Travel Tech Essentialist #107: Elite Design
Design satisfies the conscious and tickles the subconscious. — Joe Gebbia, Airbnb cofounder.
Several stories in this week’s newsletter highlight how design is much more than how things look. It impacts the entire customer experience, from how a product is presented to how a customer is offboarded. Good design not only gets the job done but it also connects.
This newsletter is sponsored by Pattern
Can the travel sector boost loyalty and revenue with insurance technology? CEO and Co-founder of Pattern Insurance, Meitav Harpaz, discusses the statistics showing an increasing number of people wanting travel insurance products. Embedded insurance is the perfect solution for travel agents who want to embrace technology to offer personalized relevant real-time travel insurance products to their customers. Find out more here.
1. Elite design at Airbnb
Airbnb co-founders Brian Chesky and Joe Gebbia met at the Rhode Island School of Design, where they learned that design is about more than how something looks, it’s how something works and how it makes the user feel. Design has to solve a problem, but if it only solves the problem, then it’s incomplete. Good design also delights and triggers an emotional reaction. In this interview with Jason Calcanis (watch clip here), Joe Gebbia discusses how elite design is one of the key pillars behind Airbnb’s success.
2. Airbnb’s results show that loyalty pays (not to be confused with paid loyalty)
Airbnb 2022 results: $8.4 billion in revenue (+40% year on year), Adjusted EBITDA $2.9 billion (+81% ), $3.4 billion in free cash flow (+49%). All record highs.
The best loyalty program is building a product people love so much they want to come back and you don’t have to pay them to come back — Airbnb co-founder & CEO Brian Chesky on the quarterly earnings call. That’s the difference between paid loyalty and loyalty pays.
3. Don’t forget about tactical retention
Understanding when and why customers leave, and doing something about it, is also part of good design. Patrick Campbell, founder and CEO of ProfitWell (which he bootstrapped and sold for over $200 million) says that there are two types of retention: strategic retention and tactical retention. Tactical retention, which gets much less attention and resources, refers to payment failures, term optimization, cancelation flows, offboarding, etc… Tactical retention is responsible for around 25% - 40% of churn, and addressing it with simple solutions can make a big impact. Some examples:
Payment failures: 20-40% of churn. Set up marketing funnels when credit cards fail.
Salvage offers: you can save up to 25% of the people who hit cancel (data below in the graph)
Convert monthly subs to annual: 200-800% higher LTV.
Reactivation campaigns: send every 60 days to bring back 5% of churn.
You can learn more from Patrick’s learnings (based on millions of datapoints) on this Twitter thread (compiled for better readability) or in this 5-minute video clip
4. Startups with employees in offices grow 3.5 times faster
Steve Blank, a Stanford professor whose customer development methodology is a cornerstone of the lean startup movement, points out that for decades Silicon Valley founders and investors have understood the benefits of “small world network effect”, which has also influenced the physical design of Silicon Valley office space. Steve wonders if the converse is true: Does remote work with ad hoc or fixed meetings via Zoom actually stunt the growth of creativity and new insights, just at the time a startup most needs them?
Reach Capital published the results of a survey on the impact of work configurations (7 work configurations ranging from fully remote to fully office) on culture and results. The survey sample size was 37 companies from the Reach Capital portfolio. That’s large enough to see patterns but not large enough to generalize across all startups. According to the results, self-reported team culture is similar across work configurations, but revenue growth varies significantly. Read + great writeup by Steve Blank and full survey results here
5. Travel featured in the new AI-powered Bing
Travel took center stage in Microsoft’s launch of their all-new, AI-powered Bing search engine. Watch these 2 minutes in which Yusuf Mehdi (Corporate VP of Search) interacts with Bing to create an itinerary for a 5-day family trip to Mexico City. I grew up in Mexico City, and my family still lives there, and Bing’s suggestions are right on target.
6. Hotel booking behaviors
SiteMinder's Hotel Booking Trends offers an interactive review of booking behaviors based on data from over 100 million reservations. It includes the top 12 sources that brought the highest booking revenue to hotels in 19 countries. In Spain, for instance, the top 5 hotel booking sources were: Booking.com, Hotel websites, Expedia Group, Hotelbeds, Jet2holidays.
7. Modernising Insurance for travelers
New insurance and fintech companies like Pattern Insurance or Faye are disrupting a previously slow-moving industry by designing products, services and experiences based on the needs of today’s consumers. They are redesigning the entire flow: how insurance companies interact with customers, how they underwrite and price policies, and how they manage risk. Some industry insiders share their views on why the insurance sector has traditionally moved slower than other industries. For Daniel Green, cofounder & CTO of Faye Travel Insurance, the answer is simple: legacy companies can’t start from scratch. And that opens new opportunities for new travel insurtech players. Read + The Fintech Times
8. The travel tech startups that Amadeus is watching
The Amadeus Startup Universe showcases innovative new businesses and is designed to create a bridge between startups and travel industry experts. Amadeus announced eight startups to watch in 2023, including Deal Engine (automates operations and post-sale servicing, including ticket refunds and changes) and Grapevine (optimizes revenue through intelligent, post-booking remarketing). Read +.
9. You’re going to _____!
In my last newsletter, I asked readers to send me examples of cheap but effective ways to be remarkable. Lillian Rafson, the founder of Pack Up + Go, reached out to share her story. Pack Up + Go is a bootstrapped startup specializing in surprise vacations that Lillian started when she was 23 years old. To communicate the surprise destination to travelers, she went low-cost and low-tech. She headed to Staples, bought plain white envelopes, and printed the company's logo and the name of the city where the traveler was going, along with a handwritten note. After the trips, travelers started sending her and sharing on social media pictures of them holding up the "You're Going To ______" pages. The Surprise Envelope became the cornerstone of their marketing. Look at Pack Up + Go’s Instagram for many examples of travelers with their envelopes, or this TikTok video. Lillian said that they have never paid for advertising on any platform or invested in SEO. 100% of the trips they sell come from word of mouth and shares on social media.
10. Fundraising and M&A
Portside, a SaaS global business aviation platform, raised $50 million in a Series B investment led by Insight Partners.
Skipperi, a Finland-based shared-use boating subscription service and peer-to-peer boat rental platform, raised €7 million in series A funding.
Dutch multimodal platform Vipper raised €2 million in funding. Vipper, founded in 2018, aims to simplify the booking of rail, bus and flight tickets.
Denmark-based tours and activities technology platform Holdbar received $1 million in pre-seed funding in a round led by Founderment.
Amsterdam-based Stippl and social travel platform, Stippl, raised €400,000 in a pre-seed funding round.
Australia-based Flight Centre Travel Group, one of the world’s largest travel groups, acquires Scott Dunn, a UK-based luxury travel brand, for $149 million. Read +.
Plusgrade acquired UpStay to expand its portfolio of upgrade and ancillary revenue solutions for the hospitality industry. UpStay serves hundreds of hotels in 17 countries. Read +
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