Last month easyJet became the six corporate backer of London-based startup accelerator and incubator Founders Factory with the intention of backing digital disruptors in the travel sector.
That will include investing in and helping scale five early stage startups each year, as well as co-founding two companies itself, so it’s a pretty big commitment on behalf of the budget airline. But it’s one that CEO Carolyn McCall sees as essential if easyJet is to live up to its own perceived identity:
That is an opportunity because it is putting much more disruptive thinking at the center of our digital heart. We see ourselves as a digital company, so that kind of thinking is very important to continue to keep fresh and to continue to innovate. I see that as quite an important element of the future digital output.
That desire to be on the ‘bleeding edge’ is also driving the decision to be the first airline sector platform partner for SAP’s Hybris e-commerce offering. McCall explains:
Hybris technology powers some of the leading e-commerce sites in the world and will be a step change in our capability to target and cross-sell ancillary products. This system will take our customers' data and our predictive algorithms and increasingly personalize the user journey, based on the individual and their requirements.
The front end of the system is currently rolling out, with additional functionality to be deployed in stages over the next year with a completion date of the first half of 2018. It’s a hugely complicated rollout, says McCall, and not something that easyJet would want to take on by itself:
I just don't think there would be any way you'd want to do this level of e-commerce development yourself. It is a specialist skill, it's moving all the time, the technology is upgrading all the time and it's moving so fast [that] you blink and something else has happened.
So, never mind the fact that the UK has a digital skills gap, which it does and that you'd be in competition with Google for developers and Facebook, even despite that, you just wouldn't want to go anywhere near doing this kind of significant digital e-commerce development without a partner.
So the SAP Hybris relationship is something that’s going to be very important to the airline over the next few years. McCall says:
We work very closely with them, we work very well with them. All they do is e-commerce, so they know it inside out. We are their first airline partner, but their experience of [the] retail sector is invaluable to us and you'd not really be able to get that at the scale internally.
It’s clear that the enhanced e-commerce capabilities are seen as a significant investment for easyJet. For now, the digital strategy comes through three commercially-mature channels, starting with the corporate website, which accounts for 75% of sales and has 350 million visitors a year. Alongside that is the mobile app, which had 168 million visits last year and reports a 38% year-on-year sales growth rate.
Finally there’s the Global Distribution Systems (GDS) aggregator, now turning in a 22% year-on-year growth in business and corporate bookings. Each of these contributes in a different way to the digital offering and bottom line, says McCall:
As well as driving seat sales, our digital offering is enabling us to sell more broadly into the customer travel value chain. We call it colloquially from click-to-kerb, and this is driving strong growth in ancillary revenue. easyJet.com continues to deliver strong and improving cross-selling, although I'm pleased to say that we actually make more partner sales from our data-driven post-booking program than we do actually in the booking process itself.
We have recently added the opportunity to buy ancillaries on mobile and at check-in, introduced this year and still to fully roll out, but already delivering year-on-year sales growth of 43%. All in all, this means that our investment in digital and data gives us the platform to leverage easyJet's strong market position and brand to target more and more of Europe's most valuable travelling customers with the relevant and bespoke appropriate offer.
More to the point, having a greater data-driven understanding of the customers opens up new revenue opportunities. For example, inflight revenue is up 31% year-on-year. McCall says:
Data mining is delivering deeper insights, which are then delivered through the digital platforms to provide greater customer loyalty…The reason for doing all of this customer analytics and digital delivery work is because, with over 26 million contactable customers, we can drive higher returns.
There are proof points available, she adds:
We launched an invitation-only recognition program, Flight Club, targeting our most regular passengers. In our first year, this not only has been well received but has increased retention by 14% and satisfaction by 32% amongst our most valuable cohort of passengers.
easyJet Plus cardholders have increased by 23% year on year. The percentage of returning customers has increased by 60% from 2010 to today, an increase of 21 million passengers. And we see that our award-winning e-mail program not only drives nearly 30% more bookings from customers, they generate 50% more flight revenue and over 45% more ancillary revenue.
Overall, she concludes, digital is at the heart of the easyJet customer proposition:
We continue to offer customers what they want - great value fares to and from the airports they want to fly to, helpful and friendly service and excellent and innovative digital services. That's why customer loyalty continues to grow so strongly. Fifty-four million passengers flew with us again last year, 21 million more than five years ago.
Some impressive digital thinking that goes beyond the basic ‘we’ve got an app’ mentality. easyJet is using digital investment to improve customer loyalty as well as grow revenues, while its Founders Factory gambit is indicative of a desire to keep on the bleeding edge of innovation.