Stefano Petrazzoli, Director of Travel Relations at The Chargeback Company, shares his insight into the wide-spanning negative effects of evolving customer behaviour on the travel industry
Over the past decade, the travel business has slowly expanded its online presence. With immediate, 24-7 access to travel agents, airlines and hotels, customer demand has grown alongside it. As a result, we’ve begun seeing more consumers succumbing to temptation and purchasing holidays without considering the consequences. Unfortunately, the increasing likelihood of impulse holidays has an adverse effect on the travel industry.
The Psychology of Holiday Bookings
There are a number cognitive biases when it comes to booking holidays. Influenced by advertisements and cheap deals, logical thinking and rational worries about economic state tend to be displaced. A combination of strategic marketing and anchoring previously higher prices to alluringly lower levels creates a sense of urgency for consumers and they book their “dream escape” on a whim.
During winter months, in particular, temperatures are low and consumers will begin fantasising about a warm summer paradise. But as the year goes on, enthusiasm fades, situations change and budgeting takes centre stage. Consumers who impulsively booked holidays may second-guess their eager decisions.
An Issue of Repentance
Once regret sinks in, consumers try every avenue to get their money back. In doing so, they’ve learnt that protocols, which are in place to protect genuine consumers, can be easily manipulated – but they don’t always realise the damaging effect that this has on merchants.
Each year, merchants, online travel agents (OTAs), airlines and tour operators face a flood of chargebacks from shoppers attempting to recover holiday funds. Those summer holidays booked during winter months are just in time for merchants to finish their financial year on a high, but leave them struggling to retain the revenue vulnerable to consumer remorse months later.
Up to four months after purchase, a consumer can raise a dispute with false claims – issues with the booking or unauthorised disputes being the most common. If unsuccessful, they have a second opportunity up to six months after, meaning customers have plenty of time to change their mind on a booking that they’ve made – and no insurance is necessary.
Can Merchants Prevent Remorse in the Travel Industry?
It’s impossible to foresee how each consumer will react to bookings once they’ve been made. Merchants can’t pick and choose what transactions to decline in an array of bookings made with genuine intent.
What’s more, consumers who lie about their disputes don’t tend to know that they’re committing friendly fraud or the impact that it has on a business. One false claim shouldn’t mean a lifetime blacklisting – as well as losing a potential returning customer, you send them directly to a competitor. Therefore, it is crucial to understand the right way to respond to transaction disputes.
Merchants need to have a specialised chargeback management solution primed to stop consumers abusing protocols. With the correct solution, merchants can actually turn disputes into an opportunity to develop the relationship into a returning customer, all while preventing losses.
What We Can Do About It
At The Chargeback Company (known as Chargebacks911 in the US), we’ve found that a holistic approach is the best method for effectively responding to disputes and creating the conditions to prevent them.
We aim to support the relationship with the customer, while emphasising the importance of coordination between during and post-sale. As the latest member of the team, Stefano Petrazzoli is glad to provide an active contribution to this successful vision. If you'd like more information, contact us today.