Travel Industry Adoption of Digital Wallets is Ready for Take-off

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How one company is helping to turn the smartphone into a digital engagement tool

This week’s Vantage Point interview is with Andrew Phillips, Director and Founder of Flon Solutions  –  a start-up based in Lausanne, Switzerland founded in 2012. Flon Solutions provides everything to turn smartphone digital wallets into customer engagement and marketing tools.

Q:   You started in telecommunications, and then decided to go off on your own. What was driving you in this and what was your vision?

I’m an electronics engineer by training and worked many years for a large European telecom operator, Orange. It was part of France Télécom Group (now renamed as Orange), which has operations across many countries in Europe and Africa. I had several project management roles and increasingly reported into head office functions – including the IT & Networks and Devices divisions.

These days the most popular smartphones are iPhone or Android, but a few years ago there was a much larger portfolio. Orange was buying and reselling €5+ Billion devices to their customers each year. This was a portfolio of around 130 devices that largely changed every quarter. So, picking the right device for the right customer segment, making sure that you’re giving them something to maximize their customer experience, was really important.

I worked with a team to analyze the specifications, features and pricing options for all upcoming devices from various manufacturers and match them to the right customers and assist in quarterly purchasing decisions for each country and segment. That was quite a challenging job. So, when I decided to leave Orange to start my own venture, I applied these data analysis experiences to customer engagement.

Then in 2012, Apple announced a new digital wallet application originally called Passbook. I thought “this looks nifty” and realized it was a great way to follow your customers’ behavior when interacting with your organization or brand.

In the airline industry, Passbook became quite popular – especially for e-boarding passes. Most airlines around the world now support digital wallets as a convenient, secure and standard way to present boarding passes to their passengers. They’re quick and easy to use at the boarding gate.

Passbook has since been renamed Apple Wallet and clone applications are available for Android. It’s also great for things other than boarding passes – coupons, event tickets, gift cards, loyalty programs and more.

So, Flon Solutions provides everything to create and manage digital wallet programs for customers and staff. We make it really easy to set up, distribute, and control these programs, and then measure how effective they are.

Q:   What’s it like switching from a corporate environment to now being an entrepreneur and running your own show?

It’s certainly very different from working in a very large company like Orange. You have to wear every hat there is, instead of expecting that someone else is managing sales or finance and you can just concentrate on technology or R&D. Now everything’s up to you and you quickly realize that sales is the most important thing.

There are a number of companies building products and services around digital wallets – though the market is still relatively small. In some cases, an existing IT department or contractor builds a custom implementation. For example, an airline usually already has a large contract with a service provider to manage their bookings, ticketing, billing and so on. And, they will usually engage the same team to add the digital wallet boarding pass functionality to their systems.

Other companies are specifically focused on digital wallet marketing. Some concentrate on the mobile payments side of digital wallets, such as Apple Pay. Others are more engaged with the consumer loyalty side – coupons, loyalty cards, events ticketing, and so on.

We often help our clients to understand the great advantages of using digital wallets to engage with customers or staff. In the airline industry, the use case for boarding passes is well known, but not always for other applications.

A key advantage is that you don’t need to build, maintain and distribute your own mobile App. Digital wallets already have everything you need to easily engage with your audience. To create a really engaging application for your customers linked to back-end web services and databases can easily cost $100+ K of development work.

Then, you have to promote your application in App stores that are already filled with over two million apps – both for iPhone or Android. So, you need to continuously push and maintain your app. Today, most people have stopped installing apps. In fact, 65% of smartphone users now install on average zero apps per month. Instead, they just use a few communication apps like Facebook, Instagram and WhatsApp.

So, we think a better way to go is to use all the powerful features in a platform that’s already installed on every iPhone – and something similar can be installed with one-click for Android users. It’s ready and waiting for any type of engagement program you might be interested in – loyalty programs, membership cards, coupons, events and more.

The nice thing is that the user has a consistent interface. They get a Pass that’s fully interactive, always up-to-date, works in multiple languages, has built-in geolocation or beacon alerts and push messaging. And, colors and logos are easily customized to your brand.

Most airline passengers are enrolled in frequent flier programs. However, many don’t really know how many points they’ve got on their card, what they’ve got to do to get to the next level, when their points might expire, or these sorts of things. This is because they usually have a static account and get occasional updates by post or email. With a digital wallet pass, everything is immediately available and always up-to-date.

Q:   What verticals or market segments have the most potential for adoption of the solutions you’re promoting?

Airlines already have a well-established understanding of digital wallets for boarding passes. They’re not always using it for loyalty programs. These tend to have their own mobile apps that have been developed separately and, consequently, as a customer you end up needing to use several different apps for the same airline.

If you fly regularly, you may even have several airline company apps on your smartphone – all with a different interface. This is difficult to remember and cumbersome for customers to use. So, consolidating these onto the same platform that the passenger is already familiar with for boarding passes is a better way to increase engagement while lowering marketing, development and maintenance costs.

Airports have different requirements. They’d like to provide benefits to their airport shopping retailers to make it easy for customers to find special offers or be encouraged to return, as we have done with our successful points-based loyalty program called StatusPass.

Airports have different requirements. They’d like to provide benefits to their airport shopping retailers to make it easy for customers to find special offers that may only be available at the airport, and be encouraged to return.

We also work with Swiss Tourism (and we’re currently reaching out to similar organizations across Europe), with products such as interactive digital coupon books or competitions for travelers – encouraging them to visit different places, events, attractions or hotels in a touristic region.

There are many opportunities in the travel and tourism industry that really work well with digital wallets. For airlines, because most travelers are already familiar with digital boarding passes, there’s a lot more that they can do.

For HR management, we have other products designed for staff, such as interactive ID badges. These digital cards help to confirm identity, but also provide easy access to work schedules and secure time-clocking. This is especially useful for staff that don’t usually sit at a desk and have access to an intranet. Instead, it’s easier to access everything they need during their workday via a smartphone.

And again, to develop and customize a mobile application for each division of an organization would be very expensive. Instead, we can easily assemble the right information all in one place for each team using a digital wallet pass. Our product – TeamPass – makes it super easy to set up and distribute the right information to different groups across an organization. You can easily interface with other systems – such as payroll or scheduling – putting everything in one place.

Q:   This is all part of the trend of digital engagement – whether it’s peer-to-peer or within groups – which is really taking off. Would you say that we’re still at the beginning of this innovation adoption curve?

Airlines have already adopted digital wallet technology for many years – for boarding passes and so on. Some have used the same features for other functions, in other verticals of the travel industry. Some hotels and car rental agencies are also using digital wallet programs for booking vouchers and special offers. Over 50% of travelers are familiar with digital wallets.

On the other hand, general consumer adoption of digital wallets and mobile payments is low, but it is increasing. In North America, over the last few years new mobile payment options like Apple Pay and Android Pay have been launched and are slowly gaining popularity. So this makes the digital wallet a great place for a brand or organization to have a presence. If a user is opening their wallet app multiple times a day to access a stored credit or debit card, and at the same time your logo is right next to that card, then they’re receiving brand reminders every day.

Q:   How do you stay ahead of the technology changes that may come?

In fact, things don’t really change that fast, in terms of the mass adoption of new technologies. It’s often a little bit frustrating when you build something and think, “Wow, this is going to be really great and everyone’s going to love this!” and it then takes longer to catch on than you had expected. It takes a long time to change consumer behavior for certain things. You also must make sure the people in charge of marketing or loyalty programs understand the benefits and are willing to try things out. Of course, hundreds of different ideas pop up all the time, and there are a lot of trials going on that sometimes bring good results and sometimes not. But, it certainly takes quite a bit of effort to get a large group of users to change their behavior to adopt a new technology.

Q:   What is your biggest lesson learned and what advice would you have for future entrepreneurs?

People talk about this famous “product/market fit” concept to ensure that you build something that the market really needs. It sounds like an obvious concept, but it’s really, really hard to get this right. There are a lot of adjustments and changes and pivots that you end up going through along the way before you really build something that a lot of customers are going to want. Then you need to figure out how to scale your business to meet the demand. It sounds like a simple concept, but it’s very hard to get right. It’s easy to spend a lot of time being a kind of consultancy firm, working on different projects for different clients. To push that into compelling, scalable products takes a lot more work.

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