5. 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”
6. • 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 2025
Source: Global Traffic Forecast 2006-2025.” Airports
Council International. 2007
trends – manifold increase in air
travel !!!
7. • 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
Source: Forum Corp, Harvard Business Review
trends – customer satisfaction
8. • 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
Source: University of Texas, The American Customer
Satisfaction Index” University of Michigan. 2006
trends – customer satisfaction
9. 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 of
Transportation. April 2007.
trends – customer satisfaction
10. CRM - ideology
Airlines 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
12. 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
13. 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 Value
Accumulate customer intelligence
14. Segment Identify Campaign
PLAN DESIGN COMMUNICATE MEASURE
•Define and Map •Define campaign •Schedule •Apply Incentive
customer data and cells •Execute •Calculate ROI
•Define Campaign •Target Customers •Manage bounce
Groups •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
15. Quite a bit of herding takes place
Do Kiosks add value?
39. We know why you fly, we're American
Airlines
• American Airlines was developed from a
conglomeration of 82 small airlines through
acquisitions and reorganizations.
• It is the world's 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.
42. 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.
44. 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
45. 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.
46. 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.
47. • 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.
48.
49. 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.
51. Special Offers
• Offering free tickets
• Concessional fares for students
• Corporate deal offers
• Jetlite surprises
52. 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.
53. What tactics should airlines use
to acquire,
develop and retain customers
with greater precision and
improved results?
54. 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
55.
56. 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.
57. 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.
58. 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.
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Objective: Bridge the divide….
