Traveling with Millennials

Traveling with Millennials

          
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Traveling with Millennials

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    A Continuum of Strategic Choices

    With the possible exception of their attention to marketing, most companies in the travel and tourism industry don’t yet appear to be acting aggressively on the various aspects of their businesses that must evolve in order to meet Millennial needs. This is most likely because they don’t yet view the members of this generation as being their core customers and a key source of revenue. This delay in acting means that most industry players will get a late start and will find themselves at a strategic disadvantage compared with their earlier-moving peers.

    An effective Millennial strategy must address the full spectrum of considerations along a continuum of time, effort, and risk. At one end of the spectrum are the near-term marketing, branding, and communication tactics that will begin to engage the members of this generation, shaping their perceptions and preferences. To succeed, companies should segment their customers to identify those most engaged in business and leisure travel; the segments that are the most profitable; each segment’s unique behaviors, needs, frustrations, and preferences; and the return on investment from meeting each segment’s needs. Armed with these insights, companies can determine how well positioned their brands are for the targeted segments and—at a minimum—adjust their messaging, communications frequency, and media mix accordingly.

    New capabilities such as advocacy marketing, microtargeting, trend monitoring, and digital, mobile, and social-media marketing will also be critical. Millennials report that their purchase decisions are affected by family, friends, and other outside influencers, so these new marketing channels will play an important role. Just as important in reaching Millennials is the use of language, visuals, endorsers, messages, entertainment, tone, and humor that resonate with members of this generation.

    Moving along the continuum, companies must develop distribution strategies and tactics that align with Millennials’ habits and preferences. This will require using a mix of channels, including corporate websites, OTAs, and aggregators, as well as rethinking loyalty programs and partnerships. For instance, insights such as that Millennials are relatively more concerned with getting reward miles or points than non-Millennials can inform loyalty programs. With the ability to recognize profitable Millennial segments online, capture their information, and offer relevant packages, promotions, and rewards, companies can draw in members of this generation. The right marketing or branding partnerships can also be effective. Our research shows that certain athletic, technology, apparel, and luxury brands resonate particularly well with Millennials.

    Because Millennials’ service preferences differ from those of non-Millennials, companies in the travel and tourism industry must design guest experiences with Millennials in mind. Airlines and airports, for instance, must rethink their food and beverage offerings, in-flight entertainment, check-in processes, flight status updates, airport amenities, and all other aspects of the traveler experience. Case in point: our research shows that Millennials favor organic and exotic foods, prefer touchscreen technology, and need charging stations for their many electronic devices. And because Millennials more than non-Millennials look online for reviews and opinions—and are more likely to broadcast their own negative experiences—the 24-7 ability to resolve conflicts online and social-media listening capabilities are crucial.

    Finally, at the far end of the continuum are longer-term, more capital-intensive projects. For instance, an airline may have to consider aircraft design, product development, and retrofit decisions—along with the requisite business cases and capital hurdles—as well as Millennial preferences related to such concerns as seat size, decor, legroom and headroom, lighting, air quality, Internet connectivity, and charging stations.

    Marketing and communications initiatives are relatively low-cost, low-risk efforts that can start immediately using current budgets. But product development projects—with their long lead-times and high capital costs—are far riskier and demand more of a financial commitment. Still, managed correctly, these higher-risk activities should also deliver significant rewards.

    Since many of the efforts along the continuum are cross functional, travel companies will be more successful if they coordinate and align their goals, strategies, tactics, budgets, and governance across the enterprise. To this end, companies must determine the most effective mix of centralized and decentralized management. (See Exhibit 3.) Because of the organizational and operational implications of these decisions, companies must understand where they are on that continuum with regard to their Millennial strategies—and where they need to be. Given the size and certainty of the Millennial opportunity, the speed of its approach, and its lengthy duration, these are critical decisions for companies to make—sooner rather than later.

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