Intelligent Retailing: The Age Of The Customer
By Jade Owens
with Solution Expert Sam Chamberlain
To become better retailers and meet modern travelers’ expectations, airlines must incorporate intelligent technology that brings intelligence into their retailing strategies. Intelligent technology creates opportunities for airlines to identify, understand and predict customer behaviors. Through machine-learning algorithms and operations-research models, airlines can predict customer preferences through more proactive tools and mindset. Contrary to common belief, this opportunity doesn’t purely exist in the marketing department. Untapped opportunities exist within the planning, pricing, revenue management and offer-management areas as well.
having or showing intelligence, especially of a high level.
synonyms: clever, bright, brilliant, quick-witted, quick on the uptake, smart, canny, astute, intuitive, insightful, perceptive, perspicacious, discerning
Intelligent retailing – simply put, it’s a hot topic that will be discussed during most conferences, trade shows and meetings. Moreover, it is likely one of the top reasons airline executives lose sleep at night because it is not just about airlines becoming better retailers, it’s about airlines becoming intelligent retailers. Intelligent retailing transcends the days of consumers having minimal options or power. Today, it requires every facet of an organization to be customer focused.
The Age Of The Customer
For airlines to know their customers better, they need vast amounts of data. A lot of it is data they already have in various places today; however, it’s challenging to consolidate it, make sense of it and derive actions from it. Most airlines today leverage data from loyalty programs, but the information is limited. At most, they are collecting name, birth date and email addresses.
To truly know a customer, airlines must collect data at every touchpoint and interaction across the entire customer journey, which is only one part of the intelligent decision-support equation.
Furthermore, we know that most airline traffic today actually comes from travelers who are not in loyalty programs or perhaps they travel with an airline once a year. Regardless of if they are a loyalty member or not, just to get on an airplane, we are required to capture so much information about that traveler. At the end of the day, if we can leverage all this information and data, airlines can be much smarter about how they run their airline. Knowing a customer’s preferences allows an airline to create better routes, schedules, prices and product bundles, all of which lead to a more customer-centric, revenue-generating airline.
It Starts With Commercial Planning
To understand intelligent retailing and how it’s achievable for airlines, let’s start at the beginning -- commercial planning.
For most airlines, the commercial-planning department is viewed as the “brains” of the business. It creates the strategies and is responsible for building the best schedules, the best availability options and the best prices. Traditionally, “best” has always meant the option that maximizes the most revenue. Not that revenue isn’t still top of mind, but now, commercial departments must create a strategy that balances revenue AND has the unique target customer in mind.
For example, today, most airlines charge a standard baggage fee regardless of the trip length, fare price or the customer profile, and there is no strategy or data-driven reason behind it. However, imagine if an airline identified each unique shopper and could determine exactly how much it should charge for a bag based on machine-learning algorithms that have considered customers’ willingness to pay.
“Customers have new expectations. They want the ride, not the car. The milk, not the cow. The new Kanye music, not the new Kanye record.”
Tien Tzuo, founder and CEO of Zuora
The industry has clearly entered the age of the customer (with more competition than could be imagined). Therefore, change must start with smarter commercial planning. The next topic, however, is determining how airlines can bring intelligence into their retailing strategies and practices to operate in a circular, customer-centric world.
The answer is intelligent technology infrastructures, because before we can begin to implement intelligent solutions, the underlying technology must be in place. Intelligent technology infrastructures meet at the intersection of the modern consumer and an airline advancing in the digital world. It combines decision science, artificial intelligence, machine learning, sophisticated operations-research (OR) models and mined customer data, just to name a few. Further, it doesn’t just power complicated models or systems, it also enables airlines to do something with it. It provides relevant insights to offer the unique customer the right offer at the right time and at the right price.
In addition, intelligent technology infrastructures solve some of the airline industry’s toughest challenges. Most airlines are not making headlines about their infrastructure innovations. More times than not, when talking about technology related to the airline industry, the words archaic, legacy and complicated are frequently mentioned.
At Sabre, when defining intelligent technology infrastructures, we first consider how we can bring
the systems of today together. Intelligent retailers cannot forget everything of the past, adopt all new solutions and never turn back. Intelligent airline retailers still need to use passenger service systems and revenue-management systems. However, the way these systems interact, or the way technology providers can build additional solutions that enhance how these systems operate today, is where the magic is going to happen.
Retailing becomes intelligent when airlines can seamlessly provide a unique customer experience because the behind-the-scenes analyst was able to quickly make a pricing or revenue-management decision that was accurate and timely.
Intelligent solutions have arrived. As mentioned earlier, airlines that focus only on customer-loyalty programs or conduct endless surveys aren’t going to survive. Intelligent technology creates opportunities for airlines to identify, understand and predict customer behaviors without having to ask them. Through machine-learning algorithms and OR models, airlines can predict what customers want through more proactive tools and mindsets. This opportunity doesn’t merely exist in the marketing department. The untapped opportunities exist within the planning, pricing and revenue management and offer-management areas.
Moving forward, intelligent solutions will empower these departments to:
• Improve schedule synchronization and deploy schedules faster to increase revenue and reduce reaccommodation costs;
• Monitor and analyze fares automatically to provide an enhanced competitive advantage;
• Deliver persona-based, flight-plus-ancillary bundled offers;
• Provide broad pricing recommendations that are buffered from abrupt market changes and use multi-channel availability;
• Deliver personalized offers and services that are consistent across all channels.
Schedulers can produce intelligent schedules; pricing analysts can create optimal prices; and revenue analysts can make the right seats available at the right time. For all intents and purposes, it is what we refer to as an intelligent-retailing nirvana because intelligent solutions are tightly integrated, meaning the process cannot end with commercial planning. The rest of the magic happens because the “brains” an airline has grown from creating intelligent schedules, availability and prices can be carried across its entire enterprise. As a result, everyone is operating from the same intelligent information and can make informed, accurate decisions. No longer are the “brains” confined to the commercial-planning department, because the “brains” can be tapped into across every solution and every department.
This is particularly important with offer management. In the age of the customer, offer management plays an integral part in how airlines deliver a personalized and seamless experience to the customer. If an airline has intelligent solutions throughout commercial planning, it gives analysts a complete understanding of the customer, so they can package and price additional products through all channels. Furthermore, next-generation shopping is key to providing the retailing experience travelers are accustomed to. Intelligent shopping technology enables airlines to:
• Personalize the shopping experience by trip-purpose segmentation,
• Bring ancillaries into the shopping path so consumers can shop for flight and ancillary bundles together,
• Significantly improve shopping response times, despite the complexity of the request.
Intelligent solutions are not only built with machine-learning and artificial-intelligence capabilities, they are created with state-of-the-art, cloud-enabled, scalable structures. Therefore, the accessibility they provide is unmatched to today’s systems.
For Sabre, one of the clearest examples of how airlines can become intelligent retailers is through dynamic pricing.
Dynamic pricing is powered by a set of intelligent pricing and revenue-management tools that empower analysts to improve decision-making and maximize revenue in real time. It considers both demand and competition and dynamically responds to the conditions at hand to give an airline the best position possible. In the past, revenue-management systems have been the “quarterback” in maximizing revenue for an airline. That is still the case today; however, if
Ready To Intelligently Retail?
It all goes back to the question: “Who is an airline serving?” If an airline is striving to be an intelligent retailer, it must consider a few key questions:
1. What are the needs of the target customer? This will help determine which products to offer and how to compete for those customers.
2. What intelligent infrastructure is needed to meet an airline’s needs? This includes the right teams, processes and technology to build a robust intelligent-retailing strategy.
3. How can an airline provide the best retailing options and win against competition? The target customer has a plethora of options. It is pivotal to have the right data and intelligent technologies to be able to proactively stand out against competition and exceed customer expectations.
Intelligent retailing is here. Empowered customers are shaping the way successful companies conduct business. Technology providers that offer intelligent solutions will be the catalyst to helping airlines achieve revenue maximization and provide differentiated experiences for their customers. /A
For additional information about Sabre’s intelligent retailing solutions, contact Sam Chamberlain at firstname.lastname@example.org.
With nearly two decades of experience in airline reservations, ticketing, pricing and revenue management, Sam is director of pricing and revenue management solutions for Sabre.