of course the whole journey with your customer.

Tomi Maaniemi: And let's not forget the retention part as well. So airlines should definitely look into the full life cycle of a customer and to make them loyal to your airline. So the latter part is as important as the acquisition part.

Stanislava Yordanova: So to sum up, what emerging trends do you see impacting that end to end retail experience? In short term, let's say this year.

Tomi Maaniemi: Some of the emerging trends that we've seen there for awhile is about distribution. So definitely the distribution part will evolve during 2020 as well. But other interesting area is how business side is getting closer to the technology and digitalization, whereas it used to be the traditional IT playing field. So I think that businesses are making is actually moving from the IT to business and that's a big change in airline industry.

Stanislava Yordanova: Okay. It's the beginning of 2020; I can't wait to see how this year will turn out for airline digital retailing. One last question. It's a fun one for our listeners. Tomi, will you share with us some more about your most memorable travel experience you had?
Tomi Maaniemi: Well, one very nice memory comes from one Middle East carrier. We were flying with my family to a vacation, and we got upgraded and the full family, four of us sitting in business is of course something really nice to have, and the customer service, how well they took care of our two little boys. Those are of course really nice memories. We by the way called them “magic moments” at Finnair when there is something that really the small things that really click and make you feel good, and that was definitely a really nice magic moment to me and my wife.

Stanislava Yordanova: Yeah, indeed. Those are magic moments that can really drive brand loyalty. I agree. So, thank you Tomi. That was a great conversation around what's ahead for airline retail. I look forward to talking to you again and having you share insights around the airline space. Thanks for joining.

Tomi Maaniemi: Thank you so much Stanislava.

Aditi Mehta: Thanks for listening to the PROS Travel podcast, The View from 30,000 feet. Special thanks to our guests and our producer, Genevieve Todd. We hope you've enjoyed this episode. If you have any feedback, a burning idea, or know of an industry expert we should feature, shoot us an email at amehta@pros.com that's A-M-E-H-T-A@pros.com. You're now free to move about the cabin.

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