Do online discounts really work...?

Almost exactly six months ago today, we removed all on-line discounts from the Kuoni website creating a completely level playing field for agents.  Since then we’ve been closely monitoring our performance by channel to evaluate the impact.

A number of interesting things have happened to convince us that we’re on the right track.  Most notably, we’ve seen a significant increase in sales enquiry conversion across all of our distribution channels – trade and direct.  We’re not surprised - our assertion was always that customer behaviour has evolved.  The internet is now an integral part of the shopping experience, used to guide the buying process, but it’s not necessarily the way customers want to book.  They will book online when it’s convenient for them and when they have all of the facts they need, but they intensely dislike being forced to in order to achieve a saving.  Presented with the same price in all channels, customers will generally migrate to the one that provides them with the best combination of service and convenience – in many cases their local travel agent.

As a consequence we’ve seen support from the trade increasing.  The effect was slow to begin with but as real trust began to develop between us and our partners, sales have accelerated forward.  The effect has been most impressive amongst independent agents but we’re also gaining support from the multiples as front line staff realise they can sell Kuoni on service without having to worry about price comparisons.

And best of all, we’ve managed in a relatively short space of time, to move our business back into the space we occupy most comfortably; away from the commodity mentality of lowest price wins and into the arena of high service, high value, ‘people to people’ transactions.  That’s not to say that price isn’t a factor; it’s just not the only factor.  We’ve focused our attention in three key areas; delivering great service to our trade partners; ensuring that our prices represent superb value for money; and using our retail presence to raise brand awareness and to drive sales through all channels.  Smart agents have taken the opportunity to grow their Kuoni business whilst reducing discounts, effectively increasing their margin on high value transactions.

At the same time, we’ve continued to build our alliance with the trade, with five Kuoni Partnership Stores now trading successfully and over twenty Kuoni Brochure Walls in place.  In addition, our retail outlets have been working proactively with local agents to grow their Kuoni business; in every location we’ve opened a store, we’ve seen growth through the trade in the local area.

It was always going to be a gamble taking discounts away just before a key sales period but the short term results have been extremely positive.  More importantly, we’ve created a solid distribution platform upon which to build real sales growth over the coming years.