Subscribe
Share
Share
Embed
See more at Switchfly.com
Welcome to Travel Buddy,
presented by Switchfly.
In this podcast, we talk about all
things travel, rewards, and loyalty.
Let's get to it.
Brandon Giella: Hello and welcome
back to another episode of Travel
Buddy presented by Switch Fly.
I have with me back again after
many episodes of a hiatus.
We have Noel Outlaw,
the CEO of Switch Fly.
Noel, thank you for joining.
I'm so excited to see you again.
Nowell Outlaw: Hey Brandon.
Good to see you.
It's been a while.
Brandon Giella: It has been a while.
Well, I am excited to talk to you
today because we are talking about
the a hundred million dollars question
how airlines can win with packaging.
Now what is so interesting is we have
talked a lot about loyalty in the past.
We've talked a lot about the challenges,
we've talked about dynamic packaging.
But what I'm interested to hear
from you is how are airlines.
Piecing these tools together to
provide a good experience for
clients and or for customers.
And and what's getting in the way of that.
And so this is where that a hundred
million dollar question comes in.
And so I wanna start with, there's
this great report that came out many
years ago not many years ago, it was
a couple years ago from McKenzie,
it's called Winning and Loyalty.
And they presented.
Through their research, through many
surveys, some stats that I thought
can help frame this question where,
they talk about why loyalty matters.
And just to give a brief overview,
they say that 64% of customers in
loyalty programs are more likely to
purchase more frequently, half are
more likely to recommend to others.
35% are more likely to choose that
brand over its competitors, and 31%
are more willing to pay a higher
price to stay with the brand.
Now the interesting thing here is
this was written through through COVID
and so it had some different takes on
supply constraints and things like that.
So it's the perspective of the report.
But this one other stat talked about
that there is a saturated loyalty
landscape with low engagement.
And so it talked about how there
is less than 50% of active loyalty
members within any kind of the
programs that they serve it.
And I know that this kind of stat,
this inactivity is is replete in the
airline community with their customers.
There are trillions of points
that are totally unredeemed, which
creates a liability for airlines.
And it creates this kind of kind of
like lack of engagement with the brand.
And so there are some ways.
That you guys have built and have
talked about before for kind of
getting at this engagement, which
we'll talk about in a second.
But talk to me a little bit from
an airline's perspective, this
challenge that they have with
inactive loyalty membership.
What is going on there?
Why is it a problem and why is
this something worth solving?
Nowell Outlaw: You know, I think the
airlines do a really good job in marketing
to people with their status, right?
But, you know, I, I literally was
sitting there yesterday with my
wife and 'cause she always uses my
points, oh, can you do an upgrade?
Can you buy a ticket, you
know, for our kids or whatever.
And she happened to have her app up and.
And I'm like, you have 165,000 points.
Why am I spending, you
know, doing this stuff?
And she's
kind of like banking it, right?
And I think it's, you know, I think when
it's just flight only you know, there's
perfect use cases for that, right?
If you can actually get get the
upgrade, get the seats right, and do
the points, it's also, are you really
creating value for the consumer?
Right.
And what we've found is, you know, in,
in the dynamic packaging side of it,
the airlines are actually able to create
a lot of value for the consumer, but I
don't necessarily think that the consumers
are aware that those programs exist.
Brandon Giella: Oh yeah.
Okay.
Okay.
so
define really quickly,
define dynamic packaging.
'cause I know I
wanna get there and I
wanna talk more about that.
But what are
we talking about?
Nowell Outlaw: So, dynamic
packaging is really.
You know, taking a flight and then
combining it with another product.
So a hotel, right?
So if you're going Denver to Cancun
and you're flying, you know, whatever
airline that you're flying, you
know, can I also add the hotel, add
the car rental, add the activities?
So I have a, basically a whole
package right in my trip.
the interesting.
Way to think about this is that people
sometimes think of it as packages, right?
In travel where I have to do this but
really dynamic packaging for consumers
is a way, if I use the, what you're
really used to is, is bundle and save.
When you think
about Xfinity or Comcast, wherever you
do your cable bill or your insurance,
Brandon Giella: I was thinking insurance.
Nowell Outlaw: Yeah.
Airlines have these programs where it's.
You know, it may be branded as
vacations, but it really is a bundle
and save ability for you to save money.
And there's plenty of case
examples of people out there.
The points guy has a, has an article
about an airline where no matter what
they tried to do on retail trying to do
it, they could not get the same rates
as get when they did the
package search on that client.
Right.
Brandon Giella: And you've talked
about, we, I don't wanna go into all
the details 'cause we've talked about
this in episodes past, but where there's
basically, you know, coupon codes and
relationships and contracts in place
that make it to where that package is.
Actually, that's the thing, it's the
best possible rate that you can get.
There's a lot of technical
and different issues why that's the
Nowell Outlaw: Yep.
yeah.
Well, you know, an airline is
motivated to have their planes full.
Right,
because that's how they make money.
So, you know, what you'll also see
is that sometimes the airlines might
discount a certain segment, right?
So if they're trying to expand
into a market or they're, you
know, they're really focused on a
particular destination, they might
actually do those seats lower.
If it's combined with a package
right, and then they bundle in the hotel
savings and things for the consumer
and ultimately, you know, they don't
even have to give you a discount code.
It's cheaper,
right?
Than if you try to go buy that in a
retail segment,
Brandon Giella: So it's a win
for the consumer because we get
better rates and we get, I guess
one place to go, one itinerary
that's all put together and it's a
win for the airline because
how would you explain that?
Nowell Outlaw: well, it's a win for the
airline because if you think about you
know, if I'm flying Denver to Cancun
and let's just say it's $500 a seat.
If it's my wife and I that go and
I spend it pure in points, it's
a $1000 But I'm there for a week.
I'm staying in, you know,
some resort and I rent a car.
Well, the resort just to stay
there, let's say that's $3,000 and
the car is another $500, right?
If you're not doing the packaging
component as an airline, you're just
selling the $1000 You're missing out
on the other $3,500 in the ability
to burn down the points, right?
Financially the airline is carrying
these points on their books.
They have to be burnt off.
If, you know, if instead of burning
off a $1000 I can now burn off $4,500
and the person, the consumer's going
to, gonna spend that either way, and
the consumer would rather spend their
points, than now I have to whip out, you
know, a credit card and buy the hotel
separately.
And so, you know, being able
to do that all in one place is
beneficial to the airline and it's
also beneficial to the consumer.
Brandon Giella: That's right.
So, okay, so we're talking money here.
You're talking to the CFO of an
airline or, you know, head of
revenue or whatever that looks like.
And the case is.
Use dynamic packaging.
Embrace this loyalty narrative.
The technology underpinning it, all
the experiences and the packages
that can be put together because it
actually helps your balance sheet
in real ways.
It helps reduce the liabilities on
your balance sheet while all the same
time creating new revenue streams.
So helping the income statement.
And so speaking like financial
language, this is a huge win by
putting these things together.
Nowell Outlaw: For sure.
And it's, you know, some people
have been successful doing this.
Some people have been really
successful doing this, and some
people are, have failed at doing this.
I think it depends on the program where
you are, the destinations that you're
able to serve, but you know, it does
offer to those loyalty consumers, right?
If you bring this back to the loyalty
user, a different option than just
redeeming for a flight, right?
Hey, now I could redeem for a
hotel, or I could redeem for a
car, you know, I could redeem for.
A flight plus a hotel, plus
swim with the dolphins at, you
know, some of, some activity.
if I'm a, you know, a platinum
status person, I could have two,
three, 400,000 points in my account.
Burning that down.
Just doing, you know, single route flights
that, that's a lot of travel, right.
If I'm.
A high traveler.
So I'm a high profile traveler.
I have a lot of points.
Maybe I'm not using a credit card,
maybe I am using a credit card.
But do I just, do I wanna get
back on a plane and go week
after week to burn those points?
Probably not.
Would I rather take my family on
a vacation, you know, to a, with
a hotel all bundled in and burned
down, you know, half my points, then
I might wanna be able to do that,
right?
So there's value for the consumer.
In being able to
basically redeem for more.
Brandon Giella: So it's a win-win
for the airline,
for other, you know,
folks in that ecosystem.
And then win-win for the consumer.
Why don't more people do it?
It seems like an obvious like, oh
sure, I should look into this tomorrow.
Nowell Outlaw: 'Cause it's complicated.
Right.
And I think that it's, it can be very
hard and you have to understand the
market, what you're getting into.
You know, certain airlines, it
doesn't make a lot of sense, right?
If you're a small program that you're
just flying to, you know, up into Canada,
it might not make a lot of sense for
you.
But you know, if you're a
Caribbean airline, it might make
a ton of sense because well know
where do people go on vacation?
Well, they go to the Caribbean.
Well, why not?
If you're the guy that's taking the
people to that island destination.
Why don't you be the people that
also sells 'em the hotel and also
sells 'em, you know, the activities
and do all that other stuff, right?
Brandon Giella: Yeah, that's right.
That's right.
So this brings us to the a
hundred million dollar question.
So the thing that you guys
talk about is you have.
Put a lot of money into building
this platform, the right way to
package things in the right way, the
right things that you're packaging.
You have all the
relationships and all of that.
It's super complicated.
So you could spend a hundred
million dollars to build it or.
You can work with Switch lie.
But before we get there talk to me
a little bit about what is some of
the complexity that goes into that?
So we've talked about this before on
the show, but not quite in this way.
So when you're thinking about,
you know, all of the things
that have to go into a dynamic
packaging solution, it is so great.
Connects the loyalty.
It's a win-win for everybody involved.
But you have to get a lot of things right.
So you gotta package things together.
There's the reporting,
there's financial, there's
legal, there's all that infrastructure.
And then of course there's currencies,
languages, you know, you I think
you said this earlier before we
started talking or recording that you
know, you can't just be in English.
You've gotta have.
Many languages down to the,
the little, you know, pop-up
screens and all kinds of things.
You got a hu of a hundred thousand
things going on the right way.
Yeah.
So tell me a little bit about
that and then also like, like
the connectors between a hotel
and a car and the experience and
all of that working together.
How does that even happen?
Nowell Outlaw: You know,
it's a function of time,
right.
In a weird way.
So Switch's very first
dynamic packaging customer was
American Airlines, and that was
19 years ago,
Brandon Giella: Interesting.
Okay.
I
just got off an American
flight and it was great.
Nowell Outlaw: Yeah.
Yeah.
I love 'em.
I mean, they're, they're a great customer.
And, you know, they kind of, I
think pro like a lot of things
that they do, they kind of started
a movement in this direction.
But, you know, it's when you evaluate all
the things that have to happen, right?
Just booking a flight is only
one piece of the puzzle, right?
And so now you need to figure
out if you're just going to
use, I'll give you an example.
If, do I want to use, oTAs.
So online travel agencies for my hotel
inventory, there's lots of vendors
out there, you know, um, Expedias,
a Goda, hotel beds, web beds, like
all these different, you know, cloud
beds, you name the name, the company.
Where do I want to do, have my
own hotel relationships, right?
So the platform needs to support both.
Connecting to those third party suppliers.
Right.
Plus the ability to have my own
internal contracts that I've managed.
So if I'm a, an airline and
I've negotiated with Hilton,
right, or Holiday Inn Express
or whoever it is, I need to be
able to put and manage those
contracts into the system.
Right?
That's two separate functional
components just for hotel, right?
Then you expand upon that and you
say, well, it's not just the front
end that the user is shopping
through, it's the backend services.
Right?
So, you know, because
problems do happen in travel.
So what is the agent tool
that the use, the agent is
using to service that booking?
Right?
And how complex is that?
To make it easy to do a cancellation,
do a modification, right?
Upgrade the room, upgrade to this.
And then, you know, and then expand that
on a global basis to say, well now I
want to be able to service the Far East.
I want to service the Caribbean.
I wanna service North America.
But I also want to be able to do that
with my internal contracts and the
best rates that are available out
there, that between suppliers, because
hotel inventory is in constant flux.
Some vendors have better
rates versus other vendors.
And so, you know, trying to get
the best value and best margin.
Out of just those things.
And then you know, add car
rentals, add activities, add
insurance, add all these things up.
And, you know, if you're not
careful, you know, you're taking
on a massive custom build project
that is millions and millions of dollars.
But also the ongoing upkeep
of all those connectors and
suppliers and things is a really big lift.
Brandon Giella: Yeah, to
your point, it's a market.
It's cha, you could get it set up one
day, but then weeks later the prices
are all different, you know, and
there's, I, what was it, some other,
there's some major airlines that
are testing out, like surge pricing.
I mean, it's like things
are constantly changing.
Hotels, airlines, all
of that and keeping it.
All in place has gotta be
Nowell Outlaw: Well, and also, I mean
the, the, the ongoing technology support
Brandon Giella: yeah.
Yeah.
Nowell Outlaw: about
every single connector.
So if you're connected to a GDS,
like Sabre, you're connected to.
A car rental service, you're connected
to a, you know, an activities provider.
Well, those guys are also
constantly upgrading,
right?
So you have to have a constant team of
people just supporting the connections.
Right.
It's
not a once coded, it's built
and that team goes away.
This isn't, you know, this is a never
ending journey of, now I gotta support
this new connector from these people
and this connector from these people.
And now there's a state requirement
over here, you know, and I have to
collect this fee, and I have to do
this and do all this other stuff.
You know, my, my personal
view is it's super complex.
If you're an airline,
just run the airline.
Right?
that's complex as it is to add all
this other dimension to it from a
programmatic standpoint.
You're not really a software company.
You are an airline.
So
be good at what you're good at and
let other people who are good at what
they're good at, be your partners.
Brandon Giella: And and maybe reconsider
that you can't vibe code this over the
weekend on cursor or replay or something.
This is not something you can
just kind of snap together.
Nowell Outlaw: It is not.
You know, and the interesting thing, and
I'll, I guess I'll tell you this story,
which is, you know, we had a customer that
decided we're gonna build it ourselves.
So 18 months ago.
They decide, they were convinced because
of a technology initiative right?
Around some really fancy stuff that they
were gonna go build this themselves.
And
so they got a vendor and
they started coding away.
And you know, that project failed.
There's
still a switch customer,
they're back, they're great.
And you know, we're doing
enhancements for them.
We're working together, but.
It's not for the faint of heart, right?
It is a lot of work to keep both, you
know, both to build it out with what
it's capable of, but also to keep
the thing up running and functional
without any interruptions,
without any services.
Because I think the thing that
people focus on is they always
focus on the front end, right?
Of the user
experience, what's the shopping
flow and what's this and that.
But there's also the
whole downstream system.
That has to be paid attention to.
And once you start adding that stuff
on top of each other, you know,
you're not just building one house,
right?
You're building a neighborhood and
you need to put in streets and fire
hydrants and stoplights and oh my
gosh, we didn't think we had to build
the school and we have to do this and
you know, we think about the financial
feeds and, you know, simple things like.
Okay, now we're using points.
Well, now we have to connect
to our points provider.
Well, what if we have
two different programs?
We have like the gold members and we
have the platinum members, and they
exchange rates at different things.
That's a whole coding infrastructure
that has to be understood for your teams,
and it flows all the way down through
the system as far as how you redeem.
How that is calculated, how it comes
through the financial feeds, how this goes
on, I'm telling you, it's, you know, it is
million, it is tens of millions of dollars
to, to consider building it yourself,
right?
Brandon Giella: just, and not just even
one time, I mean, all the time every
year you're spending millions of dollars
Nowell Outlaw: Yeah, for sure.
to keep it up.
Brandon Giella: Yeah, yeah.
Yeah.
well, I wanna do a little
bit of storytelling.
So I think the, a lot of
people that are listening would
understand the loyalty argument.
I think it's, it's pretty clear
people that love to be part of loyalty
programs do spend more revenue and it's
clear that this is really hard to do.
But what are some, let's say, okay, so
I'm the head of revenue ops, or I'm, you
know, thinking of, I, I would like to, you
know, bring this kind of program into my
airline or into my my travel experience.
What are some things that you have
seen where customers have gotten
some great benefit out of it?
They've hit results even anecdotally.
I mean that you shared a story earlier,
but things that you just heard from people
that this has made a big difference.
Nowell Outlaw: So we launched a partner
Bermuda Air, In less than 90 days.
Right.
And I think the interesting thing is, I
mean, there are airlines out there that
have spent the last 18 months trying
to get something out in the market,
right?
And so, you know, speed.
Is needed in order
to make this go.
Right.
I personally don't believe in taking
on big multi-year implementation
projects 'cause there's too much risk.
Right.
And so, you know, fast wins in
my book being in the market.
And also, you know, as long as you may
not have a hundred percent day one.
Right.
Because
we, you know, I think we have three
RFPs we're answering right now.
And you know, some of the things you're
like, well that's a nice to have when
you don't have a program today, boy you
should at least get your program launched
before you're worrying about this feature
that's so minute and so in the future.
Right.
Is it really the thing you need to have?
And so, you know, I would say the
biggest thing is get up and running.
Right?
Get
it functional.
'cause there's a lot of work just from.
Promoting it, getting your
loyalty members to use it, right?
Getting people to redeem for it.
Understanding the commercial
aspects that you have to do.
And the faster you can get
that done, the better it is for
your business because then you
have, you know, money coming in.
And you know, I mean, we've seen programs
that have gone from zero to, you know,
they're on track to do $500 million in.
Five years.
Right.
So,
Brandon Giella: this
is additional revenue.
This is like, you
know, something like that they didn't have
before, but they spend some money, you
know, put some technology people together
500 million new dollars over five years.
Nowell Outlaw: yeah, for sure.
And you know, some of these programs,
I mean, when you start thinking
about if it's long haul flights
combined, so long haul is, you know,
if you're going to Europe right from
North America, or you're going to the
Far East or something, well, those
plane tickets are not cheap, right?
Combine that with, you know, your stay.
So you're doing you know, Denver to
Geneva for a week plus a hotel in Geneva
is, you know, whatever, $700 a night.
That's a lot of money.
That is all of a sudden available to
you as an airline that is, you know, is
able to be charged and make money on.
Right as well.
And so, you know, when you think about
the additional revenue streams or revenue
segments, it, you know, beyond charging
people for their bag or charging people
for, you know, if they want to buy a
snack on the plane, you know, what, if you
could, you know, instead of charging 'em
$35 for their bag, what if you could make,
you know, $500 off of their hotel bill?
Right.
That's where the margin comes into this,
and I think that's the added benefit is
it becomes a revenue stream for people.
Brandon Giella: You know what I
like to, I mean, 'cause yeah, when
I travel to Europe as a family, it's
several thousand dollars for a week.
And what I like about it is if I can
put all of that onto one itinerary
or reservation or it's in one
email thread, that to me is like
the biggest thing that just like,
because I share it with everybody.
I'm like,
just look at the email thread.
Just look at the one thing you know.
And it's nice to have all that together.
Just as a consumer little
Nowell Outlaw: for sure.
Brandon Giella: So yeah, it
sounds like a, a major win.
But I'm curious, what is, if you had one
thing that you wish that you could get
across to somebody who's maybe considering
this decision or have, you know, thought
about loyalty or dynamic packaging, what's
one thing you would wanna say to them
after you know, all your experience and
what you guys are building at SwitchFly
Nowell Outlaw: I would
say that speed matters,
And again back we were
just talking about that.
Right.
Which is, you know, I've seen too many
projects in my life that are these
massive lifts and they fail miserably.
Right.
And, you know, I would rather
see customers be successful.
Right.
And you know, being able to
have a program launched in say,
90 days is a meaningful thing.
Right.
And that having it out there fast, you
know, airlines are not software companies,
right?
I mean, some of them have massive IT
departments and do all that stuff,
but it's also the type of thing where
building it yourself is too hard,
right?
And you're right.
No one's vibe coding this, right?
It's not gonna be done in a weekend.
And you know, but the trick is, well,
how fast could you get this done?
And then once you get it done,
you know, how well does it work?
And you know,
It's an expertise.
There's not very many vendors
that actually do this kind
of stuff.
But for an airline it's pretty powerful.
Powerful stuff.
Brandon Giella: It fits really nicely into
the kind of narrative that you see today.
It's very lean, be very efficient, be very
fast because of, you know, in different
industries and different domains because
of AI and the way that technology is
really coming together and kind of all
these like pieces are fitting together now
that people are able to move a lot faster.
So it is nice to like kind
of fit into this mode where.
Actually you can't.
You can do that and you
can do it the right way.
It's
not like, you know, you're
just putting it together like
it's actually done really well,
Nowell Outlaw: Yeah, I mean, in our case,
most of it's actually not technology.
When you think about, okay,
someone wants to launch,
it's 90 days, right?
Most of it's actually not technology work.
There's some integration
work that's pretty quick.
A lot of it is figuring out, okay,
how are we gonna launch this, right?
How are we gonna market this?
So, you know, switch, fly.
Brandon Giella: Oh
Nowell Outlaw: You know, actually
brings marketing knowledge to the table
to actually help people understand
how to promote a program like this.
Which,
Brandon Giella: That's cool.
Okay.
Nowell Outlaw: yes we can show up with the
tech, but the tech that's up and running
but brings in no bookings, helps no one.
Right?
And so, you know, we work with our
customers, weekly in some cases, on
how to promote this, how to focus on
certain destinations, how to focus
on certain segments and really help
their programs launch successfully.
Because that's also part of
doing this the right way.
Brandon Giella: That's
huge.
That's huge.
'cause yeah, I mean, it's
almost September now.
And so it's thinking like, okay,
by January I want to have this new
program up and running and launch.
I need to announce it.
I need to go to all my, you
know, million loyalty customers.
And that's a huge lift.
Not only just like the actual, like
implementation of something like that,
but just the messaging, like to your
point, like, what do we actually focus on?
Like, all that.
Huge.
Nowell Outlaw: Yeah, for sure.
Brandon Giella: That's great.
Okay.
Well no thank you.
I have one final question for you.
Where are you traveling next?
Nowell Outlaw: good question.
I leave Wednesday on my
round, the world trip.
So, I'm going from here to Singapore
to Bangalore and Bangalore back
to Denver in about nine days.
And then I will be in, in Lisbon
at the Aviation World Festival the
first part of October to go there.
And then I
might have to go to Nairobi, Kenya with
my wife which are pictures from up here.
So,
Brandon Giella: oh yeah.
Fascinating.
Cool.
I, what I love about every
time I talk to you is you're.
You're always jet setting
somewhere, and I think
that's so cool because, you know,
obviously you are building a travel
company, but it's neat that you
really are practicing what you preach.
You're, You're on the road all
the time, so yeah, it's cool.
It's cool to hear where you've been.
Nowell Outlaw: correct.
Brandon Giella: Well, Noel, thank
you so much for your time today.
I am keen to hear how
your travels are going.
Would love to hear more about your expose
at the aviation festival in Lisbon.
And and I know that the, what you
guys are building you know, having
a little bit of inside knowledge is
really coming together really nice.
And I'm excited to see things continue
to launch throughout, to fall.
So, Noel, thank you and
we'll talk next time.
Nowell Outlaw: All right.
Thanks Brandon.
Have a good day.