Could customer service be a better innovation playground than bookings?

December 18th, 2018

Alex Bainbridge

Now in December 2018 it seems a long time ago (April) that Booking Holdings acquired FareHarbor and TripAdvisor Experiences/Viator acquired Bokun (two leading supplier facing reservation systems). Perhaps time to look back at what happened and plot a course forward from here – where could we go next?

I am personally interested in these exits because I achieved my exit end of 2015 with a similar business, TourCMS. When I was CEO of TourCMS, handling hundreds of millions of USD bookings a year of local tour / experience bookings, it was an unspoken agreement between other founders of similar systems that we were SUPPLIER technology systems. I couldn’t conceive of selling to a leading online travel agent as our entire business mindset was around being the best solution for suppliers and representing THEIR needs. Selling to a retailer would mean that our mindset would become a retailer, not supplier, mindset. Our customers were suppliers and I wanted to serve them….. Of course they had traveller customers but ultimately our business was serving tour suppliers.

But then the dam broke. Fareharbor and Bokun sold. Should the founders have sold? In the end, yes. If you have an offer, you have to do what is best for your shareholders……  and if that means sell, then you sell. No problem. If you really want to make an unacquirable business then you have to create a non-profit making foundation that owns the IP such as some of the blockchain companies have done, then you CANT be acquired, but as a founder who is putting their career, house and life savings on the line, this is not realistic as the founders need to make return on their initial risk somehow. Supplier reservation system founders haven’t done this blockchain style approach so they will be acquired by whoever makes a great offer…..

What followed was an interesting mess. TripAdvisor stated they would preference Bokun powered suppliers (on stage, Arival Las Vegas) (see Phocuswire), to be later walked back by Stephen Kaufer at Phocuswright conference in November 18 (see Arival Travel).

They were not alone: Booking Holdings stated they would consider charging suppliers 0% for Fareharbor tech (*** note its currently zero, customer pays, but this is an accounting hack) i.e. taking on existing supplier reservation systems in head to head price war. They haven’t done this yet (just talked about it).

Pretty much the antithesis of where the other reservation system founders were positioned. Not good as a first move.

The new industry reality

The reality is that however TripAdvisor or Booking Holdings choose to preference, filter or price their technology services, they are here now on the supplier side of the digital market and will make an impact, nothing can roll the sector back to supplier focussed entrepreneur founders doing what is best for suppliers. That era is over.

Strategically this is right for the leading retailers. Tactically, not so good!

Right now the sector innovators are predominantly founders of supplier facing reservation systems. They are well resourced, have experienced engineering teams and are battle hardened.

Cutting them out of exit paths is not, tactically, a brilliant plan. They can bite back and as they have the suppliers ear (as they do 100% of supplier bookings, not 10% like the leading retailers), they can make an impact if motivated to do so 🙂

The golden bridge

“Build your opponent a golden bridge to retreat across.” – Sun Tzu

Its clear that the retailers are going to be in the supplier tech business for the long term and they will do a good job of it (although whether suppliers should go for it, another topic for another post!).

So what is the golden bridge for the existing reservation systems?

Perhaps it is customer service / live CRM.

The customer service problem

Customer service is new problem that hasn’t been solved by retailers, suppliers or tech companies (yet).

Historically customers booked weeks in advance so if they had a problem with their booking they would email and this could be answered in business hours, e.g. 8 hours later. As long as the problem as addressed within 24 hours, everyone was happy.

(Or they would book in destination, in which case many questions were answered directly, as most indestination bookings WERE human to human)

Now we are reducing booking cutoffs to minutes. You book on your mobile now and take the tour / experience minutes later. If you have a problem with the customer service you need it to be addressed NOW, digital live chat, not email 24 hours later.

Retailers are struggling to provide this service (mainly because the questions that are asked, apart from payment questions, require the supplier to answer). Suppliers struggle to provide this service because they are not able to provide 24/7 live answers, especially in non-local languages.

This is a really interesting area where:

  • Retailers need help. Suppliers need help
  • Suppliers are best positioned to answer the question (as they have the knowledge)
  • Technology is key (as answers needs to be immediate, scalable and from the supplier)

Perhaps the retailers should open up their customer service APIs and enable suppliers to provide live support to their customers (and via supplier direct websites also). TripAdvisor has hinted there are looking at this.

Perhaps this is the Golden Bridge…..  tech companies should focus on customer service / CRM – a critical part of the service delivery – leaving bookings to retailers to handle both on customer and supplier side.

Would everyone be happy now?

Image: Flickr: Nick Varvel

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