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How does a traditional digital advertising platform transform into a successful e-commerce site in just a few short years? It all comes down to earning customers’ trust on both sides of the digital marketplace, says Peter Andrews, Senior Vice President of HomeAway, part of Expedia Group, and keynote speaker at our Customer Response Summit in New Orleans. In this interview, Peter shares how ongoing communication with customers has enabled HomeAway’s recent transition from a subscription-based listing service to a robust vacation rental platform - with just a few bumps along the way.
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Execs In The Know: People are generally resistant to change - especially when they don’t know what to expect. How did you keep our property owners in the loop as you began the transition to an e-commerce platform?

Peter Andrews: Even major overhauls happen incrementally, so it was vital to keep our partners - property owners and managers - feeling informed about each new policy and product as it was released. In addition to sending out direct emails we posted the announcements on our partners’ “Owner Dash” (logged-in page) and stayed connected with them via our Community Board, an internal message board where partners can communicate with us and among themselves. We leveraged our social channels and also our Discovery Hub for media content, where we posted videos that described to owners how to leverage the new products that were available. Finally, we host regular Partner Summits where we showcase new products and discuss our strategy for the upcoming year. So we had a pretty well-coordinated effort to announce the changes across all these channels.I’d say that thanks to this outreach, most of our partners were well aware of the changes taking place. Understanding the why, however...

EITK: That was going to be my next question! How did you explain to your partners that all these changes would benefit them in the long run?

Peter: Knowing what we know now I think we may have approached things a bit differently. If could go back in time and tweak how we went to market with our story I think we could have better explained to our partners why we were making these changes instead of assuming that they already understood to some degree.

Some of our partners had the advantage of going to our Summits and seeing detailed presentations from our product teams and engaging with my team face to face. I think they got a lot of that message, and it did gradually filter down through our partner community. But the average partners who got online and saw a post on their feed maybe didn’t quite get the rationale behind these decisions. They didn’t understand why we were “moving their cheese” as much as we were.

EITK: Why do you think it was so difficult to make the business case to your partners?

Peter: Part of the difficulty was that our new monetization model wasn’t necessarily going to benefit all of our partners. We were transitioning away from a purely subscription-based service where property owners who paid the highest subscription rates had their listings float to the top. It had nothing to do with whether travelers were actually excited about staying at the top-listed properties, and that reduced our conversation rate. We had fewer total bookings in the marketplace.

By monetizing bookings rather than subscriptions, we could reward the best properties from the travelers’ perspective. We had to rethink the tiered subscriptions strategy.  This led to the creation of our pay-per-booking option which gives homeowners and property managers the option to pay only for the bookings they receive instead of paying an upfront subscription fee - to get on the platform. Previously, if you had a property that was a great fit for the travelers in your area, you were probably seeing a lot more bookings. If you were buying your way up the list but not as good a fit for your area, your bookings were likely going down.

This shift in business model increased conversions and benefited the marketplace as a whole, but not every partner experienced the upside.

EITK: On the other hand, by increasing partner competition for bookings aren’t you also providing a better experience for the travelers who use your site?

Peter: One of our product releases during this time was a “win/loss card” where partners could actually see when they ‘won’ a booking over a competitor and when they ‘lost’ a booking to a nearby competitor. It shows what amenities the other home has, what the inside of the property looks like, what the location is. So it was an opportunity for partners to say, “Hey, what can I do differently in terms of my value offering to try to win more of those bookings?”

And a lot of partners did this. They shifted their behavior to chase what travelers are looking for in their geographical area.

I’d add that this process helped increase our travelers’ trust in us as a platform. Under the new e-commerce model we are surfacing the best properties in the areas where they want to stay instead of putting forward the properties that paid us the most for a listing.

EITK: That really does sound like a win-win. Were there any changes that had unintended consequences, or created obstacles you didn’t foresee?

Peter: There were a few! For example, we really charged hard down the path of enabling instant bookings. In the early days of our transition to an e-commerce marketplace we had partners trying to take the booking offline. We wanted to keep those transaction within the marketplace, where we could provide fraud protection, payment protection, and on-platform reviews. So we tried to eliminate a lot of the communication prior to booking.

What we didn’t realize was that a certain subset of partners in our marketplace really needed to communicate with prospective travelers prior to booking. These were typically the luxury properties that boasted specific amenities that added a lot to their booking value. So, if a luxury ski property bills itself as “slopeside,” the traveler is going to want to know exactly how far the house is from the bottom of the lift before selecting that property for their vacation. In these cases partners and travelers need to be very clear about expectations.

To address these concerns we created a secure communications channel that enables partners and travelers to communicate without giving away their contact details. We also now offer a 24-hour “book and hold” option so our property owners can discuss details with prospective travelers prior to accepting their booking.

By keeping bookings on-platform we are able to provide a safe and secure environment for online transactions, not just for travelers but for partners, too. Overall we’ve significantly reduced any fraud. 

EITK: It sounds like HomeAway has been pretty nimble in creating new products and functionalities based on your customers’ needs. What processes do you have in place to help their suggestions float to the top?

Peter: We’re always talking to our customers. Over the past two years, as we’ve gone through this transition, we’ve been especially focused on getting feedback from our property owners and managers. We created several Customer Advocacy Boards (CABS) that meet on a regular basis to represent various owner segments. We float ideas and get their feedback, and we listen when they’re having issues or problems. They’ve also come up with some great ideas about new products we should put in the development pipeline.

We also have the Partner Summits, which we host throughout the year. It’s amazing what you can learn just by talking face to face. At the end of each day we meet as a team for an immediate retrospective to figure out if any partners’ questions weren’t answered to our satisfaction so we can go back and rapidly address that. We learn quite a bit about where we can do better from these events.

EITK: In cases where the unavoidable occurs, how do you make it right with customers in a way that increases the likelihood that they’ll come back?

Peter: Our travelers need to feel confident in booking their vacation - often a very large expense, in place they’ve never been, staying with someone they’ve never met. Things don’t always go perfectly. We try to make sure that we’re there 24/7 to help them in the rare cases that an owner has to cancel at the last minute. Our Book with Confidence Guarantee says we’ll step in and help that traveler find a new place to stay that’s just as good or better. These situations can cost us quite a bit, but it’s key to maintaining that sense of trust in the platform.

EITK: What advice do you have for companies seeking to maintain strong customer relationships while making significant changes to their business model?

Peter: I would say effective communication at every step of the way is key. Don’t completely focus on the “how” - also focus on the “why” so that your customers have a deep understanding of your strategy and thought process and how these new changes will improve their overall experience. Then listen. Invite feedback and be prepared to address any significant concerns. It’s an ongoing process that takes a tremendous amount of dedicated effort, but it’s absolutely worth it.
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