How Data Fragmentation Puts Airline Revenue at Risk

     

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Much is written about siloed departments at airlines. At the largest airlines, each major function could have hundreds of employees housed on different floors – or in different countries, with different sub-cultures, and very various focuses. Sales and operations in particular, have disperse workforces spread across the global network.

Data, of course, doesn’t have to be this way. Data can be centralized and integrated for consistent decision-making across the airline. Nevertheless, data silos too, are still very common. Each function collects and manages a separate database designed for its own unique purpose – and each thus ends up with a narrow view of the customer. This means that there is rarely a comprehensive view of the customer across functions.

Unfortunately, this now limits the ability of airlines to meet the changing demands of airline customers.  Customers increasingly are expecting greater personalization by which “offer management,” or customizing offers to individual customer needs is more prevalent. Airlines need to break down their functional silos from a business sense, but in conjunction, they also need to develop a comprehensive customer-oriented database so that all departments can in fact, be operating with a consistent view.

Revenue management could be considered the primary source for offer management. When a customer seeks out a flight, the fare offered is based on the fare structure and inventory management system overseen by the revenue management function. For example, if a customer searches online, he/she may access a low $79 fare 21 days out; whereas on the day of the flight, the offer climbs to $479. These offers are generic – presented to all customers who are seeking flight and fare information via the airline website or via third party channels. Today, airline “offer management” is pretty much all generic. Even the prices for ancillary services are generic and all customers receive information on these services in generic ways.

When the revenue management department communicates with operations about an individual customer, it is primarily via established fare rules and ancillary purchases. This customer is not entitled to a flight change; that customer cannot check a bag without paying more; and so on. To associate a customer primarily with his/her fare rules obviously doesn’t sound like the new personalization airlines seek.

Many other airline departments actually do maintain more customer-specific information. Frequent flyer data is organized by individual. E-commerce can track whether an individual is simply “looking” versus “booking.” The social media folks correspond directly with individual customers and their posts. 

Even though these other departments have more personalized information, they often have their own customer databases. Part of it, of course, is that the same customer is identified differently in various systems: by their frequent flyer number, their credit card, their e-mail account, their mobile phone number or their Facebook name.

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Think what “offer management” would look like if all customer data were integrated. There are opportunities in each of three key areas:

E-merchandising

The customer experience begins online. A difficult-to-navigate website or overly aggressive e-merchandising can both contribute to a poor online customer experience. Airlines that can master increased personalization in offer management – both for flights and for ancillary services – can drive both greater customer satisfaction and additional revenue. More personalized offers, driven by integrated customer information across revenue management, e-commerce, mobile, FFP, and social media can include flight deals on destinations already searched or customized ancillary bundles based on historic ancillary purchase behavior.

Off-schedule Operations

An integrated customer database can dramatically improve customers’ experience during off-schedule operations, including:

Recognition: The first step in improved experience is recognition – some notion of understanding individual customer needs rather than just looking at the fare rules (the fine print says: “We owe you nothing”).

Communication: Customers want to be alerted to schedule issues quickly and on their preferred devices.

Personalized Re-booking and Choice: Re-accommodation needs to be proactive based on perceived customer needs. A passenger who has experienced another such off-schedule operation recently should potentially be higher priority.

Personalized Incentives/Choice: Airlines typically have clear rules for airport agents to compensate passengers whose trip has been disrupted, and often compensation schemes are built around meal or hotel vouchers. But again, different passengers have unique needs. More personalized schemes could include free lounge access or upgrades or certain ancillary amenities.

Overbooking/Day of Departure Flight Management

Managing passenger loads on the day of the flight – given the uncertainty of no-shows, voluntary over-sales, and unexpected spurts in demand – is an ongoing challenge for airlines. Here again, direct communication with the customer and recognition of differing needs can drive increased customer satisfaction – as well as higher loads. Personalized offers could include discounted standby to fill empty seats earlier in the day and pro-actively offering low-cost vouchers for voluntary displacement.

An integrated customer database has potential for both increased customer satisfaction and more revenue. Although current data fragmentation is limiting such personalization, airlines are increasingly moving toward greater integration of customer data. 


Read about how airlines can tap into the benefits of more personalized offers built around their customers' needs.

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