Differentiation Through Data

Strategic Planning For Pricing And Revenue Management

As a consumer in the information age, the average airline customer has grown accustomed to personalized, one-to-one marketing and service in many areas of life. This is possible because businesses, such as airlines, collect and retain significant amounts of data about their customers. Unfortunately, this data is often not utilized to the fullest extent. Customer segmentation and data mining enables airlines to differentiate themselves from their competitors by extending personalized offerings to customers or mitigating common travel issues when used as part of a customer-relationship-management strategy.

Imagine arriving at your favorite coffee shop while running a little later than planned in your morning commute. Inside, a snaking line separates you from a triple-shot Americano espresso with two sugars and cream. You join the line, checking your watch as patrons move forward to the ordering kiosk and silently estimate how long it will take for the barista to prepare each customer’s order, which determines how late you will be for your first meeting of the day.

Finally, it’s your turn at the ordering kiosk. Before you can give your order to the employee behind the counter, the employee asks, “Triple-shot Americano with two sugars and cream?”

Within seconds of paying for your drink, your name is called, which is odd, because you don’t remember the employee behind the cash register asking for your name. A smiling, apron-wearing barista places a triple-shot Americano with two sugars and cream into your hand. You glance at your watch, and you are back on schedule.

While there are five other coffee shops along your route to the office, you’ll return to this one, because the staff knows you, and they care about your experience.

This is the level of personalization that will keep customers coming back time and time again to the establishments that take extra care to get to know them and make them feel special.

Customer Personalization

There are many actions a company can take to differentiate itself and heighten a customer’s experience. For example, using data that had been collected on an individual diner, a restaurant can send a birthday voucher for a free dessert. This level of service increases the chances of customer loyalty, as well as opens greater opportunities for customers to share their experience with friends, family and colleagues.

Personalized marketing, used notably by Internet companies, such as Amazon, employs customer data and a one-to-one strategy to tailor an offering or service to suit a specific customer’s wants or needs. Examples of this type of marketing include an online bookseller suggesting a title similar to the last several books a customer purchased, a local big-box superstore sending diaper coupons to the home of a family who recently used a loyalty card when purchasing baby food and pacifiers, or even a “happy birthday” email containing a voucher for free dessert sent by a restaurant chain to a frequent diner during his or her birthday month.

This type of marketing fosters a relationship beyond the normal realm of “business-to-consumer.” In this type of relationship, the customer receives a sense of individual care, rather than feeling like he or she is simply another customer among millions with a pocketbook full of dollars to spend.

Recent studies by EPiServer show that one-third of marketers believe personalized marketing campaigns are effective. Woodson Martin, chief marketing officer, ExactTarget Marketing Cloud, recently stated, “The future of marketing is the customer journey. Today’s hyper-connected consumer requires companies to create personalized experiences and deliver value at each touchpoint to increase brand loyalty and drive sales.”

Personalization isn’t just effective in terms of procuring new customers. This tactic can also be used to retain customers. In the same way that air travel has evolved from luxury to commodity, in general, the average airline customer has become connected and well-informed. Airline customers can shop via computer, tablet, smartphone or telephone, while eating dinner or riding a train. They are bombarded with messages every time they check email, watch television or browse social media. For airlines to effectively retain customer loyalty, they must connect with customers and differentiate themselves by offering something that their competitors can’t or don’t.

In the same way that smartphone manufacturers, grocery stores and even coffee-shop chains must persuade the customer to select them from a sea of competitors that provide near-identical service, airlines must differentiate their service from that of their competitors.

When a customer is perusing fares and finds two carriers with nearly identical arrival and departure times and prices, what drives the customer to select one airline over the other?

Act Of Kindness

Often times a simple act of kindness is all it takes for an airline to stand out and leave a lasting impression. For example, offering a passenger his favorite beverage free of charge, based on data captured during a previous trip, builds brand loyalty and promotes exceptional customer service.

Branding differentiates carriers to an extent, but recognizable livery and comedic or sentimental television commercials are only minimally effective when a customer is assessing baggage fees, available departure times, layovers and overall cost differences between carriers. Historically, airlines have used frequent flyer programs to reward their best customers with upgrades, special lounges and designated security lines, among other perks. These tiered loyalty structures are designed and communicated in such a way that non-members see the rewards and want to become members, while members reap the benefits and feel as if they are part of a truly exclusive club.

The airline industry pioneered this type of reward system, now replicated by hotels and credit card companies. However, without personalization, this tiered approach is not enough to differentiate the airline from others in the industry and retain customers.

One North American airline used its frequent-flyer data to print elite-level flyers’ beverages of choice in the flight attendants’ manifests, so the attendants could deliver said beverages as a courtesy during flights. Some airlines provide a bottle of champagne to elite-level passengers flying on their birthdays.

Another North American airline took personalization to an entirely new level for its 2013 holiday season ad campaign. In the ads, passengers scanned their boarding passes for a flight and were greeted on-screen by Santa Claus. Using the data collected from the boarding passes, Santa interviewed the passengers about their holiday wishes. Employees collected their responses and expediently shopped for the requested items while the passengers were en route to their destination. When the flight arrived, Santa delivered the desired gifts as passengers waited at the baggage carousel.

While this level of personalization is unrealistic outside of the constraints of an ad campaign, it certainly provides some insight into creative uses of data. These are examples of airlines that not only effectively retain customer loyalty where a frequent flyer program might fail to do so, but also inspire customers who are not on the receiving end of the personalized experience to aspire to become elite-level status so they, too, can receive the same treatment.

Airlines’ own massive amounts of customer data can be used to personalize their marketing efforts, as well as the complete customer journey. However, the data is often stored in different information systems that do not communicate or integrate well.

Brand Advocate

Customer data can be used in myriad ways aside from offering complimentary beverages or inspiring television commercials. Calling a passenger by name, recognizing his or her seat preference or giving seating priority to a rebooked passenger could create a brand advocate.

Ideally, though, airlines will not just use collected data for giving away complimentary cocktails or creating inspiring television commercials. Passenger data, currently held across many systems at most airlines, can be utilized to send customers special offers based on their trip histories and frequent destinations. In addition, logged customer-service issues, such as previous instances of lost or delayed baggage and flight cancellations, would be communicated to check-in agents.

Leveraging customer data and email to proactively notify customers of delayed baggage or to create rebookings could alleviate traveler stress. Calling a passenger by name, knowing that he or she prefers an aisle seat, or giving seating priority to a rebooked passenger whose flight was recently cancelled could create a brand advocate.

Technology that supports personalized contact with customers is quickly becoming crucial to customer retention. SabreSonic® CSS Customer Experience Manager is a rules-driven solution that enables a consistent, automated customer experience unique to an airline’s brand and its customers. It uses ticketing, inventory and customer data to increase revenue by enabling airlines to offer relevant products to the right person at the right time in the customer journey. It also helps increase loyalty by facilitating unique experiences for individual customers or customer segments, as well as grows the customer base by utilizing existing loyal customers as brand advocates. This type of solution can help bridge gaps in communication between data storage systems, as well as enable airlines to fully personalize communications with their customers.

As consumers grow accustom to Amazon predicting their next purchases, Netflix introducing them to films they are guaranteed to love, or their local baristas knowing their names and beverage preferences before they even place their orders, they begin to expect this level of personalized service in all aspects of their lives. Personalized customer engagement builds brand loyalty, improves the customer experience and can lead to incremental sales through specifically targeted offerings.

Personalization is more than a trend manifesting across numerous industries. As it becomes increasingly prevalent, customers are noting its presence, as well as its absence. Will your airline make a lasting impact that differentiates itself from the rest of the pack? Incorporating personalization into a customer-relationship-management system may hold the key.