🧠A Lesson in Strategic Thinking
The world's biggest entertainer is now taking business lessons from the airlines. But why?
Ever wondered how some entrepreneurs manage to build billion-dollar empires? How they manage to stand out from the rest?Â
The answer is as simple to conceive as it is difficult to implement:Â
The entrepreneurs and the CEOs of the world identify problems and find the most efficient way to solve them.
Today we're trying to give you an insight into how they function, how an entrepreneurial mind thinks.
To do so, we'll be taking up a simple topic.Â
Disney's partnership with Volantio.
So, let's dive right in.
Context First, Always 📖
Volantio is an Atlanta-based startup that develops travel tech solutions to help airlines maximise profits while taking care of consumer convenience.
How does it do this?
Well, there are several ways.Â
One service it offers is a personal concierge service to book tickets.
Huh?
You just have to set up an alert for flights for your destination and the desired date, the concierge service will track fare changes in real time and let you know when you can get the cheapest flight.
But the service that we and Disney are interested in is Volantio's ticket rescheduling service.
Running airlines is a costly affair.Â
Which is why airlines cannot afford to travel with empty seats.
So, they often overbook flights to hedge against cancellations.
But this creates another problem. If enough people don't cancel their flights then you do not have enough seats for customers.
What do airlines do then?
Convince some passengers at the airport to reschedule their flights and offer them perks like travel miles or coupons or first class tickets.
But this is a lot of hassle and involves major negotiations on the spot.
Plus, if a customer refuses to leave and is offended by the staff's behaviour, it creates a PR nightmare.Â
Enter Volantio.
Its machine learning-powered platform allows it to identify customers who will be flexible and will agree to reschedule their flights.
So, it sends them notifications with the option to reschedule their flights and offers them perks.
All of this is done days before the flight so no customers have to take the trouble to get to the airport only to go back home.
But ReadOn isn't this a small thing? How much difference does this make?Â
Every drop counts. This small proposition could help airlines add $8 billion in revenue each year!
Plus, they won't have to think twice about overbooking flights.
In fact, Volantio's customers, some of whom are also investors, have already seen an average of 3-5 times return on their investment.
But why is Disney getting into bed with Volantio?
The Problem Statement 📜
Though Disney's business venture is very different from that of airlines, they both depend on the same thing: filling seats.
How?
Disney's musicals like 'The Lion King' and 'Aladdin' are regularly performed on Broadway (a New York-based live theatre chain).
Now, some days these theatres are overbooked but on weekdays they aren't.
So, Disney is losing money every day: whether theatres are overbooked or underbooked.
This is impacting the company's profits.
The Root Cause 🤔
The root cause of this is customer behaviour.
Most customers want to see shows during the weekends or during holidays when they're free.
So, on weeknights, the theatres are half empty.
But can this consumer behaviour be changed?
The Solution 💡
Here's where Volantio comes in handy for Disney.Â
It will identify customers that could be flexible enough to change their reservations and offer them perks to convince them to do so.
Have mediocre seats for a Friday night show because of overbooking?
Get premium seats for the same price on Wednesday.
But will customers want to do this?
A survey by Disney states that 63% of theatre-goers would reschedule bookings to get upgrades.
So, inflexible customers will continue to fill seats on weekends and the flexible ones can pack the show on the other days.
But will this really be impactful for Disney?
Yes, because right now the only other way for the company to create additional revenue is to increase the price, something that could backfire and alienate customers.
On the other hand, allowing customers to reschedule bookings will help it increase its revenue without increasing the price.
This will also help the company recover from the financial impact of the pandemic that shuttered theatres.
Plus, Disney could also use this tech for its amusement parks in the future.
The company could crack this only because it correctly identified its problem statement and the root cause behind it. Because it asked the right questions.Â
Other big movie theatre chains could also take a cue from Disney and implement this tech in their business operations.
This could help them recover faster from the financial impact of the pandemic which shuttered their business for months.
In a Line: One of the world's most successful companies, Disney, is looking at one of the world's most unprofitable sectors (airlines) to optimise costs, increase profits and get more customers every day.
There is something to be learned from everyone: This is why Disney is taking a lesson from one of the world's most unprofitable sectors (airlines) to increase profits, optimise costs and get more customers.
Quick Question: What other industries do you think could benefit from Volantio's platform?
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