Introduction:

I am Sahil and part of GX-21. Here is my detailed submission for acquisition project that I have made for the product ‘Agoda’, an online travel aggregator (We will refer this category as OTA in this assignment).

Why did I choose Agoda?

I chose the Agoda for the following reason:

1. Travel ecosystem is one of the booming ecosystems in the country especially after Covid.
2. With growing GDP and disposable incomes supported by ‘post-event acceleration‘, the penetration of travel is not only increasing but even the frequency of travel is increasing

3. As per ET, 74% of Indians prefer online booking for domestic travel. So most of the increasing travel attribution should support OTAshttps://brandequity.economictimes.indiatimes.com/news/research/74-indians-prefer-online-booking-for-domestic-travel-report/936142654. With going focus on the travel, the fight for channels to acquire at the best cost is getting higher. So, that is a significant problem I can help myself and my company with5. I am a heavy user of travel OTAs so I can understand customer problems to a detailed extent (Will intentionally try not be baised with my opinions/experiences)6. Growing scale of operations - Agoda has become no. 3 in terms of growth of OTAs (as per the report of Global hotel technology giant, STAAH. Gobibo and MakeMyTrip owner, GoMMT took the top spot followed by

and Agoda)https://www.traveldailymedia.com/gommt-booking-com-and-agoda-retain-their-top-spots-in-the-fast-growing-indian-travel-economy/

Let’s understand travel business a little better!

What do OTAs do?

1. OTA is a platform that let people do most of the travel related bookings at the click of a button.
2. The offerings include (but are not limited to) hotel bookings, flights, activities, visa services, travel insurance etc. Note: For the scope of this project I will be taking accommodation as the use case because every offering has it’s own unique ICP, offering, proposition.
3. Before OTA, most of this work was done in two ways-
4. 1. Either through a physical travel agent: Many of us might remember that one uncle who is one stop solution for booking travel tickets mostly train tickets (Flights were too expensive but they could help with that).
   2. Direct hotel websites or tele-calling to them.

What problem do OTAs solve and what is JTBD framework for all stakeholders?

While it might seem intuitive that OTA helped get tickets at the convenience of your house. But let’s dig a bit deeper. Travel has fundamentally 4/5 stakeholders in their cog wheels. Let’s understand that and break this in JTBD format:

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Business flywheel of travel

Now let’s try understanding the business flywheel of Agoda (P.S. Before this I was working with Amazon, so many jargons are still stuck with me 😀)

In simpler words, all of the blue cogs (Hotel selection, customer experience, traffic) are lead inputs, while black ones (better price from hotel, better commissions and lower price) are the desired outputs what will fuel this flywheel leading to ultimate north star ‘Business Growth’

Understanding the product

Product/Business Level Information?

1. What does Agoda offer? Agoda offers a multitude of offerings from hotels, flights, activities, home and apts, airport transfer, car rentals, trains, buses, ferries etc.
2. Does it communicate that well? How? Agoda uses multiple channels to communicate it's offerings. on UX, all of these offerings are clearly established. However, in most of the ads, the communication is generic and mostly limited to hotels.
3. How does Agoda make money? Agoda works on commission model. On supply side, it onboards hotels, flights, other ancillaries and on user side it delivers those supply hotels. In layman terms, its a marketplace for travel inventory. On every booking there is a commission, which can range from 0% - 10% depending on the hotel type, agreement, chain etc.
4. What is the biggest acquisition lever? Agoda's bigges acquisition lever is pricing. Agoda offers multiple discount codes to users (many pre-applied, many user applied) to show a pricing that is shown highly discounted to users

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Let’s hear from Customer’s feedback

Category of customers

I spoke to around 17 customers who are the users of Agoda and book accomodation atleast once a year. These customers can be bucketed in three buckets:

1. Light travellers: These customers are usually taking vacation almost once/twice a year but primarily for a short vacation (≤ 3 days/vacation)
2. Wishful travellers: These customers are usually taking 3-5 vacations a year (occasionally 4) and stay for both short and long vacation i.e. ≥ 4 days/vacation but ≤ 7days/vacation. Interestingly Wishful travellers take 1 vacation a year to a foreign land.
3. Power travellers: Customers who are travel almost every second month or are living primarily out of the suitcase. These travellers however don’t necessarily stay for higher no. of nights.

If we split the vacations between domestic and international, domestic travels are ≤5 days a night while international are ≥5 nights. This could be primarily because for international trips users seek value by spending more days as the cost of travel is high. So minimising Cost/travel days give users a sense of value.

Let’s plot these again their potential to purchase:

To evaluate the potential of these 3 cohorts it’s important to understand a little about business model equation of Agoda​

→Agoda’s revenue = No. of booking nights x (Commission x revenue/booking night) |OR| Avg. no. of booking nights x (avg. commission x revenue/booking night)​

This means to maximize the revenue we need to optimize the equation using following levers

1. The no. of bookings (Users)
2. The no. of booking nights (Average nights/user)
3. Revenue/booking night (Average Cart value)

Note: But it's important to note the population scale also to understand which customer is actually important for Agoda

Let's split this figure into two parts

1. X axis: Total no. of room nights stayed
2. Y axis: Total margin per room night
3. Size of the bubble: Population split

Source: Vedco report + Statista on travel cohorts for India market 2023

Hence this makes High traveller + Wishful traveller as the belly of the business and hence makes Agoda's proposition a volume game vs. margin game.

What is the split of domestic vs international?

Domestic destinations remain the top choice for Indian travelers, with nearly eight in 10 taking a domestic trip in the last year. International leisure travel is still a comparatively new yet rising phenomenon. The value-conscious Indian traveler is increasingly looking to explore international destinations, which, in budget terms are comparable with domestic destinations. This also shows up in preferred outbound destinations with seven in 10 respondents opting for short-haul destinations

How long are users staying on these vacations?

Note: This could define our target in terms of which ICP of out the 3 discussed above is blaoting part of the belly

Shorter trips are becoming the norm, driven by improved air and ground connectivity that reduces travel time. Better road infrastructure and safer, more comfortable cars are also boosting road trips. The flexibility and door-to-door convenience of road travel make it popular, reflected in the high frequency of weekend (1-3 nights) and week-long trips, while longer trips are less common.

What is the travel motivation for users to travel?

Note: This will be helpful when we design the proposition and communication

There can be multiple motivations for travel for users from an event to taking a break to religious toursim. I had a look at primary research data (unfortunately can’t share the same herewith) and a few external reports such as VIDEC report, Booking.com’s Indian travel landscape report. Following are the top motivations for India travellers:

What are reasons to use a particular OTA? We can call it choice enablers or triggers for choosing an OTA

Note: This would be required to work on building the product offering and acordingly then aligning the communication and proposition.

From the bottom chart let’s take top 4 reasons to choose any particular OTA:

1. I trust the brand
2. Past booking experience (Can be clubbed a bit with WoM too)
3. Best prices (Not surprisingly we are a value conscious community and proudly so🙂)
4. I am used to booking travel this way (Typical user Inertia popping up it’s head here)

Review from third party apps?

Now, all of these interviewees knew me or all my colleagues in GrowthX. So to get real sense of the customer feedback I went to following three modules - Trip advisor reviews, Playstore reviews, Trustpilot and Reddit.

1. Overall Rating (Quant): Not bad with 4.6 star rating. Almost at par with the market leader. Infact it’s better than many other players such as Booking.com, Goibibo etc.

2. Qualitative feedback: When evaluating qual feedback, we see that many people have issues at proposition level or service level with Agoda. Most important issues that are highlighted are around customer service, bad UX and booking related.

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Competition Framework:

The competition can be taken in terms of hotel bookings and flight booking. For the context of this assignment we will take the competition as Hotel bookings (Source: 🔗videc.co)

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Elevator Pitch:

Travel should be exhilarating, but finding the perfect accommodation at the best price can be a hassle. At Agoda, we take the pain out of the process by offering an extensive selection of accomodation, flights and much more at unbeatable prices, making your travel planning as enjoyable as the journey itself.

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Understanding Core Value Proposition

1. Easy access to million of hotels: This proposition is inherent to any OTA but the no. of properties make a lot of difference
2. 1. MMT claims to have 1.5M hotels
   2. Goibibo potentially will have similar supply inventory as MMT’s because they are from the same group so 1.5M
   3. Booking.com will have around 4M inventory
   4. Cleartrip’s inventory will be much lesser as it is flights first platform
   5. Airbnb is the platform with more no. of properites vs Agoda (7.7M as of July 2024) but the target audience and offering is bit different but surely it’s a competition (Ideally the direct competitor as per Intercomm JTBD as both are solving the same job for user)
3. Amazing price on hotels
4. 1. Price comparison is an important factor for Agoda. Currently it has competitive pricing vs MMT, Goibibo and B.com
5. Trustworthy platform with
6. 1. 50M+ downloads
   2. 800M+ user reviews
   3. 24x7 customer care

Understanding ICPs

ICP 1 – B2C

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ICP 2 – B2B

ICP prioritization table:

Recommendation: As ICP is much bigger in TAM and easily experimentable we will focus on ICP 1 for this exercise

Understand Market

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User Acquisition and onboarding journey

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https://whimsical.com/user-discovery-KEtfkbWPdEs2YXhKSsDHCg

Designing Acquisition Channel

Broadly I would define the Channel prioritization framework as the following:

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Detailing acquisition channel

Organic:

SEO traffic: SEO is an important channel for travel as almost 40% of the traffic comes from organic for an established player. Google search share is an important metric. In rating, with (VPN location as India, Agoda features in page 1 but 5th choice. So yes there is scope of optimization)

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Direct traffic: Another very important channel for Agoda as we are in mature scaling stage and we spend a lot on ATL + performance. Direct traffic is the only way by which we can scale down our CAC.

Engagement rate is also not good (at general level) but fine as per industry average:

Paid Ads:Search ads

Google ads: Google Search ads seem going fine as the first auction result gave Agoda ad. I would go a level deeper to see our branded keyword search share to non-branded (My Google paid search account is not working for some reason so couldn't do it)

Meta/YT ads

: IG and FB are an important channel for travel inspiration. Also most of the internet savvy audience is on these platforms so makes in important for have IG and FB ads in the mix.

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Let's also evaluate where the actual traffic is coming from:

1. Organic contributes 92%+ traffic for Agoda while 8% comes from paid
2. Most the traffic (non-branded) is coming from category queries such as 'Hotels in Mumbai' and 'Hotels in Delhi'

Referral program:

Surprise! Agoda doesn’t have a referral program while MMT, Goibbo have the same

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​Product Integration:

Agoda has product integrations with a few OEMs such as Vivo in which the app comes pre-burnt with a new phone. But these integrations are just handful, cost heavily and difficult to crack. In addition conversion from base to actual DAU is very less

Content Loops

A very important channel for travel as users look for travel as an inspiration. Not explored in Agoda

ATL

Agoda invests in TV to a large scale but because of attribution issue, the lead indicators are only around Reach and Frequency.

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Plan of action (Top channel that I will activate for ICP 1)

Content Loop + Referral hybrid:

Let’s go back to who our ICP is. These users are technological savvy, drive inspiration for travel from various sources such as blogs, influencer videos etc and they seek trust which means WoM matters to them a lot (This also came out of my interaction with Agoda users). So let’s dive deep into the platforms which provide this inspiration:

1. IG: A typical social platform that only serves push but pull content for travel inspiration.
2. Quora/Reddit: User content platforms that let people have genuince feedback about a travel trip, from planning to execution
3. YouTube: A video first platform for pull based travel content inspiration
4. Blogs/Affiliates: Travel portals that people refer to for their planning

Content Loop selection Framework

Another reason is we see a lot of traffic that pours from Affiliate channels for all the OTAs. So idea is to create more self sustaining affliates:

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Basis this I would going ahead with Blogs and websites as the content loop channel but as a referral (Usually we see this as affliate but affliate websites are big websites and more like product integration). Let’s see for blogs/affiliates following would be the Hook, Generator, and Distributor:

1. Hook: Users share their awesome trip pictures/ blog itinerary on blogs/travel pages/IG stories
2. Generator: Users or influencers. Either real travel taking people who are writing their POV on their blogs or influencers. Now considering we are enabling this channel from the brand lens. We would take all such creators as influencers (We will use this to design the affiliate program)
3. Distributor: Users. Users look at this story with how easy and awesome it is to use Agoda and plan your dream trip in best of the cost

Now in terms of referral, we expect any elated user to put it’s content out so that more users come to Agoda. But why would they do that? Out of the 4 big pillars, Fame is the only one which would be there. But what if we add FAME + MONEY as the pillar

User Flow:

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https://whimsical.com/conten-Kbjq6bz4gNBzEzSZZ6stSq

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User journey:

Channels for informing (Note: AgodaCash is the platform currency that helps you book hotels on Agoda)

1. Push Notification: Fro the booking dates we will get to know when the trip got over. We will prompt user D+1 , D+4 and D+10 days. (This can be run via an experiment to see is this combination works vs. something else)
2. 1. D+1: Hey [User Name], we hope you enjoyed your recent trip! Want to relive those memories and inspire others? Share your travel story and become an Agodan influencer. You could earn up to INR 5,000 AgodaCash when someone books a trip from your story. Start sharing now!
   2. D+4: Hi [User Name], your trip to [Destination] looked amazing! Many Agodans are eager to hear about your experience. Share your travel story today and earn rewards when others book through your post. Click here to get started.
   3. D+10: Hello [User Name], it’s been a few days since your trip to [Destination]. Ready to turn your memories into rewards? Share your story and become an Agodan influencer. Earn up to INR 5,000 AgodaCash when others book through your post. Tap here before it expires!
3. Website /UI interface: Prompt users on the UI interfact to share their story:

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3. Emailer: Send a detailed inviting email to the users congratulating them about their trip, offering some AgodaCash, inviting them to share their story and earn upto INR 5000. We can put some real stories such as “User XX is now an Agoda Premier influencer and has earned INR 50000 worth of AgodaCash, that means he booked his entire Paris round by sharing his travel stories. You can too!”
4. WhatsApp: Whatsapp can follow the same format as above and can follow the same frequency as point 1

Important Question: Why would the user click on the link provided by influencer? The reason here is that we will offer direct lowest rate to that influencer landing page without the need of using 5/6 coupons that is already the current flow. In short, the user will get the lowest price available and influencer will call out that in his/her messaging in 1:1, 1:many and 1:few communication

CAC to LTV ratio:

Let’s calculate CAC to LTV ratio:

Agoda earns money from commissions. Usually these commission range from 2% to 10% of the ABV of the user. For this calculation we will take 6% as the commission rate and 3% gross margin (4% goes into company costs)

Let’s consider we share 1% of this commission rate. So our cost per acu

Assumptions:

1. Average Booking Value (ABV): INR 12,000
2. Gross margin after costs(Agoda): 3% (This can also be taken as gross margin)
3. User's Share of Commission: 1% of the booking amount
4. User's Lifetime: 3 years
5. Booking Frequency: 1.5 times/year
6. Content Reach: Assume each user’s content reaches 1,000 users.
7. Click-Through Rate (CTR): 2% (industry average for CTR on referral links).
8. Conversion Rate (CR): 5% (of those who click, how many actually book). [Can be improved]
9. Incentive to Users: Assume users who click the link receive INR 500 off their first booking.

CALCULATION

Revenue on Gross margins

1. Commission per Booking (Agoda): Commission=3%×12,000=INR 360 per booking
2. Total Commission over Lifetime: Lifetime Bookings=1.5 times/year ×3 years=4.5 bookings per user over 3 years.Total Commission=360×4.5=INR 1,620
3. Influencer's Share from Referral (1%):User’s Commission per Referral Booking=1%×12,000=INR 120
4. Total LTV:LTV=Total Commission=INR 1,620 per user

CAC

1. Number of Clicks from Content: Clicks=1,000×2%=20 click
2. Conversions from Clicks: Conversions=20×5%=1 new customer
3. Referral Cost per New Customer: Referral Cost=User’s Commission=INR 120
4. Discount Incentive Cost per New Customer: Incentive Cost=INR 500
5. Total CAC: Total CAC= Referral Cost+Incentive Cost=120+500=INR 620 per new customer

CAC to LTV Ratio

• CAC to LTV Ratio: CAC to LTV Ratio= 1620/620 = 0.38 (To be conservative if CTR and CR is taken less this ratio shall be around 0.24)

Summary

​In summary, following is the process we followed for this exercise:

• Selection of Agoda: Chose Agoda due to the booming travel ecosystem post-COVID, high online booking penetration, and Agoda's growing market share in OTAs.
• Understanding OTAs: Defined OTAs as platforms for booking various travel services. Focused on accommodation as the primary use case for this project.
• JTBD Analysis: Identified the jobs to be done (JTBD) for key stakeholders: travelers, hotels, travel enablers, ancillary providers, and the OTA platform.
• Business Flywheel: Analyzed Agoda's business flywheel, highlighting the lead inputs (hotel selection, customer experience) and desired outputs (better prices, commissions).
• Customer Feedback: Gathered insights from 17 Agoda users categorized into light, wishful, and power travelers. Analyzed their travel habits, motivations, and choice enablers for OTAs.
• Competitor Analysis: Compared Agoda with competitors like MMT, Goibibo, Booking.com, and Airbnb in terms of inventory, pricing, and trust.
• Core Value Proposition: Identified Agoda's key propositions: easy access to a vast inventory, competitive pricing, and a trustworthy platform.
• ICP Definition: Developed Ideal Customer Profiles (ICPs) for both B2C and B2B segments, detailing demographics, pain points, solutions, and marketing pitches.
• Qualitative & Quantitative Analysis: Conducted a detailed analysis of customer reviews from platforms like TripAdvisor, Playstore, and Trustpilot to understand sentiment and areas for improvement.
• Final Recommendations: Based on the analysis, provided strategic recommendations for customer acquisition, targeting the identified ICPs with tailored marketing and product strategies. Focussed on Core content loop + Referral hybrid mix.

Thank you for your time

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