Iztok Franko is the founder of Diggintravel and host of the Diggintravel podcast. Recently, the company released their Airline Digital Optimization Yearbook so we asked Iztok to talk to us about what this means and why it is important for airlines to implement a digitalization model that succeeds.
Tell us a bit more about the Yearbook. How it all started and what are the main goals?
This whole Yearbook thing or digital optimization benchmarks started back in 2017 and it started basically out of my passion for digital optimization, for UX, for conversion optimization. Back when I worked at an airline, my career progressed basically from IT to e-commerce, to digital marketing, to marketing.
As mostly every airline back then in the mid-2010s, and 2020s. We wanted to increase our share of digital e-commerce. So as I started to really look at how we can do this more systematically: is there any framework? How you can do this? How you can increase your web sales? I started studying conversion optimization, UX optimization, and structured analytics, and we started to implement that in practice. We had great results. I think for 24 months we had double-digit online sales growth. So this is where the passion came from. Then when I started my own company Diggintravel, the goal was to educate the industry about this more systematic approach to airline e-commerce and digital marketing.
Often I see like more random, or stoic approach in terms of how we do things, but it's not really structured. I'm a very structured person, so that's why we wanted to educate. Since 2017, we did five rounds of benchmarks of serving people and then creating the results, creating benchmarks and yearbook reports. If I look back to 2017, to the first report, I'm kind of ashamed of it now because it evolved into one of the biggest airline digital E-commerce research papers.
It's part of the process, I guess.
Yes. Part of the learning iteration and optimization also with the yearbook.
You have this concept of the digital optimization maturity model. How would you define it?
Basically, we try to break down airline digital optimization, e-commerce, and conversion optimization. In a nutshell, it's how airlines optimize their web sales, their digital sales, and mobile sales. We try to break down this process into eight areas from organization, people, skills, to tools, to what kind of research you do, UX research, what kind of analytics you do, what kind of tools you use. One special area that I'm sure we'll talk about is airline booking engines because they're the key platform here, and then what kind of organizational support you have.
So we have these eight areas. We try to assess airlines in each of these eight areas from level one to five. Level one being the beginning of maturity and level five being the most mature. So this model also evolved through the years, but what we found out by using this model and some additional questions that we use, we get quite a good pulse with airlines as they self-assess during this process. We can then distinguish where in this whole overall maturity airlines are.
I just saw a post from you on LinkedIn that you had more than 5,000 downloads, right?
As I was preparing for this interview, I started to reflect back, because we'll talk about a little bit of evolution. So these five years more than 5,000 people, which I think is a lot, knowing this is a niche. It's the niche of the airline industry, e-commerce, and digital marketing experts. So for me , seeing that more than 5,000 of them were intrigued by this, I’m quite proud of this accomplishment.
You're doing this since 2017. How do you see this evolution in terms of digitalization and the importance of this topic?
I was trying to do, for this last Yearbook for 2023, we tried to do and put some content on how the industry evolved and how this area evolved in the last five, or six years. And so many different things happened. We had covid in between, which was a disruptor. I don't want to be presumptuous, but I think a little bit of growth in the industry, a tiny part, is also what we are doing with this content and research. Because I see during each of these five research projects, I reach out to more than 100 or 120 airline and e-commerce leaders to try to convince them to participate in our survey.
And I always appreciate everybody's support. So I would like to say it here again, but during this research, we talked about this process. And I see that people back in 2017, when this structured approach to e-commerce optimization was not as well known, there was a lot of people intrigued by it, trying to learn from it. Now, five years, and six years later, we see some of the airlines having structured digital optimization teams, we see these very specialized roles. So I see our field and our industry evolving.
I also get this not only from our benchmarks and from our results but also by talking to airline digital leaders on a daily basis at events. They tell me this is something interesting. We did a lot of workshops with airlines, trying to educate them on this process. So I think, as an industry recognition for this, that this is what we call scientific or smart data-driven airline marketing decision-making. I think there is a much better recognition now that this is the process that really works.
I'm sure you had some surprising results, but can you mention two, or three that were the most surprising?
I am surprised, but also, if you really think about it, not really. Initially, I was surprised that the gap between airlines that are still not recognizing this and that are still at the beginning of this journey and the airlines that have evolved through these five, or six years in this process is getting bigger. It's logical because I think covid disrupted a lot. We saw in our past research that airlines had to downsize their digital teams.
I think a lot of know-how was lost in between. So now as we’re getting people back we need to reeducate some of these people. That's why I see airlines that were smart during covid and didn't lose this inside knowledge completely. They had a one or two-year period where they went a little bit slower, but they didn't take stepbacks. While on the other hand, I see some airlines that took stepbacks in terms of recognition knowledge. So they have to start over from the scratch.
The second one, was more positive, where I was surprised. I was how many airlines said that during the last year, they increased their digital teams. Covid was for a lot of airlines, a strong motivator, a push to go, especially for traditional airlines, to go now all in on direct distribution, e-commerce, on digital sales. We see that more than 60% of airlines said in our story that their digital teams, during the past 12 months — I think the percentage was more than 20% or 23% — increased significantly.
Good to see that it was actually an opportunity in these struggling times. One number that we had here, and I'll just quote your Yearbook, is that “62% of airlines said that investment in the internet booking engine (upgrading, optimization or simplification) is one of their focus areas this year.” Why is this percentage so high?
I think it's always high. In the last five, or six years, it's always been like this. There is a gap on the technology side. This industry evolved in the last five or six years. So people are more aware of optimization. They want to do testing, they want to be agile, and they want to use data to create different experiences. And this is what basically optimization and CRO is all about. It's very tight, knitted together with personalization and data-driven marketing. On the other hand, I think the backend, the booking engines, the leg legacy technology that a lot of airlines are using didn't evolve as fast.
I think we still need time to catch up on these modern approaches for most. So that's why we see a little bit of frustration with airlines. We say “you are teaching us, or you are telling us we should do this and this like testing, you should do smart analytics, you should experiment on your booking flows.” But then we don't have the technology, we don't have the core platform to allow us that. So that's why we see it in an optimistic way. It's positive that more than 60% of airlines want to invest in this because they want to have new, modern digital platforms.
How do you see a good implementation of this digital optimization now in practice?
Depends on where you start. How big is your team? How big is your airline? Typically, in smaller airlines, we see somebody who gets intrigued by this. Somebody in digital marketing, in e-commerce, starts researching, maybe finds our paper or maybe finds some other research. And then they start to learn about these things. And typically this person becomes like an internal champion, and an internal key motivator to try to set up analytics. Then they try to experiment with some agile user research and maybe some simple tests. So this is typically how they try those things and then it evolves.
Maybe you get some quick wins and some good first proof of concept scenarios of optimization. You increase conversion or you increase sales, or you do better campaigns. Then I think we start talking about how can we put this into a bigger process. So the next step from that is like a small team. There is like a small optimization team, part of e-commerce or digital marketing.
But what we've seen through the last couple of years is that the bigger airlines, now they're trying to embed, not having one centralized team to do this optimization, but they are trying to embed this kind of thinking, this kind of methods, this mindset into their digital teams. So it's more about educating digital project managers, developers, and product owners on how to do that. It's more like education and support, rather than control it centrally in their digital marketing departments.
You said that for some airlines maybe this process can be frustrating. What are the main challenges, the most common, that you see and the recommendations you have to deal with them?
The main challenge, and it's not only in e-commerce, but it's also overall in airline marketing or in any other businesses that I consulted in the past, and it starts with basic analytics. I think a lot of people are still uncomfortable working with data and taking data-driven decisions. So this is the first part. Let's see how are you measuring things on your website, and on your mobile apps. What are your KPIs? What do you want to optimize? So a lot of cases we have to go back to real basics. And set these analytics, and guide them on how to break key KPIs from the top, from the key e-commerce goals to the tactical ones.
Once we have this breaking down, once we are able to track it, now let’s find cases that will really have an impact on the top high-level KPI. So I think this structured approach based on data, is a more systematic approach. If you don't understand it completely, people get a little bit afraid of it. But I think once you educate and you understand the benefits, I think then people get motivated to start doing it.
In terms of technology, what technologies do you see having the most impact in the upcoming years in this digital optimization?
I can talk about what technology especially excites me lately. Just before going there, we need to start with the basics. We need to start with core analytic platforms, and core booking engine platforms. We often used this in the past in research and the word “own”, own your digital platforms. And by “own” it doesn't mean that they need to be your own or developed by you, but I think airline digital teams need to own them in a way that they can control what they change, how they change it, how they optimize it, how they measure and things like that.
Going back to your question, what I'm most intrigued about, especially in the last two years, I've been trying to dig deeper into data science. Thinking about what are the data science concepts, and algorithms, that can help us do better e-commerce and digital marketing. I think there is a big opportunity there in terms of recognizing trends, recognizing bottlenecks. As you’re recognizing you’re building customer clusters for later personalization and for optimization. So a lot of opportunities there.
I started doing some of these things on my own, coding some of the data science. And once you start learning about that, you see how accessible it is. 20 years ago, you probably needed have a PhD in math or statistics to build complex models. But now a lot of these models are accessible, so you don't need to build them from scratch. You can just learn about them and then try with your own data and experiment again. There is a lot of excitement and we see it now with the latest boom with ChatGPT, it's very similar.
Even here, for example, it's amazing because I was learning about coding in R, about data science, and building some of these models and even here ChatGPT can help you. It's writing half of my code now. Sometimes I had to Google, I had to find out how I would do a certain part of the code. Now you just ask and you get an answer from this crazy machine on the other side that helps you. So I think you could be scared of this, but on the other hand, once you start learning more, I think it can help us immensely. I think this is the next frontier in this optimization.
Every single airline that I worked at in the past on optimization cases had more than a million people on their websites. Tens of millions on a monthly basis. So just figuring out better what people are doing and why they're doing it. Then it starts with data and also all kinds of different agile research methods that we are also teaching airlines how to do.
Speaking of ChatGPT, one of our colleagues was experimenting with it asking about offer and order management. And we were all surprised at how good the response was. What impact do you already see of this Yearbook that you do and the importance of this topic for airlines? What direct impact do you see already happening in the airline industry?
I think the key impact is just educating. I see many airlines that started to apply these principles. I had one case on our podcast and in our yearbook, so in 2017, we were talking about e-commerce and a person working for an airline, and he was the first guy in that airline that start to get intrigued by it. Then we did this story with him like five years later, through Covid, how much they were building their digital team. It grew from three people to 20 people. Integrating this concept there, and watching how it evolved in these five years was amazing. If there is one airline that we can help on this journey I will be happy and satisfied.
We posted a lot of different roles in different areas of this framework that we talked about, in these eight areas. Seeing these roles pop up on airline job boards makes my heart warm because you see that airlines are getting some of the roles that were not there two, or three years ago. They're now on a lot of airlines’ digital teams and e-commerce teams.
You already talked about many recommendations, but let's try to make a summary. Let's see, maybe a small airline. What recommendations would you give to start with this approach?
I would say just invest in people and invest in first educating yourself about this. Because if you look into all airlines’ digital or e-commerce budgets. The spending that goes into platforms, and technology distribution is huge. And then also the digital marketing and e-commerce budgets, the money that typically we invest in customer acquisitions, so in digital advertising, they’re not small amounts for most airlines. Just think about how you’re investing part of your budget into educating your building, your digital team, building your skills, and then also educating them about this more scientific data-driven process, it's a no-brainer.
It just gets you most of something that you already have. There was a funny story that I put into the introduction of our Yearbook. One airline CEO asked me how we can measure how good are our digital products, and this story will tell you about the impact. I said our benchmark is not the benchmark of your digital product, our benchmark is the benchmark of your digital process. So, he understood right away, he was a smart guy. He said, okay, you benchmark the process, but we want to benchmark what is the end result. I said we don't that.
I see a very strong correlation over these five, or six years. Whenever I work consulting workshops, airlines that are mature in this process, there is a strong correlation that they build good digital products. And on the other hand, airlines that don't, typically struggle with digital user experience. This is a systematic process of how you get there. Everybody's talking about let's be more customer-centric, we want to build customer-centric solutions. But if you don't use your data to understand customer behaviour, if you don't do research to understand your customer behaviour and key friction points, and you don't test and see what really moves the needle for them, then it's like being blind. Somebody sometimes can even guess and hit the target, even blind shooting, but I would say there is a much higher chance if you really have good aiming devices, that help you shoot in the right direction.
You also have your own podcast and blog with many valuable interviews. Why is it important for people that work in airlines to know what others are doing?
I don't know how important it is, but it started as I just wanted to talk to more airline digital people about these things. Not only about digital optimization, but broader trends, innovation, and things like that. And podcast at that time sounded like a great opportunity, not only for me to talk to people, but I wanted to give a voice and platform to people who are doing great stuff.
Airline people, because many of them are building great digital products, who are doing innovative things. I just wanted to give them a platform to tell their stories. Now if I go back to impact, a lot of times, to me it's funny when I go to a live physical event, like this huge Aviation Festival, FTE, and other events, and people would come to me and say — I don't know them in person — saying “I listen to your podcast”, and it's like they feel they know you. And I have the same feeling when I listen to other podcasts.
To me, it has evolved into a really beautiful platform. We can connect people, people get to know me a little bit more personally, and I get to know a lot of great minds in our industry and then we share their stories. So people who are working, who are doing the same things in practice, appreciate that because they can on one side learn, but on the other side, just see what other people are doing, what are their challenges, what are their troubles. They can empathise and correlate with that.
Keep doing that amazing job because it surely inspired us to also move forward with our own podcast and now on YouTube as well.
That's great to hear. The more, the better. The more we talk about this, the more we connect the industry.
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