Identifying potential e-commerce customers becomes increasingly important if you hope to win a fair share of the $184 billion in online sales anticipated in 2004. That's where Technographics® can help. It is a system that categorizes customers according to their online buying profiles, ensuring that you "target the right people with the right products, services, and messages" for profitable Web site transactions.

Who is the ideal online customer for your hospitality and travel products? According to Cambridge, Massachusetts-based Forrester Research, that person would be a "Fast Forward" technology optimist.

As marketers, you know about demographics and psychographics, but now with the advent of electronic commerce—reaping more than $20 billion in sales in 2000, and estimated to hit $184 billion by 2004—you may want to consider technographics.® When Forrester Research looks at the world of e-commerce, it sees a population segmented into categories based on people's attitudes toward technology, their motivation to use technology, and their ability to afford technology. This "digital" population is broadly divided into optimists and pessimists, who are either high-income or low-income. The high-income optimist category comprises 60 million consumers who can be segmented into three groups: Fast Forwards, New-Age Nurturers, and Mouse Potatoes. High-income optimists are all early Internet adopters, and control nearly $3 trillion in spending power.

In the book Now or Never: How Companies Must Change to Win the Battle for Internet Consumers, author Mary Modahl, vice president of research at Forrester Research Inc., explains the technology consultancy's technographics scale, based on the company's ongoing survey of more than 250,000 American households. By creating technographic profiles of their customers, businesses can target the right people with the right products, services and messages for online transactions, says Modahl.

Internet Early Adopters

Early adopters are distinguished by their motivation to use the Internet. Fast Forwards embrace technology to advance their careers; New Age Nurturers use the Internet to help fulfill family or community needs; while Mouse Potatoes go online to be entertained.

Fast Forwards are both educated and affluent; in 1999, their median annual income was $71,000; and 21 percent earned more than $100,000 annually. This group is likely to have cell phones, pagers, second phone lines, and home fax machines. Fast Forwards read more business journals and watch less television than other groups. In 1999, 66 percent of Fast Forwards researched their travel plans online, and 8 percent purchased travel online. (Concerns about credit card security kept online purchases low.)

In the travel industry, most businesses would like all their clients to be Fast Forwards, says Modahl. They have high incomes, little leisure time, yet are leading users of technology. Companies can target Fast Forwards by creating messages that appeal to their desire to succeed.

New Age Nurturers form the affluent center of the Baby Boom generation, according to Forrester. Their consumerism often starts mainstream trends, such as the popularity of SUVs, natural fiber clothing, and fresher grocery produce. In their purchase choices, they seek value first, rather than discounts.

Mouse Potatoes primarily use technology for fun. They are likely to be active singles or couples without children. More than other early adopters, they frequent online sports and film sites, and enjoy online games. They appreciate the convenience of online shopping, and are catching up with Fast Forwards in online travel purchases. Modahl suggests that the best way to target Mouse Potatoes is to create exciting Web sites and messages that portray a sense of "new," "fun," and "exciting."

"Fast forwards are ego-driven—'me, me, me' is their mantra. New Age Nurturers are superego types—'us, us, us,' they think. Mouse Potatoes are the id of the online world—they just want to have fun," writes Modahl in Now or Never.

Mainstream Consumers

Of mainstream consumers, who comprise 88 million individuals, most have yet to adopt the Internet for e-commerce, according to Forrester. Attracting this group to shopping online will be a major coup for online retailers. Mainstream consumers include high-income and low-income pessimists, and low-income optimists. (Forrester identifies families with annual incomes above $40,000, and singles with annual incomes above $25,000 as high income, because with these incomes they can afford computers.)

High-income pessimists can be segmented into three groups, which are similar to high-income optimists but without the technology component. These groups are:

  • Handshakers, who are career-oriented individuals focused on getting ahead and distinguishing themselves.
  • Traditionalists, who concentrate on nurturing their families and building community relationships.
  • Media Junkies, who, like Mouse Potatoes, want to have fun but use other media to do so.

High-income pessimists sometimes appear to be optimists because they purchase easy-to-use technology, such as cell and cordless phones. They sometimes use technology out of necessity, for example, in their work. Yet they do not share the same enthusiasm toward technology as do optimists. Forrester believes these high-income pessimists, who account for 40 percent of affluent individuals, will spend more time online as it becomes easier and more pervasive. Forrester believes that pessimists have the potential to change their attitudes and behavior toward technology to be more like optimists.

Because mainstream consumers naturally gravitate toward companies and brands they know and like, companies should use the same logo, color scheme, and message for all media—print, TV, and online—to appeal to this group, Modahl says.

Potential Online Consumers

Low-income optimists who are technologically savvy have immense potential for future online transactions. Because this group is typically young (24 percent are under age 30) and single, their disposable incomes are likely to rise as their careers advance and they marry. Within this group two segments emerge. Gadget Grabbers focus on tech-based entertainment, such as computer games: Techno Strivers are students and young professionals, who often own computers. They seek best online travel deals. These young low-income optimists began using computers in the 1980s, when they were still children. They use the Internet to chat, exchange instant messages, download music, and get news. They think of the Internet in the same way that other consumers think of the telephone—an interactive communications tool that they cannot imagine living without.

A third group of low-income optimists is the Digital Hopefuls, who primarily use the Internet to stay in touch with family and friends, and include a large group

of retirees.

Forrester has labeled low-income pessimists as Sidelined Citizens. Because this group has an annual income of less than $20,000, they cannot afford a computer or Internet service provider. They account for less than one-twelfth of personal disposable income. They are the last to go online, and some never do.

When Now or Never was published last year, Fast Forwards were the leading buyers of every type of product online, including travel. This group, however, only represents 23 percent of the online population. The future of e-commerce lies with mainstream consumers, who account for 45 percent of the nation's personal shopping. Fifty-two percent of U.S. households had access to the Internet at the beginning of 2001, according to Forrester, which projects that will increase to 57 percent by the year end. Forrester believes these consumers are creating a second wave of online consumers.

When businesses identify customers in relation to these technographic segments, they can better design Web sites and online marketing programs that will tap into their motivation. In Now or Never, Modahl suggests companies do a "quick test" to determine their customer base as either early adopters; mainstream consumers, who tend to follow early adopters by two years in going online; and laggards, who are the last group to adopt technology. Most companies have a combination of these three groups as customers.

About 60 million consumers are defined as early adopters. In 1997, only consumers who had been online for three to four years were shopping online. By 1999, the time lag had narrowed to 18 months. Early adopters also doubled their online spending in their second year of online shopping. Fear of credit card fraud was the main reason more consumers were not booking online.

Since American Airlines developed Sabre, its online reservation system, in 1964, travel has become the largest and most mature single category of e-commerce. Airlines were the first business to publish their availability and pricing in real time, which allowed their online reservationists and travel agents to sell travel in real time. Since then, deregulation and dynamic pricing, in which prices fall to their lowest competitive point, has contributed to the airline industry's evolvement into one of the most complex industries that sells products and services on the Internet.

Travel Leads Online Sales

Travel is the single largest category of all online purchases. Between January and November 2000, $6.9 billion airline tickets were bought online, $3.5 billion hotel rooms were booked online, and $1.8 billion cars were rented online by both business and leisure travelers, according to a joint survey of the National Retail Federation and Forrester. In descending order, the biggest online purchases were airline tickets, computer hardware, hotel rooms, books, apparel, software, music, consumer electronics, health and beauty aids, toys and games. Fewer travelers are renting cars online, because fewer people rent cars when they book air and hotel reservations, and some car rental Web sites have not been well designed, says Henry Harteveldt, senior travel analyst with Forrester Research.

When the two travel segments—airlines and hotels—are combined, their online revenue is almost 2.5 times larger than the next largest category of online sales, which is computer hardware at approximately $695 million.

In 2000, airlines saw between seven and eight percent of their bookings coming over the Internet, up from five percent in 1999. Hotels generally receive more than two percent of overall bookings online.

Why buy online? According to Harteveldt, consumers purchase online for:

  • convenience; online purchases can be done at any time and from any place where there is a connection and delivery.
  • information; consumers can access the same information online as most travel agents.
  • price; consumers feel that prices quoted on the Internet provide good value.

Online consumers are described as either "bookers" or "lookers." Lookers research online and then buy offline, whereas bookers will research and buy online. As a result, bookers are a more valued consumer that online businesses want to attract.

A survey in 2000 by Forrester of bookers shows that:

  • 76 percent researched and bought airline tickets on the Web; 16 percent only researched airline rates;
  • 59 percent researched and bought hotel rooms; 24 percent only researched hotel rates, and
  • 38 percent researched and booked rental cars; 22 percent only researched rental cars.

As more mainstream consumers come online, travel companies will want to consider the consumers' choice of Internet service providers when developing online promotions. For example, about 45 percent of Earthlink subscribers are travel bookers, which means that they research and buy travel online, and 20 percent are just lookers. In comparison, 30 percent of AOL subscribers are lookers, and 38 percent are bookers, according to Forrester.

Hotels Sell Online

Although airline tickets continued to lead in travel purchases made online in 2000, almost 6 in 10 travel bookers were reserving hotel rooms, Harteveldt notes. "This is very important for the lodging industry because many of the hotel companies have been late in the game in terms of developing really good Web sites," he says. Even as online hotel sales start to catch up with airlines, Forrester estimates that online purchases will account for only 6 percent of hotel revenue by 2004, which is less than what airlines have already achieved.

"What we have found is that consumers' interest has often outpaced companies' abilities to sell online," Harteveldt says. During the mid-to-late 1990s, hotel companies "did not expect or react to the anticipated consumer demand to move to the Internet as rapidly as they [consumers] did," says Harteveldt. "They [hotels] really missed the boat because they had not developed easy booking engines or have easily accessible Web sites," Harteveldt says. For example, Marriott, before 1999, used its Web site primarily for intranet communication, such as e-mail, and distributing RFPs and corporate contracts.

When a hotel can shift its customers from booking from a traditional phone reservation center to an online reservation site, it can reduce its booking costs from more than $20 to under $5 per room, Harteveldt notes.

Harteveldt believes that the hotel industry has opportunities to succeed in a cooling economy where airlines do not. When consumers cut back on their leisure travel expenditures, they may vacation closer to home, and drive instead of fly. They will, however, still stay at a resort or city property.

The Internet provides hotels with enormous flexibility to attract business in real time. Hotels won't be able to capitalize upon opportunities without a vision, a well designed Web site, and more creativity in their marketing promotions on the Web site, Harteveldt says. Hotels need to provide as much information as they can about their products, and they should have an easy to understand, rigidly enforced security policy for booking. If hotels harness their customer information to build brand loyalty and site loyalty, they will generate revenues for their properties, Harteveldt says.

Since early 1999, hotel corporations, led by Hilton, Marriott, and Holiday Inn, have recognized how consumers want to buy, and they have enhanced their Web sites, Harteveldt says. Marriott's site, for example, provides information on each property and its proximity to major points of interest, such as tourist destinations, and provides directions and even weather reports.

Online Travel Agencies

Several online travel agencies are enormously effective in reaching customers who are brand neutral. These agencies are trip.com, expedia.com, and travelocity.com. Harteveldt recommends that suppliers develop loyalties through promotions and sponsorships with these agencies.

Traditional companies that have been laggards in building an effective online presence have been losing the business of high-income optimists who research travel online, then book expensive vacations. Companies that specialize in student travel are losing the business of Techno Strivers who are finding cheaper fares online much more quickly. Among the weakest areas of travel served online are package vacations and charters, says Modahl.

"Until recently, both the economic value and the booking process of renting a car online have been painful," says Harteveldt. The online car rental rates were not very good, and the online Web sites were poorly designed, he says. As companies have come to better understand how consumers are interacting with the Internet and as they better understand their own customer bases, companies like Alamo, National, and Dollar have taken steps to make the online booking process easy, enjoyable, and fast, he says.

Cruise Holidays

Cruise lines have not provided easy-to-book Web sites, except for two online travel agencies, and Uniglobe.com, which also provide comprehensive inventories, Harteveldt says. Some cruise lines have begun to develop online booking, such as Renaissance and Radisson Cruises, he adds. Because cruises have much higher margins than airlines, and cruise vacations are more highly researched, they are sold differently than airline tickets. Cruise lines prefer to sell through travel agents, rather than bypass them by providing direct online booking. Cruise lines will provide special offers to travel agencies, based on their volume of bookings and the customers they serve. About 8 percent of the U.S. population has taken a cruise, whereas more than 50 percent of Americans have flown.

The Internet is an ideal marketing and sales tool for the cruise industry because consumers can research the products online, check itineraries, the activities and entertainment offered, see the ships and their floor plans, and photos of the destinations to visit. If a site "does not offer any online booking, it's like watching an athlete run three quarters around the track, then just sit down," says Harteveldt, who believes cruise sites should allow direct booking or be linked to an online travel agency, adding, "These are the sites that sell cruises. We encourage people to visit them or their local travel agent to book the cruise."

Internet Use Grows

By early 2001, 54 percent of U.S. households owned a personal computer, and 56 percent had at least one mobile phone. Forrester's research shows that 52 percent of U.S. households have access to the Internet, up from 43 percent in 1999. By the end of 2001 that percentage is expected to increase to 57 percent. "This is both exciting and challenging," says Harteveldt.

What is important to realize is that one-third or more of every age group through 59 years of age is online; that one-third or more of every demographic household with annual income of $20,000 or more is online; and a third of every educated group, from high school up, is online. "So the Internet is not the bastion of well-to-do, highly educated professionals anymore," says Harteveldt. "The challenge to travel suppliers and vendors is that as we cross the 50 percent penetration mark for Internet use, companies need to be prepared for a totally different group of customers who use their sites," he says.

"There are big differences between people who have been online for a long time versus those who have just started using the Internet within the past year. The new users have some trepidation, Harteveldt continues. "But they are beginning to use the Internet because of its convenience. They want value and control when making online purchases." Because the newcomers are not "techies," they are attracted to Web sites that are easy to understand and navigate. Companies should design sites that encourage visitors to register, and provide tangible benefits for doing that.

Many newcomers to the Internet are less educated and have less income than early adopters. Likewise, they have different travel patterns. Travel companies will want to provide products that appeal to the mainstream population. For example, if an adventure travel company is trying to sell to everyone online, it will need to offer a product that is moderately priced. Companies that want to sell to families may want to offer booking capability of up to eight people in a single reservation record. "Sites need to be embellished, not with visuals, but with content so that the consumer thinks, 'Wow, this company really understands my needs, my objectives, and will take care of me better than anyone else,'" Harteveldt says.

Power Ranking

Forrester has developed a Power Ranking category, available at its Web site, forrester.com, which ranks those airline companies that have done a good job developing their online sites and providing customer service, delivery, transactions, and other features. In early 2001, Continental ranked first, Northwest second, and USAirways, third. The company is in the process of developing Power Ranking for hotel companies.

Now or Never, published by HarperBusiness, hardback edition can be found at both traditional and online bookstores. For more information on this book go to

HSMAI is an organization of sales and marketing professionals representing all segments of the hospitality industry. With a strong focus on education, HSMAI has become the industry champion in identifying and communicating trends in the hospitality industry while operating as a leading voice for both hospitality and sales and marketing management disciplines. Founded in 1927, HSMAI is an individual membership organization comprised of over 5,000 members from 35 countries and 60 chapters worldwide.

Jason Smith
703-610-9024
HSMAI