Customer Relationship Management

Customer Relationship Management [CRM] is designed to increase revenues, profits, and customer service by increasing the understanding of the desires and behavior of customers. Using this information, services and offers can be laser targeted ti niche groups, providing exceptional value to both the customer and the business.

CRM systems are used in the airline industry mainly by sales and marketing departments to support:

• Customer Acquisition
• Customer Segmentation and Target Marketing
• Loyalty and Retention Management
• Channel Optimization
• Campaign Management

These capabilities can be employ for a number of different purposes, such as:

• Customer Value Analysis
• Customer Insight
• Upgrade Monitoring

Customer Value Analysis

A customer value model is designed to analyse customer attributes frequency, recency, and spend to identify the most profitable customers. This is a monthly activity, with the value updated in the airlines customer–facing systems. Those employees directly engaged with customer activities are able to immediately identify who their best customers are.

This helps to prioritize customers in difficult scenarios, such as allocating seats following postponed flights due to elements such as weather, technical difficulties, failed connections and route issues.

By knowing where your best customers are stranded around the world, the information can be applied to flight rescheduling priorities at the same time that business services, accommodation and rental car arrangements are being made.

Marketing Insight

Marketing Insight programs provide sales personnel, marketing managers, and flight personnel [ticket agents, gate attendants, airline lounges, flight attendants] with customer profiles. A final passenger report lists the VIP passengers on flights, with expanded information. This may include both frequent fliers, high spend fliers and those passengers who have already suffered flight disruptions. A simple act such as acknowledging their recent experience can go a long way to smoothing relationships and re-establishing a sense of 'good flight experience'.

When a customer phones the airline, staff can immediately recall all 'insight' information based on the customer frequent flier number.

Passenger Services

Most airlines recognise that most of the profits are from a relatively small percentage of customers. Special services can be designed for each tier of customer, to ensure the services they need are available when and where they fly with the airline.

Small personal touches go a long way in amongst the elevated frustrations air passengers are now forced to endure.

Whilst many fliers select carriers on the basis of price, the most profitable customers do it on the basis of the services provided, relationships created and the attention they receive.

For instance, elite travelers may receive priority check-in, priority security screening, priority boarding, priority baggage handling, seat upgrades when available, and additional mileage credit whenever they are assigned to a middle seat.

With most passengers now belonging to several frequent flier programs, it would be easy to assume that most high profit passengers also belonged to such programs. Surprisingly, Continental Airlines found otherwise. Once they installed their data warehouse and analysed high profit fliers, they found that a staggering 60 percent of the high-value customers were not One Pass [frequent flier] members, and as such were not receiving the service designed for their most elite customers [Elite Access].

Today, these customers are identified as soon as they check in. They receive Elite Access treatment without having to be One Pass members.

Upgrade Monitoring

One of the key benefits of being a frequent traveller on any airline is the opportunity to be upgraded to a first class seat when there is a seat available. This process is monitored by the data warehouse. An upgrade report can be run at the beginning of each day to show which flights departed the previous day with empty seats in first class; and high value passengers seated in coach. Such lost opportunities can be followed up to increase vigilance on appropriating available seats for upgrades.

Business Benefits

In a Continental Airlines case study on a data warehouse implementation and use of analytics, the following results have been returned:

• Targeted promotions produced cost savings and incremental revenue of $15 to $18 million per year.
• A targeted CRM program resulted in $150 million additional revenues in one year, [the rest of the airline industry declined 5 percent].
• The goal to increase the amount of travel by Continental’s top 35,000 customers resulted in an average increase in travel of $800 for each customer.

Next: Loyalty Program Optimisation

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