CRM

in Airline Industry

Importance of CRM

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 worlds largest aviation market by 2025

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 supplier

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 complaints

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

The Gartner Group states that CRM is a business strategy designed to optimize profitability, revenue and customer satisfaction. To achieve this the integration of people, processes and technologies is required in a collective effort to:
Acquire new customers through effective marketing campaigns and marketing analysis Grow existing customer base through expanded service offerings that target untapped travel opportunities Retain most valuable customers by understanding and proactively addressing individual values and preferences.

Who is the customer?

Individual

Traveler The Travelers Company The Person or Entity Paying for the Ticket The Person Choosing the Airline The Travel Agent Corporate Customers Cargo Brokers

Obstacles to CRM
Lack of buy-in across the business Departmental customer data silos

Unwillingness to share

Business processes not mature / clear Couldnt reach all touch points

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

Customers interaction methods are changing A bit of marketing will be enough, wont it?

Carriers CRM Challenges

Carriers face several key challenges in the context of using CRM to carry out their strategic priorities: Decreasing cost of serving customers Moving away from expensive, custom built systems to cheaper pre-packaged apps Cost-effectively integrating multiple systems and improving cross-channel service Unified view of the customer Integrating multiple processes that cut across in-house and 3rd party systems Customer knowledge Identifying the most and least valuable customers Loyalty program effectiveness Decrease costs Retain most valuable members Increase members expenditures and purchase of distressed inventory Differentiating the product Using service to differentiate their product and, thus, justify a higher price Raising customers switching costs Create a unique offering that competitors cannot easily duplicate

CRM focuses on
Customer

acquisition

Who are the profitable customers ? How do we attract them?

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

Customer retention
How do we build and sustain customer loyalty?

CRM need to be
There are many means of achieving these goals, including: Understanding customer value and lifecycle to prioritize marketing and service resources Using customer information to target promotional offers and cross-selling activities effectively Using customer information in the design and development of products and services Recognizing customers as individuals at all customercontact points Offering personalized or mass-customized service Utilizing multiple alternate channels for marketing, sales and service transactions in order to improve service and reduce cost Increasing the share of customer through greater penetration of travel related products.

CRM Blueprint

Customer Information
Information captured falls into the following categories: Demographic profiles Loyalty membership information Service preferences Purchase and travel history Contact information Online behavior

Data sources
PNR (Passenger Name Record) Reservations system Departure control system Frequent flyer program Revenue accounting Customer contact system (call-center) Baggage management Web site

CRM architecture

Analysis
The analysis can be grouped into three main areas: Segmentation Grouping customers according to similar characteristics Scoring Understanding customers propensity to perform certain actions Prediction Forecasting future customer characteristics

Decision Systems
The decision systems comprise the following functions: Lifetime value models Targeting rules for sales and marketing campaigns Service personalization rules and prompts Service recovery rules

Physical architecture