Airlines do it best, but you too can increase profits

Fries with your burger? Internet with your room? What are the add on sales you can make to enhance your customer’s experience?

Did you know that airlines worldwide will net US$36 billion in fees and upsells? That’s a lot of money! Their growth area is targeting the most lucrative customers with new products. Who are your most lucrative customers? And what are your add on sales?

Airlines seem to be flying highest (pardon the pun) with added sales. They are always searching for new opportunities to make more money. For example, paid apps are mostly not as successful yet major budget airline, Ryan Air’s £3 booking app is top of the iTunes chart!

So how can you go about gaining add on sales? I’d suggest you start by breaking down your product/service offer into as many pieces as you can. I’d encourage you to also have one or two comparisons from other industries to help you see what’s possible. For example, when booking airline travel who would have thought there could be so many choices and add ons. Certainly ten years ago there wasn’t!

Now think about the differentials you can offer, and charge for:

  • different opening hours for select customers
  • a unique product, or a standard product
  • special delivery
  • higher level of service
  • different payment methods and terms
  • complimentary products or services
  • faster service
  • additional service e.g. personalised, pickup or in home service
  • automated repeat order at a set date
  • early order discount, or higher cost for last stock item.

There are many options to differentiate your product or service, and therefore opportunities to increase demand for your offer. The outcome will appeal to different customers with offers that better match their needs e.g. travellers with or without bags, or travellers who like/dislike airline food, or taller travellers wanting more leg room. Here’s another example, where an e-reader service is letting readers pay per page!

By breaking down your offer you can then isolate pricing and also costs. As a result you should be more likely to make each cost pay for itself, and be able to renegotiate better prices from your suppliers. But at a minimum you’ll have a better understanding of which are the most important elements of your customer offer and where you make the most money.

Go 2 Market principle: what all business operators should want is a way to satisfy customer needs. By breaking down your offer into multiple parts you can differentiate your offer and better satisfy their needs plus your own to make a healthy return.

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