Unlocking the potential of Big Data and understanding customer ‘DNA’ is transforming airlines’ services
This is the age of Big Data. Every time a mobile phone is switched on, a product bought online or a comment made on Facebook, a trail of electronic information is laid down that can be collected, sliced, diced, and analyzed by those who have access to it. This is beyond business intelligence. Collating data to produce reports and identify strategy is about planning for the future, be it next week or next year. Big Data, on the other hand, is about delivering personalized service in real time. Its impact is immediate.
For the airline industry, a steep learning curve lies ahead if airlines are to adapt their business processes to take advantage of this information evolution.
Organizations such as Amazon and Google lead the way in Big Data and it has become received wisdom that their understanding and manipulation of the concept has become the key to marketing success. Anybody who has bought from or browsed Amazon will be used to receiving recommendations through email and the Amazon home page. Google quickly assesses browsing history to display relevant advertisements. Put another way, these companies are using Big Data to personalize offers, provide better service, and predict what the customer needs and will be buying in the future.
Airlines are the proud possessors of an awful lot of customer data but, arguably, they’ve been relatively slow to fully utilize their information assets and enter the Big Data world. But that is changing. British Airways, for example, is working on its “Know Me” initiative. By drawing on its own deep reservoir of data, BA is aiming to introduce a higher degree of personalized service. Crew members are armed with iPads so they have instant access to who is on board the flight and the nature of their requirements. That could mean someone new to business class receiving a special welcome or reassurance for a nervous flyer. But this is just the tip of the iceberg compared with what is possible.
Big Data can, and should, have an impact at an earlier stage in the commercial process. Customers can be segmented according to need. There is little point in offering rental cars to someone flying home but every chance that a businessman may like a limo service when traveling overseas. As the experience of retailers shows, data has a hugely important role to play in targeting marketing messages to those most likely to opt-in. Online retailers have become adept at data-led cross-selling and up-selling. For the airline industry there are clear opportunities to do the same.
Iain Webster, Senior Loyalty Consultant at global loyalty program provider ICLP—a company with a strong presence in the travel sector—argues that airlines aren’t yet in the same league as the likes of Amazon when it comes to dealing in Big Data.
“If you look at Amazon, they are great at predictive analysis and making recommendations based on those predictions,” he says. “They can do that because they know what their customers look like and it’s a very effective way to drive sales.”
Airlines are yet to take full advantage of the data available on customer preferences, however. And the airline targeting that does take place can be inexact. Webster notes he received a marketing email from an airline about trips to India based on a recent flight he took. But the departure airport had shifted so it was no longer his home airport. Sending out marketing emails to Swiss residents without knowing their language of preference is another illustration of the shortcomings that cannot be tolerated in Big Data marketing. These results stem from a combination of factors, including limited information and different customer-facing systems working in isolation.
A simple CRM e-mail based on a customer’s transaction history constitutes small rather than big data, for example. If the segmentation of a campaign factors in a previous destination but not the customer’s address, the message risks becoming irrelevant.
Big Data marketing draws on dozens of touch points and data sources to build a comprehensive profile of the customer and the marketplace. It is a more complex undertaking and harder to pull off.
A 360 degree view of the customer calls for integration between all facets of the business. “Airlines are very effective at collecting data,” says Matt Smith, Chief Technology Officer at enterprise management IT company, Software AG. “But it tends to be in silos and it doesn’t necessarily cross the different operational aspects of an airline.” Customer information obtained during the booking process isn’t necessarily available on the system that records inquiries at the check-in desk or complaints about baggage.
Linking these touch points is possible and solutions are available despite the legacy nature of many airline networks. But a second challenge lurks behind simply connecting disparate systems. Transactional data—including names, addresses, destinations, and class of travel—fits into a neat structure and is relatively easy to file, analyze, and recall. “But a lot of data isn’t so easily structured,” says Gabriele Di Piazza, VP Marketing at unstructured data management company HP Autonomy. “Unstructured data includes natural language interactions at call centres, records of clickthroughs and other website activity and user reviews on blogs and social media.” It’s this kind of data that can help really define the customer; what she is interested in and her retrospective thoughts on the product or experience. It can also be tracked in real time as the basis for personalized content, served on the fly as the consumer tracks through a website.
Again this is where the Googles and Amazons of this world have led the way. The behemoths of the Internet age have commercial models built on collecting the unstructured data from the millions of people who use their services every day. Google not only knows its customers through keywords typed into the search engine but also through an analytics engine that can track the journey of individuals across the web, building up a profile in the process. Amazon has transactional records coupled with an armoury of analytics and predictive software. Their commitment to understanding the customer reflects their Internet-pure origins.
Airlines have a different legacy, of course. Leaving that history behind won’t be easy but it is possible. Di Piazza cites Jet Airways, which is targeting offers and content at defined users, again basing the personalization on unstructured customer information.
A vision of Big Data
Such an initiative proves that airlines are catching up with retailers and Internet companies and beginning to embrace the Big Data concept. As Software AG’s Matt Smith sees it, the biggest challenge facing airlines is in understanding what can be done with the data and implementing a strategy. “The first step is integrating the data you have,” he says. “After that you need to visualise the potential of that data and then you have to deal with it.” If the vision is there, Smith believes there are real opportunities for airlines to differentiate themselves by adding additional services. Virgin Atlantic operates a taxi share scheme. It uses the data on airline records to introduce passengers who are staying at the same hotel, allowing them to share a cab and costs.
“It’s an add value service and I think there will be more emphasis on this,” Smith says. “But to achieve it you need to have the data and you need to integrate that data.”A world of possibilities exists for airlines and their customers. But it is a world running on Big Data. For airlines, that means collecting, analyzing, responding to customer information in a heartbeat.
The airline website will be transformed as a result and in time, even the indirect channels, opened up through the New Distribution Capability project, will be capable of providing what the modern customer has come to expect; a personalized offer in real time.