IBM sees channel future

With the end of the year approaching, it’s time again for our top futurists to gaze into their crystal balls and tell us what they see.

And just as they have for the last half decade or so, they’re likely to behold unprecedented industry growth, a battery of new technologies, and plenty of opportunities for venture capitalists with deep pockets.

When one travel prophet bucks that trend, it’s no big deal. When he works for IBM, however, it’s worth a closer look.

That’s exactly what Claude Guay, the global executive for marketing and business development at IBM’s travel and transportation division, is doing. While others talk the same talk, he’s preaching the virtues of channels.

Channels?

“One of the trends we see is the proliferation of distribution channels,” says the Montreal-based executive. “Consumers are taking advantage of a variety of channels, whether it’s the Internet, or self-service kiosks, or sophisticated voice-response systems.”

A successful interactive travel enterprise must take advantage of all available channels appropriate to its target market if it wants to flourish, Guay says. Focusing on one or two channels may limit a company’s prospects.

He bases his prediction on the dealings he’s had with customers. Among his clients’ biggest concerns, going into 1999, are maintaining a brand across all available channels. Which is to say, maintaining the same level of service on the Internet, in person, over the phone, and at a kiosk.

Why are these channels so important?

“Because,” says Guay, “in the future, you’re going to be able to access your travel provider in a number of ways through what we call pervasive technology. That could be your personal computer. Or it could be your cellular phone, TV, or your Palm Pilot.”

One example of this kind of multi-channel distribution is happening at Air Canada. The airline is reaching out to passengers through its Web site with online reservations and “virtual” tours of its aircraft. In addition, it is developing self-service booths and nurturing its phone andagency channels.

IBM is helping the carrier with the technology needed to maintain a single, coherent, and consistent brand identity across the board.

So far, so good. And, to be honest, nothing we couldn’t pick up in Marketing 101. But here’s where the future takes a twist.

The channels that our businesses are developing today could be essential to lifting our profits tomorrow. As Guay sees it, the key to increased earnings lies in what banks call “channel pricing.”

“Use a teller, pay one fee,” he says. “Use the Internet, pay a lower fee.” Guay sees travel agencies, which only recently started imposing fees on travelers, reducing them for tickets booked through a Web site or intranet.

He also sees any number of incentives that might reduce costs to suppliers. If these come about, “why shouldn’t the savings be shared with the consumer?” he wonders.

Why not indeed.

Already, commissions suppliers pay to interactive travel companies are significantly less than those issued to traditional agencies. Guay believes that in the future suppliers could see other savings, not only by increasing bonuses but also by effectively “collaborating” with customers to lower costs.

Travel suppliers might adopt a “carrot and stick” approach to nudge customers to other distribution channels. The “carrot” might be a lower fare or a better seat, while the “stick” might be a higher price for using a phone line for booking assistance.

The future of travel will include any number of new gadgets, like smart cards and wearable computing devices, to hear Guay talk about it. There will be plenty of growth in interactive travel, too.

But all that becomes almost tangential if our business ignores the importance of channels — particularly low-cost channels that, if properly used, can make operations run cheaper and faster.

“The success of Priceline.com, where consumers make fixed bids online for an airline seat-that’s just the beginning,” says Guay. “As consumers become more educated and savvy, as they push the limit, I expect to see more companies make an investment in their future. The time for the cheap, fast approach is over. Now it’s time for companies to get serious about interactivity.”

Christopher Elliott is the author of Scammed: How to Save Your Money and Find Better Service in a World of Schemes, Swindles, and Shady Deals. Critics have called it “eye-opening” and “inspiring” — it’ll “grab your attention and won’t let go.” Order your copy now on Amazon, Barnes & Noble or iTunes.

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