Improving the customer experience: Available and cost-effective solutions
Solution 1 Using existing technologies to personalise travel
Carriers are understandably reluctant to invest money and resources in unproven technologies. Adopting (and possibly adapting) a new technology and testing it can be arduous, complicated, costly and time-consuming.
Airlines can sidestep these problems by turning to technologies that have already been tested, refined and accepted. As airlines welcome Wi-Fi, notebooks, tablet computers and other mobile devices on-board, air travellers are no longer in-flight Internet exiles. Moreover, keeping current with how customers communicate — Web, text, Facebook, Twitter, etc. — allows carriers to stay connected to them from booking through their arrival home.
The biggest game changer is Wi-Fi — a crucial gateway. People assume they will always have Web access to modify and personalise their environments; thus, making in-flight access the norm instead of the exception opens up tremendous possibilities for both productivity and entertainment. After the initial investment, Wi-Fi can be provided at a relatively low ongoing cost.
Putting communications, entertainment and productivity devices literally back in the customer’s hands is one of the most powerful and efficient ways to personalise a trip.
Technology can yield unexpected savings
Making in-flight Web access a standard feature instead of a frill often provides demonstrable operational savings. Such access can also open up new onboard revenue-generation opportunities — from premiums for special content to profit sharing across e-commerce partnerships.
“We firmly believe that giving people access to in-flight entertainment when they’re captive for an hour or two will make us a fortune,” says Michael O’Leary, Ryanair’s chief executive officer. “But we don’t want to spend a fortune to make a fortune.”
As a European airline, Ryanair pays higher access costs than US or other international carriers and will take longer to see a return on its investment.
Newer technologies, tablets, for example, can add revenue in unexpected ways and even help airlines save on fuel. In 2012, Qantas began distributing iPads to passengers to enable streaming of on-demand content on its older Boeing 767 fleet; this was less expensive than rewiring the cabin. Once Qantas had all the obsolete wiring and racking removed, the airline saw a measurable drop in fuel consumption, according to Alison Webster, executive manager of international customer experience for Qantas.
China Airlines’ Hsiao-Hsing Tung, vice president for corporate development, points to the “dual-use benefits” of making Web-connected tablet computers standard equipment for cabin crew. Tablets can help cabin crew recognise most-valued customers and pay special attention to them. The crew can also use them to reduce repair time on the tarmac by requesting spare parts for a broken seat, for example, during a flight.
“Twitter is here today. But what about WhatsApp? BBM? We have to go where the customer is.”
– Glenn Morgan, head of service transformation at International Airlines Group
Leveraging social media
Airlines can make additional gains by making better use of another proven technology — social media — before, during and after flights. Social media can improve customer service by serving as a fast workaround for overwhelmed phone lines or gate agents. They can also provide a richer exchange of information with customers in both directions, giving carriers an opportunity to listen, learn and respond.
“Different platforms lend themselves to different functions,” notes David Cush, Virgin America’s president and chief executive officer. The 144-character limit for Twitter is effective for marketing time-sensitive promotions and for resolving customer service queries. “By virtue of its format, you have to be very clear, very direct and very brief,” he says. “Facebook allows Virgin America to connect with the consumer on a deeper level.”
Glenn Morgan, head of service transformation at International Airlines Group, predicts that customer engagement will continue to shift to the Web, but warns that platforms fall in and out of favour — airlines have to be sufficiently attentive and sufficiently nimble to keep up with change. “Twitter is here today,” Morgan points out. “But what about WhatsApp? BBM?” he asks. “We have to go where the customer is.”
Airlines may find it difficult to allocate resources to these constantly changing media channels, but that attention is now mandatory. "You cannot hide" from the social media space, says Thierry Antinori, Emirates’ executive vice president and chief commercial officer. “You're either completely out, and you have a lot of missed opportunities. Or you are in, and you have to be good. So we chose to be in.”
Joachim Schneider, Lufthansa’s vice president of product management, explains how his airline uses social media to respond quickly to passenger problems: should a customer post to Facebook from a taxi, warning that he will be late, Lufthansa will proactively rebook his flight. The airline thus becomes the solution rather than the problem.
Solution 2 Building on best practices from other industries
The airline industry can learn a lot from its would-be competitors and others. The hospitality, logistics and gaming industries offer well-honed best-practice templates, systems and approaches that could substantially improve the air traveller’s experience. Some of those best practices even have their roots in innovations originated by airlines — loyalty programmes, for example.
Customising, pushing and pulling data
Collecting, exchanging and analysing data are the key to these approaches. Sector leaders in the hospitality, logistics and gaming industries constantly collect detailed information. Among other metrics, they study how and how much their services are used, monitor operational efficiency and analyse customer responses. The hospitality industry, a competitor with airlines for ownership of the full travel value chain, merits particular attention.
Hospitality companies routinely collect and analyse data to make their operations more efficient. If a hotel has clear data about the types of food eaten more often on specific days of the week, it can order more accurately and cut down on waste. Such information can also help the same company give its customers more of what they want, in ever-more fine-grained detail. If a hotel knows the guest in Room 268 favours a Black Angus rib-eye steak cooked rare with hot sauce on the side, that guest is more likely to rebook at that hotel. The finer the distinctions, the more personal and compelling the customer experience and service.
Improving efficiency and personalisation can create powerful synergies: cost savings married to personalised service can lead to greater customer loyalty and higher profits.
Logistics companies do something similar. Many have expanded the package delivery options they offer in response to customer demand; they then track systems efficiency from package pick-up to package delivery, assessing and adjusting their services in response to customer behavior. What a stay-at-home parent earning an income by selling goods on eBay needs differs from what a family business that mostly ships between the US and the Indian subcontinent needs, for example. Logistics companies track these trends and tailor their services, defining them with greater precision and specificity: time to destination; time, place and circumstances of delivery; level of security; packaging used, etc.
Hospitality and logistics companies track data in two different ways. Systems that monitor packages, customers, guests and transactions automatically “pull” that data and report them on demand. Thus, these companies can know immediately how many packages were late today because of snow in Cleveland, Ohio, or how many room-service orders included hamburger versus steak. When data need to be interrogated or analysed further, these systems will “push” for an answer. The businesses might need to know, for example, how many people hold the logistics company responsible for the snow delay or how much the hamburger vs steak decision was influenced by price. Increasingly, data analytics and correlation algorithms are automating that process.
An investment, not a gamble
Harrah’s Entertainment, a resort and casino company (now Caesars Entertainment), started to develop and refine the collection and analysis of customer information back in 1998 on a level not seen before in that industry, according to a Harvard Business School case study. Using a loyalty programme introduced the previous year and expanding the use of its patented swipe-card system, Harrah’s tracked every customer transaction it could. Data gathered included not just choices for bet-by-bet gambling, but food, lodging and other forms of entertainment as well. Every Harrah's property across the country was included.
As noted in the case study, this information did not simply track how customers behaved in the past. It created information-rich customer profiles that enabled prediction of how they might behave in the future and what kinds of incentives and interventions would either encourage or discourage more visits to Harrah’s.
Expanding the scope and sophistication of its rewards programme allowed Harrah’s to run on-the-ground experiments to test different marketing strategies. Having defined a specific cohort of interest — perhaps women between 55 and 75 who live within 10 miles of a casino — it could divide the group in half, provide different incentives to each, then track the resulting purchasing behavior to see which works better.
Airlines face legitimate and serious questions about using new technologies. Indeed, they can be expensive: the design and implementation of Harrah’s upgraded Total Rewards Program was done at a cost reported by The Wall Street Journal in the US$100m range. It bears underlining that this was 15 years ago: the technology has since been vetted, improved and come down in price. But Harrah’s ROI was just as impressive: in 1999, Harrah’s revenue increased over the previous year by 50%, according to the Journal. The company’s stock price and profits doubled.
Solution 3 Wielding the wealth of data that travellers provide
Airlines already collect much of the data that would allow them to make best use of the approaches of the hospitality, logistics and gaming industries. Airlines were an early entrant in the modern data collection business when they pioneered computerised reservations systems. But the industry now lags other sectors in how it uses its data.
A top-tier logistics company can do more than simply move a package from a suburban porch in Belgium to an office in Hong Kong on the agreed schedule. It can also pinpoint the package’s location at any time and, with sufficient awareness of the larger transportation network, reroute that package on the fly to save time or money or to skirt difficulties.
A high-end hotel also knows, ahead of a guest’s arrival, that she prefers turn-down service to be done when she is at dinner, that CNN should be the default channel on her television and that she is happier if sugar is removed from the coffee supplies in her room.
A resort casino with a well-tuned predictive analytics program can note the interval since Mr Tanaka’s last visit and foresee that an appearance by a famous Italian tenor and the offer of a US$25 dinner discount may tip him towards visiting on the upcoming weekend.
Similarly, airlines need to leverage the data they already collect to make trips as smooth and efficient as possible, to make flyers feel not only welcome but at home on-board and to understand the combination of factors that will engender repeat business and brand loyalty.
Customisation as a norm
Consumers have come to expect their daily life to be as customisable as their online experiences. Web browsers, for example, now incorporate a slew of functionalities that — whether customers are consciously aware of it or not — make navigating online more efficient and more personal. Software, in effect, predicts future behavior based on an analysis of previous patterns, anticipating and, therefore, preparing for what will likely be desired next.
- Cloud-stored profiles serve as a personalised desktop wherever a customer logs in: bookmarks, favourites and auto-fill information to facilitate filling out forms.
- Predictive analytics allow browsers to cache images or information customers use more frequently; invisibly, this reduces the frustration and irritation of lags and wait times.
- E-mails and online calendars are mined by profiling algorithms that then produce context-appropriate advertising: mention scuba diving in an e-mail, start seeing ads for swim fins.
This ongoing analysis is inherently low cost. It takes data already in the system and uses them in more sophisticated ways.
Airlines already have a huge amount of information about their customers: where they go, how often they travel and with whom, how much they spend, where they sit and what they eat. To the degree that customers book package deals offered on airline websites, airlines also have information about car rentals, hotel choices and even destination activities.
Airlines also have the technical means to make the most of such information. Airlines and airports are intensive users of operational data and communications technologies. They also use data to improve the efficiency of sub-systems such as catering, cleaning, maintenance and fuelling. Data also facilitate better coordination between different systems.
Today, customer options at the booking stage are confined to a handful of fairly crude categories: first class, business class or coach; vegetarian, halal or kosher food; non-stop or layover. Asking customers for more information, and providing more information and options to them in return, would allow airlines and passengers to customise the travel experience to their mutual benefit.
People thinking versus packages thinking
Airlines have succeeded in making flying safe — passengers are safer in the air than on the road. And, within the constraints of weather and other externalities over which airlines have no control, the industry runs on a pretty tight schedule. Analysing operational data has helped airlines make great progress in improving revenue per passenger mile.
But airlines have not done as well using data to customise the passenger experience. Travellers get where they’re going, but they could have a much better experience and, as a consequence, feel better about the trip and about the airline. Using information to provide more personalised service can improve customer satisfaction as well as ROI.
When Lufthansa uses information from Facebook to rebook the flight of a passenger stuck in freeway traffic, it provides a direct personal benefit to that passenger. The airline also gains more time to sell the seat to a standby traveller. An airline that knows that a passenger’s daughter has a peanut allergy and acts to safeguard her reassures the parent in a way likely to engender brand loyalty. It also reduces the likelihood of an in-flight emergency that could have a cascading effect on the schedules of multiple flights.
Similarly, a business flyer who can access her company’s email system in-flight is being given back time that she might have lost. She is more likely to favour an airline that connects her, rather than one that virtually isolates her.
With the right planning and investment, and by making better use of information already available, air travel a decade from now could give both the industry and travellers more of what they want. The passenger gets more options for personalising a trip, a smoother passage through the airport itself and a more pleasurable in-flight experience, while the airline gains loyal customers who will provide repeat business, along with a more efficient, and thus profitable, process overall.
Executives are well-aware that a key part of implementing this vision will depend on establishing industry-wide data and interoperability standards. Almost two-thirds of the executives surveyed (65%) see this being accomplished within the next 10 years; however, exactly half of them also worry, that competitive forces may stymie movement in this direction.