While its two biggest retail rivals prepare to merge, Tui Travel is carving out its own retail strategy for the next few years.
A key strand of this will be to send more retail staff on fam trips, after discovering that good agent knowledge enables it to charge a substantial ‘service fee’ on the vast majority of bookings made in its shops.
Nick Longman, the operator’s UK distribution director, said more educationals would be offered to ensure that the collective experience of staff in every shop covered all types of Tui’s differentiated products and each of its key destinations, including Turkey, Egypt, Spain and Portugal.
“We have to invest more in training as we know it’s really helpful if someone in the shop has first-hand experience of what they are selling,” he said.
“It’s that really good knowledge that allows them to give the best advice and therefore justify the service fee that we charge. It’s normally only about 1% to 1.5% of the total holiday cost, so it’s not a huge amount.
“The key thing has been teaching staff to let customers walk away if they won’t pay it. We hope if customers do that they then go and book the same holiday online, but there’s always a risk they’ll go out the shop and into a Thomas Cook next door who’ll sell them one of their holidays, but the percentage of customers who do that is tiny.”
Longman claimed that more than 85% of customers now pay a service fee for booking in store. The retail chain trialled several costs, including £5 a head, £10 a head and £30 a booking, and found that the £10 a head fee – adding £40 on to a typical family bookings – was the best-accepted.
New reservations system
Tui is to install a new reservations system in October 2012. It is being touted as providing complete transparency between sales channels, and should help to increase customer retention. It will also enable Tui to introduce a new reward scheme for holidaymakers.
Longman said the new system would revolutionise the B2B and B2C booking process, as well as Tui’s entire back-office system, offering the customer “a seamless process in a multi-channel environment no matter how they chose to interact with the company”.
He said the pricing element was still to be worked out; currently, it is cheaper to book online than through a shop because of the service fees that agents charge.
“People understand that there’s a price for service,” said Longman. “If there’s human intervention at some stage, there will be a charge – and that will be picked up by the system.”
He added: “We’ve talked about transparency and the single customer journey for some time but couldn’t completely deliver it. From next year we will. As soon as a customer comes into a shop or logs in online, the system will bring up their previous holidays, their CSQ [customer service questionnaires] scores, any complaint letter – everything.”
Longman added that better knowledge of the customer would lead to increased retention rates. “Retained customers are so much better and more valuable than ones you have to keep acquiring,” he said.
The system will also allow Tui to introduce a comprehensive loyalty scheme, enabling it to recognise and reward repeat customers.
“A big thing in our sector is the lack of recognition. There’s nothing worse than being a loyal customer for 20 years and not getting anything for it,” said Longman.
“The cruise lines do it brilliantly. We won’t be able to give hundreds of pounds’ worth of onboard credit like they do, but we can offer premium seat upgrades, better rooms, VIP airport lounge passes or waive supplements to eat in speciality restaurants.
“We can run little cocktail receptions for repeat customers, or give them free excursions or treats in our differentiated units. Much of this can be supplier-funded – but it’s up to us to identify the customers who deserve them. We wouldn’t know who they all are now, so it’s pretty limited at the moment, but we will.”
Longman added that part of the provision of all these rewards for loyalty in resort would be for reps to have all the information about their customers to hand wirelessly on a tablet device such as the iPad.
Repeat bookings push
Tui is to trial a booking scheme whereby customers will be incentivised to book their next holiday before they fly home from their current break. Any sales made will be attributed back to the channel the customer previous booked in – including shops – so that agents can earn commission.
Longman said it was a system employed successfully by the cruise lines and added: “What customers do on holiday will significantly influence whether they book with us again, so why not get them to commit to next year before they leave from this year’s holiday?”
He said shops in resorts in Egypt and Malaga had not worked.
“Customers didn’t want to sit in a shop wasting their holiday time, but they might commit over a drink in the bar on the last night while they’re kids are rehearsing for the last night’s show, for example.
“It’s psychologically the best time to convince them to book again. If they are in a Holiday Village, we’ll suggest they try another of our Holiday Villages in a different destination next year.”
He said: “All we would need is for them to register their intent and pay a deposit, and we’ll give them a load of added value for doing so. We will then pass the booking back to the agent closest to their postcode and they will contact them on return.
Longman believes Thomas Cook’s retail merger with The Co-operative Travel will be beneficial for Tui. “I think it’s going to be better for us. We know there will be shop closures and so with fewer shops there will be less competition. Plus, when we’re dealing with one entity as a tour operator, it may give us an opportunity to forge stronger commercial relationships.
“We’ve always enjoyed a healthy relationship with the Co-op but, for many years now, Cook has been their number one sell. We already get good support from both of them.
“Now merged they need to make their operation work as a travel retailer and, given the strength of our product, I see no reason why they should not continue to want to sell us. I don’t think this makes them more likely to want to sell us, but it certainly shouldn’t make it less likely.”
However, Longman believes it could be hard to align the Cook culture with that of the Co-op, adding: “Having been integration director following the merger of Thomson and First Choice, it was quite a challenge to merge the retail estates – and that was in two companies with relatively similar cultures.”
Longman also said he did not feel threatened by the growth of Virgin Holidays’ or Kuoni’s retail operations, commenting that neither sold foreign exchange which is key to the profitability of Tui shops.