The travel industry must do more to increase the level of consumer trust in its brands by addressing concerns about online pricing, former Tesco boss Sir Terry Leahy told the ITT conference.
He told the annual conference, being held in Venice, that trust was a key driver for growth for all businesses and that travel in particular had a great opportunity to use the power of its brands.
However, he warned: “I think your industry has a challenge in that can you trust price. How reliable is that? You will navigate your way through that. The great thing is you have tremendous potential to create trusted brands in your industry.”
Sir Terry said looking after loyal customers rather than going after other people’s customers was also the most rewarding business strategy.
And he said many firms become obsessed with beating last year’s performance and so expend too much energy and resource on short-term activities.
“All industries spend more marketing dollars rewarding promiscuous customers than the loyal customer. Much too much time is spent on the customer somebody else has. By far the best return on investment is to reward the customer you already have.”
The Tesco Club Card loyalty scheme is often touted as a secret to the retailer’s success and Sit Terry said in just two years it made Tesco bigger than Sainsbury’ s when its rival had been two and a half times bigger.
Sir Terry said the travel industry was perfectly placed to understand customers’ needs and to exploit modern technology like e-commerce and m-commerce platforms.
But he said it would be established brands that do this most successfully if the “plunge” into the new forms of technology.
“Clearly it’s an exciting time for the industry because of the internet and new channels of sales and marketing.
“But my experience of that is existing players with existing customer relations and knowledge of the industry are well placed to capitalise on new technology.
“What you must do is plunge into the new technology and change your business model but keep what you are good at and apply that through the new media.
“The most competitive combination is a bricks and clicks combination.”
Asked what plans Tesco has for entering the travel industry Sir Terry said it was already in it through its Club Card scheme which offers members discounted travel.
Former First Choice mainstream boss Ian Simpkins works for the loyalty scheme which is one of the biggest customers for Virgin Holidays.
“We are, in a different way, coming in to the leisure industry through our rewards scheme. n order to offer different types of rewards to Club Card members we do buy a lot of leisure and travel and holidays.
“In in unexpected way we are into the industry and that’s a big opportunity for many of you to work with the Club Card scheme.”
Sir Terry defended Tesco’s impact on the high street saying they could remain based in a ‘medievel’ model and rather than superstores being the threat it was now the internet.
He said the high street needed investment and a vision of what it’s role will be in the future rather than the focus on what is threatening it.