Meaning of CRM in Airlines Industry • CRM is the process of managing detailed information about individual customers and carefully managing customer ultimately leading to customer loyalty Managing the “touch points”
• Global passengers to rise by 5 billion in 2010 and more than 9 billion by 2025 • Passenger traffic in Africa forecasted to increase by at- least 7% and Asia –Pac by 6.8% a year, respectively, by 2010 • Asia will be the world’s largest aviation market by 2025Source: Global Traffic Forecast 2006-2025.” AirportsCouncil International. 2007 trends – manifold increase in air travel !!!
• 40% of satisfied customers switch suppliers without hesitation • 65% to 85% of customers who choose a new supplier claim to be satisfied and very satisfied with former supplierSource: Forum Corp, Harvard Business Review trends – customer satisfaction
• 85% of customers claim to be satisfied, yet willing to switch to other suppliers • In the 12 months before Feb 07, there was a 49.6% increase in the number of passenger complaintsSource: University of Texas, The American CustomerSatisfaction Index” University of Michigan. 2006 trends – customer satisfaction
2,0% P o stal Service 1,0% Limited-Service Restaurants CAGR 1994-2005 Cable & Satellite TV Wireless Telepho ne Service Cellular Telepho nes Express Delivery Co mputer So ftware 0,0% 50 75 100 Energy Utilities Ho tels Ho spitals A irlines M o tio n P ictures -1,0% Netwo rk/Cable TV Newspapers News Fixed Line Telepho ne Service -2,0% Q1 2006 customer satisfaction (out of 100 points)Source: “The American Customer Satisfaction Index” University of Michigan. 2006. IBM analysis, “Air Travel Consumer Report.” U.S. Department ofTransportation. April 2007. trends – customer satisfaction
CRM - ideologyAirlines think about CRM for…• Operational • Automation of basic business processes (marketing, sales, service)• Analytical • Analysis of customer data and behavior using business intelligence• Collaborative • Communicating with clients
Pre-Airport Airport In-Flight Post-Flight Promotion Airport check-in and Baggage storage Gate connections notification seat assignment Entertainment Baggage claim Travel planning Baggage check information Meals Reservations and Security Baggage pick-up Shopping booking Airport shopping or Customer service and Connectivity Ticketing dining complaint management Flight delay Club room access notification Transportation from Airport waiting areas airport and parking Virtual check-in and Boarding pass and seat assignment Frequent flyer boarding account management Transportation to Gate location airport and parking Frequent flyer account management Identify the key touch points
Segment Identify Market Customer Customer Behavior Aggregates Summaries Membership Air Partner Ratio Account Balance Revenue Per Mile Air Vs Non-Air Retro claim Ratios Activity Summary Long Haul Ratio Earn/Burn Ratio Current and Future Lifetime ValueAccumulate customer intelligence
Segment Identify Campaign PLAN DESIGN COMMUNICATE MEASURE•Define and Map •Define campaign •Schedule •Apply Incentivecustomer data and cells •Execute •Calculate ROI•Define Campaign •Target Customers •Manage bounceGroups •Apply Rules backs•Configure Channels •Review Process •Identify Responses “Effective implementation of a targeted campaign can increase an airline’s revenue by as much as 2.4 percent a year, representing a bottom-line annual impact of $100 million to $250 million for a large carrier” – McKinsey, CRM in the Air
Quite a bit of herding takes place Do Kiosks add value?
We know why you fly, were American Airlines • American Airlines was developed from a conglomeration of 82 small airlines through acquisitions and reorganizations. • It is the worlds largest airline in passenger miles transported and passenger fleet size. • American Airlines serves four continents. • As of February 2009, the American Airlines fleet consists of 616 aircraft. • American Airlines had an average fleet age of 15.4 years in February 2009.
The Low Fare Airline• Southwest is the largest airline in the world by number of passengers carried per year (as of 2007).• Southwest Airlines was originally incorporated to serve three cities in Texas as Air Southwest on March 15, 1967, by Rollin King and Herb Kelleher.• Successful business on an unusual model: flying multiple short, quick trips into the secondary (more efficient and less costly) airports of major cities.• The fleet include only one aircraft type, the Boeing 737.
CRM in Singapore Airlines• SIA has become a role model for service in the airline industry.• Focus on customer retention as its highest priority• Constantly innovates its service to retain existing clients and to attract new customers.• Consistently gets awards for its customer service
On board• On board the airline provided some of the best food, & most importantly ”serves it with smiles”.• Passengers are treated with special attention.• Introduced an entertainment system called Krisworld.• Provided individual video screens for each passenger of each class and programs included 22 video channels along with12 audio channels, 10 games and real-time text news that are updated every hour.
Ground service• Every aspect of ground service was looked into such as:• How many times the reservation phone rang before being answered or how long customers had to wait to check in.• Check-in services were made flexible and passengers could also check-in through fax or telephone.
• SIA had a frequent flyer program-Kris flyer.• A member of this program earned a specific number of miles every time he/she traveled by SIA. These miles could be converted into free flights to any destination.
The joy of Flying• Jet Airways is India’s leading private airlines• Jet operates with a relatively young fleet of Airbus 330, Boeing 737 jets and ATR72 turboprops.• Started international operations in March 2004 between Chennai – Colombo.
Special Offers• Offering free tickets• Concessional fares for students• Corporate deal offers• Jetlite surprises
Other CRM Activities• Rapid Rewards program for all passengers that make all their reservations online.• Incentives include lower rates, express boarding passes, and in-flight bonuses like free snacks & drinks.• Business Rapid Rewards for Business travelers.• Special services to senior citizens.
What tactics should airlines use to acquire,develop and retain customers with greater precision and improved results?
In order to manage the customer more effectively across all lines of service,airlines must change their approach to CRM in a number of ways…• Customer Segmentation• CRM Initiatives• Organization design & Management
What are the problem areas?• CRM investments are largely driven by the competition rather than the needs of the airline’s most valuable customers.• Few airlines truly exploit CRM analytics to segment their customers based on value rather than miles flown.
Destruction of Competitive advantage…• In a bid to imitate first-movers and provide customers with similar services, airlines have effectively eliminated any competitive differentiation provided by CRM initiatives.• Execution of an airline’s CRM strategy is often inefficient as well, with no clear vision or direction; competing departments often set separate goals.
Threat from ‘Within’…• Employees may not have the tools to provide consistent levels of service across all customer touch points.• Employees may not have the service mentality necessary for a CRM program to be truly beneficial to both the customer and the airline.