Travel: Demographic Segmentation Still Matters

Last June, in our interview with analytics evangelist Avinash Kaushik, he touched upon a point that is dear to our hearts — "segmentation is key to truly finding any insights from"¦ web data." Indeed, marketers can use segmentation to better understand their consumer base, identify valuable customer groups and develop strategies to proactively target these groups individually.

As the web has become more social, the importance of behavioral segmentation has increased. Still, demographic segmentation can often yield powerful insights. Take as an example, the online travel industry. Many consumers shop for flights and hotels in tandem and one might expect similar age profiles for airline and hotel websites. Excepting for a slight skew toward older consumers among airline websites, this is in fact what we find.

However, these groups convert, or complete online transactions, at different rates. By normalizing the conversion rate of each age segment against the average conversion rate of hotel and air websites in general, we discover how these age groups perform relative to the performance of the average site visitor.

Read as: In January 2009, hotel shoppers in age segment 18-34 were
9% less likely to convert than the average hotel website shopper.

Key Findings:

  • On the one hand, airline websites, in aggregate, display relatively homogeneous conversion performance. That is, no group significantly over- or under-performs against average airline shoppers.
  • On the other hand, hotel websites display marked differences among age groups — hotel shoppers between ages 18-34 convert at significantly lower rates and hotel shoppers over 55 convert at significantly higher rates than average hotel shoppers.

While airline and hotel websites have a similar mix of shoppers by age bracket, demographic segmentation leads us very clearly to the discovery that the two categories have striking differences in their conversion performance by age. In fact, we find that older consumers are hotel websites’ best customer group. This insight would lead savvy hotel marketers to craft marketing campaigns that drive more traffic specifically from qualified older consumers. (One tool that can be used to this end is Compete’s Behavior Match product suite).

In the final analysis, while demographic segmentation should not be discounted, it is worthwhile to note here that behavioral segmentation (i.e. segmenting users based on traffic sources, level of engagement with a website, search keyword types, etc.) frequently leads to more immediately actionable, higher ROI findings. Nevertheless, all marketers would benefit from the insights generated by not only tracking segmented performance at the market level, but also by benchmarking this group-by-group performance against competitors at the brand-level. For more information, see Compete’s webinar on Segment-Driven Marketing.

Categories: Travel

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