Travelocity: “Faded Pioneer Brand” No More

Several years ago Travelocity was, in the words of chief marketing officer Jeffrey Glueck, “a faded pioneer brand.” By 2002 rival Expedia had surpassed it in terms of marketing share; what’s more, Travelocity wasn’t even profitable.

Travelocity is faded no more. Thanks to a rebranding and remerchandising strategy, the online travel reservations provider is in the black, with revenue continuing to rise. Since 2003, revenue from airline reservations–a barely profitable segment of the travel business–went from accounting for 65% of total sales to just 35%, with the more lucrative nonair services now bringing in the majority of sales. Last year alone revenue from bundled packages (air plus hotel plus car rental or event tickets) surged 148%.

Making the feat more impressive still: Travelocity spent $100 million on marketing in the U.S. last year, according to Glueck, compared with $145 million by Orbitz and $300 million by Expedia.

Much of the credit, Glueck explained during a session at last week’s eTail 2005 conference in Philadelphia, goes to “tons of consumer testing. I’m a big believer in one-to-one usability testing.” Travelocity also has a “universal control group” against which it tests e-mails.

Travelocity put its research to use in what Glueck described as “three steps to profitable growth”: building high-margin products (in this case, travel packages); defining a mission (“What does the brand stand for?”); and merchandising wisely.

In Travelocity’s case, creating the profitable products was relatively easy. It then had to inform customers and prospects of the benefits of the bundled offers. It was largely, said Glueck, a matter of “doing the math for the customer: ‘Buy this package and save $70.'”

But Travelocity didn’t want to compete solely on price. “Without an emotional connection,” Glueck said, “you have a transactional relationship, not a brand.” To create the connection and define its brand promise, Travelocity looked at its competitors. Most of them in their advertising and marketing focused on how they could help customers avoid the negatives associated with travel, such as mixed-up reservations. So Travelocity opted to “embrace the positive.” It redesigned its Website to showcase the pleasures of travel, with more photos of destinations. This redesign also ensured that the Travelocity home page looked different from the text-dominant home pages of its rivals.

Of course, by promising a pleasurable travel experience, Travelocity had to eliminate some bugaboos of modern-day travel. “How does the technology feed the brand promise?” Glueck asked. In Travelocity’s case, it was a matter of creating a high-tech reservation system designed to eliminate “lost” bookings, an all-too-frequent problem with online booking.

Technology and customer data were both used to improved merchandising as well. Travelocity introduced its Good Day to Buy e-mail program. When airfares for a given destination drop at least 20%, the company automatically contacts all site visitors who had searched that destination with the past 28 days to let them know of the improved price.

Despite a focus on personalized messaging, Travelocity hasn’t ignored mass marketing. It spent $80 million on its Roaming Gnome campaign–commercials and print ads featuring a garden gnome as a spokesperson. Although a garden gnome is technically an inanimate object, Glueck insisted that it has humanized the brand: “He’s getting out of the garden; he’s the best example of a life-enhancing traveler.”