This is the first of a 3-part series analyzing the state of abandoned cart emails in the airline industry.
Part 1: The Lowdown on Abandoned Carts for Airlines
Part 2: Our Research – How Airlines Tackle Abandoned Cart Emails
Part 3: How To Improve Cart Abandonment Emails and Win Back Sales
Think of the last time you booked a plane ticket. Did you purchase the very first flight you found? Or did you check prices on a bunch of sites, start the checkout process on a flight, and then simply leave?
If you chose the second option, you’re not alone – 81.7% of travel customers do the same. This behavior, also known as cart abandonment, can be a huge headache for airlines. Here's a quick overview of the topic.
1. The Potential for Airlines
Airlines have pretty unique challenges that require them to strive for high conversion rates. Plane seats are perishable, meaning if they’re not filled when the plane leaves, the airline has missed out on revenue opportunities. With high fixed costs, each marginal sale is a big win.
The mid-2018 figures from IATA put the average passenger load factor at 81.7% for 2018. Estimates have risen to 4.36 billion seats filled on planes, while revenue from passenger flights is expected to be $590 billion.
If we do the math, the remaining 18.3% equates to 976 million seats and over $132 billion in potential revenue. Airlines have a huge opportunity to claim their share of this missed revenue if they can convince cart abandoners to complete their purchases.
2. Why Do Travelers Abandon Online Shopping Carts?
Travel tends to be a special and pricey venture for many people, and potential travelers are selective when making their purchase.
A 2016 Expedia study found that US travelers make an average of 140 visits to travel sites up to 45 days before booking. This includes online travel agents (OTAs), airlines and metasearch sites. It’s easy to see that airlines often experience a high number of "window shoppers", or people who spend a lot of time browsing the site without making a purchase.
Data from SaleCycle, an email service provider (ESP) focused on cart recovery validates this. They surveyed 1,000 travelers and found that the most common reasons for abandoned carts were:
- Travelers wanted to do more research before booking (39%)
- Issues with pricing (37%)
- Needing to check with other travelers (21%)
- A checkout that was too long or complicated (13%)
- Technical issues (9%)
- Payment issues (7%).
3. How Do Companies Tackle Abandoned Carts?
There are many tactics companies can use to increase conversion rates when it comes to winning over window shoppers. One of the most simple and effective ways is by sending abandoned cart emails. These emails are triggered when customers get to the last stage of booking and then leave without completing their purchase. If you look at Google Trends, these began to appear as staple tactic of eCommerce around 2012.
According to Klayvio, an eCommerce-centric email service provider, abandoned cart emails have an average open rate of 41.2% and a click rate of 9.5%. Each email sent to Klaviyo’s clients generated an average of $5.81 in revenue.
Other ESPs have different statistics on abandoned cart emails, but they all point to success. From a variety of sources, open rates vary from 10 to 20%, and click rates from 10 to 17%. These are both significantly higher than traditional email newsletters, and much higher than display advertising and other forms of digital marketing.
4. What Are Airlines Doing About Abandoned Carts?
There are many success cases where airlines have successfully improved their email game. Webtrends, a digital marketing solutions company, worked with AirFrance KLM to improve its email retargeting. They saw email conversions quadruple after they implemented real-time data intelligence to send targeted abandoned cart emails within one hour.
In 2013, American Airlines worked with a digital marketing firm to create an email program that would engage and recapture potential customers. The results were impressive – compared with standard campaigns, the abandoned cart emails resulted in 300% higher open rates, 200% higher click-through rates and 400% higher conversion rates.
Despite these outcomes, we did our own research and found that 80% of airlines don't send abandoned cart emails. This is pretty surprising, because airlines tend to have high rates of cart abandonment compared to the eCommerce benchmark rate – 84.8% versus 76.8%.
Many airlines – particularly full-service carriers – are trying to reduce their reliance on OTAs (online travel agents such as Expedia) and improve their direct channel sales. By not re-engaging these customers, they’re leaving money on the table and failing to to reach their distribution goals.
If more airlines invested in intelligent abandoned cart solutions, the gains would be significant.