Marketing Week (MW): TUI has just posted strong financial results. How has it navigated through the economic downturn to remain robust?
Johan Lundgren (JL): We have grown profit every year because we are clear about what our strategy is and we are executing it. Now it’s time to see where we can start growing the business back again in terms of customer numbers. Our strategy is “modern mainstream” – we offer differentiated and exclusive holiday concepts, we are becoming an online driven company and we make sure we run a cost-efficient model that allows us to give added value to our customers.
MW: Does TUI see marketing as a cost or investment?
JL: Marketing is both a cost and investment – we do see the middle to long term benefit of investing and our communications are really important because we are selling an experience. We are selling a product that is not tangible for people to look at and they may not experience for six months or a year.
MW: How important is the brand to TUI?
JL: It’s very important. It’s where we give the customer a promise of something and we have clearly defined what that brand proposition is within Thomson and First Choice. We know if we are getting those brand promises across we stand a much better chance of getting the customer in the first place. But a well-known brand is not the same as a strong brand. There are examples in this industry where there are well-known brands but it is not clear what they do.
MW: Latest Abta research shows price has risen over a choosing a recognised travel brand as one of the drivers of purchase. How does that relate to TUI’s strategy?
JL: Many people out there would choose price as a key part of their decision but not all of them. There is a large amount of commoditisation out there – a large stock of being sold by multiple sources and commodity drives price. But that’s a place we don’t want to be in and on the other hand there’s a growth among people wanting to go into exclusive hotels. Where we add value and features to the holiday concept is selling exclusivity for a specific customer segment. That part of the business is growing. We are one of the few who can operate in that space because we have scale.
MW: How is TUI using customer data to drive communications?
JL: In general in the UK TUI has been well advanced in deploying CRM and is moving into e-CRM where the technology allows us to collect data and use it in a totally different way than before. The whole point of data is that you get to know your customer and can anticipate future need before he or she knows what they want.
MW: Is personalisation of growing importance in communication?
JL: Even if you operate in a mass market it’s absolutely key that you individualise – it mean that the customer feels that the company is communicating on their terms and conditions. There’s nothing so annoying as getting messages from companies with totally irrelevant content. They think if you can’t get this right why should they trust you [to handle bigger things].
MW: TUI has many customer channels – is it speaking with one integrated tone of voice?
JL: I think we are getting better at it. We are looking at the whole customer journey from them researching to booking and trying to connect the part when they are at their destination with the communications they have had prior and how we communicate when they come back … we think we are doing better than most.
MW: How does TUI gather feedback and how does it plan to use social media to stay in touch with customers?
JL: We are going to move away from offline form-filling to online feedback but the most difficult challenge is how to interact seamlessly with our customers through social media until it’s time for their next holiday. I’ve seen a number of clumsy attempts from companies trying to play a part through Facebook. People regard Facebook as their area where they choose who to accept as a friend. As a company coming in you have to be very careful. Social media is definitely useful as a customer service tool but also a way to engage and get people to participate in your company. In the Nordic region we have created a community on Facebook where customers can participate in developing our next holiday concept and we ask if they have friends who would like to participate – although we are transparent that it’s a trial and not a guarantee their ideas will be implemented.
MW: How do you see new technology and devices benefiting the travel industry?
JL: I see technology as a massive opportunity and not as a threat. One of the problems of the past was that a travel purchase was being made every other year by a customer and it was difficult to keep the relationship alive – it’s different from grocer’s like Tesco where the customer needs to shop every week. What social media and technology can do for us is make sure we stay relevant during the time after the holiday and before the next holiday. We do know that people love to engage in travel and this is where technology can be involved.
People are already buying holidays over their mobiles. It’s low as a percentage but the phones will get better and we will get better in terms of our content and mobile framework.
MW: TUI has a 55,000 strong workforce. What is the importance of employee engagement for the company?
JL: We want to make sure that our people are aware of the strategy and even more, understand it. We’re about making the travel experience special and our mission is “spreading smiles”.
This is what everyone in the organisation should wake up trying to do. Can they feel they can create? Do they feel they can make an impact?
I think there is a very good vibe in our company. Everybody and their colleagues are seeing our strategy working in difficult times.
MW: Where do you see growth coming from, both in terms of segments and geographically?
JL: The online part of our business is growing and we see growth in areas where we have differentiated concepts. There are opportunities in the emerging markets of Russia, China and Brazil.