Data Fuels The Customer Experience
Innovations in data storage and conversion technology and the decreasing cost of real-time analytics, coupled with an increasing focus on the end-to-end customer experience, are inspiring airlines to acknowledge personalization as a long-term strategic and competitive investment.
Airlines today are sitting on a gold mine of valuable information about their customers. If used wisely, this wealth of data can empower them to better market to and serve each customer within the proper context of his or her journey and present status.
Fortunately, much of the airline industry now recognizes customer data as a valuable corporate asset, rather than an annoyance. Unfortunately, the industry has fallen behind in bringing this data to life.
Airlines have an enormous advantage over many businesses when collecting and storing passenger data. Some carriers have as many as 11 opportunities, or touchpoints, throughout the customer lifecycle to personally connect with and gather information from a single passenger.
Despite these opportunities, many airlines still struggle with the creation of a consistent experience for each individual customer across all touchpoints, as well as understanding customer trends below the macro or market level.
To overcome these obstacles, airlines must capture, analyze and aggregate the data at hand in a manner that builds a holistic view of each customer’s history, behaviors, preferences and level of satisfaction.
United Airlines Achieves Sizeable Results
Chicago-based United Airlines realized a year-over-year increase of more than 15 percent in ancillary revenue as a result of its personalized approach.
Data comes in different sizes, formats, speeds, languages, systems and levels of structure, and new types of data are being developed at an unprecedented rate, largely through the proliferation of social media outlets and digital technology. Traditional data sources, such as CRS bookings, passenger name records, ticketing and check-in transactions, pricing, operations and service recovery, ancillary purchases, loyalty systems, and baggage management, have long been stored in siloed, transaction-based systems and then measured and analyzed – often in hindsight over many months – to determine a carrier’s actions going forth.
Transactional data is no longer adequate, in and of itself, for agile and accurate decision-making and strategy formulation.
Today, emerging, often-unstructured data sources, including shopping queries, clickstreams, mobile behavior, stated preferences, inflight activities, and social media and sentiment analytics, may prove to be of even greater value, as they provide airlines – and most businesses – with the ability to quickly respond to individual customers’ preferences and moods in real time. .
Perhaps the time has come for the airline industry to follow the lead of other industries, such as retail, entertainment and hospitality, and shift its focus to a data-first strategic approach. This type of approach recognizes that an organization’s data assets become more valuable and its business more productive when information is utilized effectively. The objective is to improve information flow, collaboration and intelligence throughout the organization and subsequently, the complete customer journey. Better data quality and harmonization result in faster analytics and decision making.
A Gold Mine Of Data
Airlines have access to a wealth of data that, when harnessed, analyzed and converted, can provide a powerful competitive advantage by offering a personalized customer experience to every customer.
Interestingly, the Harvard Business Review found that companies in the top third of their industries in the use of data-driven decision-making were, on average, 5 percent more productive and 6 percent more profitable than their competitors.
The key to implementing a data-first approach is to first determine the critical strategic and operational questions that need to be answered and the types of data that will provide the answers. Today’s tech-savvy, highly mobile consumers generate an almost continuous stream of data, the majority of which is now funneled through emerging, often unstructured sources, rather than legacy or transaction-based systems.
The marriage of traditional data sources with emerging sources is, without a doubt, a complex process requiring an investment in next-generation data systems, as well as the reengineering of business processes and retraining of employees.
In today’s competitive marketplace, though, its value is unquestionable for obtaining a comprehensive view of the customer. Organizations with a data-first focus have the ability to correctly and dynamically pair their valuable products and services with the customers who will desire and optimally benefit from them. In addition, they equip and empower their customer-facing employees with the information necessary to confidently engage passengers, offering an exceptional customer experience within the appropriate context.
There is a clear window of opportunity in the airline industry today for such carriers to take control of the global marketplace utilizing timely, actionable data to dynamically generate personalized product and service offers for their customers. Data is the foundation of personalization, which combines relevant content and product and service recommendations based on intent, location and interests to convert shoppers into satisfied customers.
Traveler-to-airline Data Exchange
Throughout each step of an airline customer’s journey, there is an exchange of data between the traveler and the airline. The reservations system’s view of each interaction phase, powered by the data input by the traveler, acts in near real time to facilitate contextual, multi-channel dialogue to execute sales and service through the entire journey.
This type of data-driven personalization provides innovative airlines, in particular, with the ability to generate significant incremental ancillary revenue, cut service costs, establish sustainable loyalty from their best customers and attract new ones. Ancillary revenue for the airline industry worldwide topped US$38.1 billion in 2014 – hardly a side business. And a recent study by Sabre found an airline could expect up to a 22 percent increase in ancillary revenue by personalizing its offers.
Last year, Chicago-based United Airlines, for example, began assessing in real-time more than 150 variables about each customer to determine the individual’s likely actions. Approximately 200 milliseconds later, a tailored offer is dynamically generated for the customer.
According to Scott Wilson, the airline’s vice president of e-commerce and merchandising, the personalized approach led to a more than 15 percent increase in year-over-year ancillary revenue.
It’s also a brand differentiator. For many years, the airline industry has concentrated on price. However, prices can easily be undercut by competitors. It’s a vicious cycle, and in the end, everyone loses money. Carriers can build valuable relationships with customers by offering an end-to-end journey specifically designed to meet their individual preferences and needs based on their knowledge of those customers. As customers engage across an airline’s various touchpoints, they should expect and receive the same levels of personalized service, which is key to building loyalty and trust.
Likewise, personalization is also a valuable tool on the operational side of the airline business. Although delays and cancellations are unavoidable, based on passenger data collected from various touchpoints, airlines can satisfactorily service and uniquely compensate valuable customers.
For example, a passenger who often spends time in an airline’s airport lounge and orders alcoholic beverages can be given a lounge pass and a drink coupon to use while waiting for a flight. In addition, the airline can create and e-mail a new itinerary to the passenger, including his/her seat location preference and preferred arrival time at the airport, while he/ she waits in the lounge.
Personalization is more than simply a trend. It is an expectation for today’s well-connected consumers. A recent study by Digital Trends, a technology news and information website, noted that 73 percent of consumers prefer to do business with companies that use their personal information to make their shopping experience more relevant.
Advances in data storage and conversion technology and the declining cost of real-time analytics, combined with a growing focus on the customer-service experience, are stimulating businesses, such as airlines, to recognize personalization as a long-term strategic and competitive investment.