Airlines should look to examples set by the retail industry in creating highly customised offers for their target audiences, says SITA chairman Paul Coby
Airlines have led the world in making personalised offers to customers through frequent flyer programmes, they invented brand loyalty after all. The ability to personalise and get to know customers better is an all-important part of deepening customer relationships and further exploring opportunities to sell more services. Today, highly personalised selling is something the retail industry is focused on, best exemplified by Amazon.
Retail seeks to understand what people buy and how they shop, therefore, retailers are developing their ability to target customers. Showing someone a product aligned to their personal tastes is obviously more likely to make them buy. Recommendations about what to buy are central to that approach, as is showing related products and offers.
However, it is not just about selling a product, it is also about up-selling and cross-selling; something airlines traditionally have not been so adept at. Airlines have many passengers to deal with, holding passenger data across multiple siloed databases and systems. However, new and evolving technologies are increasing the possibility of personalised interactions, not just with frequent flyers, but with every passenger.
Industry estimates put global airline ancillary revenues at only 5% in 2012. There could be significant opportunities to raise this figure by taking a more personalised "omni-channel" approach to customer retailing. Passengers who feel understood and valued at a personal level are more likely to be receptive to up-selling and cross-selling, and be more loyal to a brand.
In the jargon of today's technology industry, this is "retail enablement". It means that airlines take a more pro-active retail-based approach to customer engagement rather than see themselves as facilitators of people's movement.
Like each airline, each retailer is different. Each needs to understand how to sell appropriately to their target audience. A guideline for each airline could be to find its retail "twin", with a similar customer profile, and then behave like that retailer in targeting customers.
New generation passenger systems, big data analytics, business intelligence and cloud computing allow airlines to behave more like retailers. The new generation of passenger systems can enable them to manage many different channels of engagement for customer - laptops, smartphones, tablets and kiosks.
These systems can handle huge volumes of tailored requests, ensuring that personalised data follows passengers across channels. The idea is to build customer profiles in real time, including data on sales history, segment, trips, etc.
There are new technologies that will enable airlines to capture masses of customer data from multiple sources, going beyond passengers in frequent flyer programmes and using big data analytics for digital trails, creating personalised offers for a wider range of customers. Of course, businesses have to be careful about abiding by the laws of countries they operate in and ensuring they have appropriate customer permissions.
While most retailers focus on that wider view of how customers interact with their brand, many airlines are still very transactional. Big data can "join up the dots" to create a holistic view of individual customers for airlines and in turn strengthen customer relationships. Thanks to the processing power of cloud technology, airlines can build passenger profiles to offer highly customised experiences for those who want them. That can lead to the creation of dynamic offers like tailored holiday packages and relevant unbundled services, presented instantly online to customers.
The pervasiveness of smart mobile devices increases the potential for more customisation. Passengers on their journeys can be given offers depending on their locations, using geo-location technology. Retailing can be contextual and location-aware, so personalised offers can be received on the go, like products related to a passenger's whereabouts in the airport or those related to their flights or destinations. About 83% of airlines will use mobile channels to generate ancillary revenues in the next few years, according to the 2012 Airline Business/SITA Airline IT Trends Survey.
In getting customers to use their websites, airlines have a fundamental advantage. Activities like advanced passenger information or the opportunity to change an allocated seat, can be restricted to the airline website to ensure online traffic from passengers. Hence, airlines can direct passengers to their websites even if they bought their tickets from an online travel agent.
Airlines can use these opportunities to offer passengers products and services, taking advantage of interaction with "known customers" on smartphones, tablets, laptops or kiosks before and throughout the journey. Applying retail lessons will enable them to do this to the fullest, resulting in a potentially big boost for ancillary revenues.