CRM

in

Airline Industry

Global passengers to rise by 5 billion in 2010 and more than 9 billion Global passengers to rise by 5 billion in 2010 and more than 9 billion

by 2025by 2025

Passenger traffic in Africa forecasted to increase by at- least 7% and Passenger traffic in Africa forecasted to increase by at- least 7% and

Asia –Pac by 6.8% a year, respectively, by 2010Asia –Pac by 6.8% a year, respectively, by 2010

Asia will be the world’s largest aviation market by 2025Asia will be the world’s largest aviation market by 2025

40% of satisfied customers switch suppliers without hesitation40% of satisfied customers switch suppliers without hesitation

65% to 85% of customers who choose a new supplier claim to be 65% to 85% of customers who choose a new supplier claim to be

satisfied and very satisfied with former suppliersatisfied and very satisfied with former supplier

85% of customers claim to be satisfied, yet willing to switch to other 85% of customers claim to be satisfied, yet willing to switch to other

supplierssuppliers

In the 12 months before Feb 07, there was a 49.6% increase in the In the 12 months before Feb 07, there was a 49.6% increase in the

number of passenger complaintsnumber of passenger complaints

Importance of CRMImportance of CRM

A comprehensive customer loyalty management (or CRM) strategy and solution manages all customers interactions in a consistent and value oriented manner

CRM DefinedCRM Defined

The Gartner Group states that “CRM is a business strategy The Gartner Group states that “CRM is a business strategy designed to optimize profitability, revenue and customer designed to optimize profitability, revenue and customer satisfaction.”satisfaction.”

To achieve this the integration of people, processes and To achieve this the integration of people, processes and technologies is required in a collective effort to:technologies is required in a collective effort to: AcquireAcquire new customers through effective marketing campaigns new customers through effective marketing campaigns

and marketing analysisand marketing analysis GrowGrow existing customer base through expanded service offerings existing customer base through expanded service offerings

that target untapped travel opportunitiesthat target untapped travel opportunities RetainRetain most valuable customers by understanding and proactively most valuable customers by understanding and proactively

addressing individual values and preferences.addressing individual values and preferences.

Who is the customer?Who is the customer?

Individual TravelerIndividual Traveler The Travelers CompanyThe Travelers Company The Person or Entity Paying for the TicketThe Person or Entity Paying for the Ticket The Person Choosing the AirlineThe Person Choosing the Airline The Travel AgentThe Travel Agent Corporate CustomersCorporate Customers Cargo BrokersCargo Brokers

Obstacles to CRMObstacles to CRM

Lack of buy-in across the businessLack of buy-in across the business Departmental customer data silosDepartmental customer data silos

Unwillingness to shareUnwillingness to share Business processes not mature / clearBusiness processes not mature / clear Couldn’t reach all touch pointsCouldn’t reach all touch points

Sales (reservations), check in, in-flight were particular Sales (reservations), check in, in-flight were particular problemsproblems

Customers interaction methods are changingCustomers interaction methods are changing A bit of marketing will be enough, won’t it?A bit of marketing will be enough, won’t it?

Carriers face several key challenges in the context of using CRM to carry out their Carriers face several key challenges in the context of using CRM to carry out their strategic priorities: strategic priorities:

Decreasing cost of serving customersDecreasing cost of serving customers Moving away from expensive, custom built systems to cheaper pre-packaged Moving away from expensive, custom built systems to cheaper pre-packaged

appsapps Cost-effectively integrating multiple systems and improving cross-channel Cost-effectively integrating multiple systems and improving cross-channel

serviceservice Unified view of the customerUnified view of the customer

Integrating multiple processes that cut across in-house and 3rd party systemsIntegrating multiple processes that cut across in-house and 3rd party systems Customer knowledgeCustomer knowledge

Identifying the most and least valuable customersIdentifying the most and least valuable customers Loyalty program effectivenessLoyalty program effectiveness

Decrease costsDecrease costs Retain most valuable membersRetain most valuable members Increase members’ expenditures and purchase of distressed inventoryIncrease members’ expenditures and purchase of distressed inventory

Differentiating the productDifferentiating the product Using service to differentiate their product and, thus, justify a higher priceUsing service to differentiate their product and, thus, justify a higher price

Raising customers’ switching costsRaising customers’ switching costs Create a unique offering that competitors cannot easily duplicateCreate a unique offering that competitors cannot easily duplicate

Carriers’ CRM ChallengesCarriers’ CRM Challenges

CRM focuses onCRM focuses on

Customer acquisitionCustomer acquisition – – Who are the profitable customers ?Who are the profitable customers ? How do we attract them?How do we attract them?

Customer developmentCustomer development – – How do we deliver what the customer wants?How do we deliver what the customer wants? How they want it?How they want it? When they want it to optimize profits and revenue?When they want it to optimize profits and revenue?

Customer retentionCustomer retention – – How do we build and sustain customer loyalty?How do we build and sustain customer loyalty?

CRM need to beCRM need to be

There are many means of achieving these goals, including:There are many means of achieving these goals, including: Understanding customer value and lifecycle to prioritize Understanding customer value and lifecycle to prioritize

marketing and service resourcesmarketing and service resources Using customer information to target promotional offers and Using customer information to target promotional offers and

cross-selling activities effectivelycross-selling activities effectively Using customer information in the design and development of Using customer information in the design and development of

products and servicesproducts and services Recognizing customers as individuals at all customer-contact Recognizing customers as individuals at all customer-contact

points points Offering personalized or mass-customized serviceOffering personalized or mass-customized service Utilizing multiple alternate channels for marketing, sales and Utilizing multiple alternate channels for marketing, sales and

service transactions in order to improve service and reduce costservice transactions in order to improve service and reduce cost Increasing the “share of customer” through greater penetration Increasing the “share of customer” through greater penetration

of travel related products.of travel related products.

CRM CRM BlueprintBlueprint

Customer InformationCustomer Information

Information captured falls into the following Information captured falls into the following categories:categories:

Demographic profilesDemographic profiles Loyalty membership informationLoyalty membership information Service preferencesService preferences Purchase and travel historyPurchase and travel history Contact informationContact information Online behaviorOnline behavior

Data sourcesData sources

PNR (Passenger Name Record)PNR (Passenger Name Record) Reservations systemReservations system Departure control systemDeparture control system Frequent flyer programFrequent flyer program Revenue accountingRevenue accounting Customer contact system (call-center)Customer contact system (call-center) Baggage managementBaggage management Web siteWeb site

CRM architectureCRM architecture

AnalysisAnalysis

The analysis can be grouped into three main The analysis can be grouped into three main areas:areas:

Segmentation – Grouping customers Segmentation – Grouping customers according to similar characteristicsaccording to similar characteristics

Scoring – Understanding customers’ Scoring – Understanding customers’ propensity to perform certain actionspropensity to perform certain actions

Prediction –Forecasting future customer Prediction –Forecasting future customer characteristicscharacteristics

Decision SystemsDecision Systems

The decision systems comprise the following The decision systems comprise the following functions:functions:

Lifetime value modelsLifetime value models Targeting rules for sales and marketing Targeting rules for sales and marketing

campaignscampaigns Service personalization rules and promptsService personalization rules and prompts Service recovery rulesService recovery rules

Physical architecturePhysical architecture