First Published on 20th July, 2018
Ai Editorial: An attractive reward portfolio today should not only aspire to deliver a variety of merchandise, but also needs to offer different ways of redemption. This could mean a combination of miles and cash for redemption, using loyalty currency for payments etc., writes Ai’s Ritesh Gupta
Enjoying rewards, privileges or perks by using miles or points makes a loyalty programme attractive.
But for many, even if after spending money to attain a certain status or accumulating miles, there is always that gap that disappoints many when it comes to realizing what they had desired. While there are members who do gain rewards they desire, the vast majority of customers they either have to wait or even fail to redeem something of interest.
Airlines have been on-lookout for ways to bridge this gap.
The focus is on offering choice and flexibility when it comes to redemption. As asserted by Loylogic, an expanded and attractive reward portfolio today should not only aspire to deliver a variety of merchandise, but also needs to offer different ways of redemption. Airlines can do so by offering members of their loyalty programme access to miles/ points for their chosen online stores or allowing them to transfer their points onto a bank card and convert them into cash to shop anywhere they want.
Initiatives that exemplify this:
1. Counting on a combination of miles and cash: One area that airlines have focused upon is unredeemed miles. They need to deal with inactiveness or discontentment among members by being creative. There is scope for choice and flexibility and this should reflect in letting members spend, even a small amount of miles, on what they desired for.
In this context one trend that has emerged has been about offering a simplified option at the check-out, say one click or a tab, to pay with miles and also miles + cash to sustain the stickiness of a loyalty programme.
For example, the Lufthansa group has enabled members to pay in miles, cash, or a blend of the two. The group chose to strengthen its digital interfaces and made it simple by introducing new functionalities such as a slider. This way when a member accesses LH.com with their Miles & More details, they can choose the flight and tweak the number of miles they’d like to spend. Users can do the same by sliding the scale or also by sharing the number of miles. Members need a minimum of 7,000 award miles available in their personal mileage account. According to Lufthansa and Amadeus, the flight fare is broken from standard currency into part miles/ part cash, with different ranks. What this means for loyalty members is that they can their loyalty currency accumulated with ease. And the transaction results in new mileage. According to Lufthansa, this functionality has been introduced “for all revenue tickets and commercial classes, with the airfare calculation based on the total ticket price, including taxes and fees”. The challenges associated with tickets that were bought using this functionality included handling of a rebooking or a refund scenario involving a combination of both cash and miles.
There are airlines that are eradicating issues related to “shortage of miles”. Enrich the frequent flyer program of Malaysia Airlines, is enabling members of a loyalty program to acquire more of their program’s miles. So members can purchase additional miles online via an airline-owned channel.
2. Paying with loyalty currency on non-airline owned channels: Airlines have been extending the use of their loyalty currency in channels outside their own environment. So members can use their miles or points for an online purchase on a 3rd party site. Also, one can collect more miles while paying with money. For instance, SWISS Miles & More members is letting frequent travellers to use their miles or a combination of miles and cash to shop for Swiss household names such as Vögele Shoes and Magando.
This aspect of letting members shop on their preferred channels and still letting them use their miles is important. According to Loylogic, mature airline and coalition loyalty programs tend to see over 50% of miles earned through partners.
3. Being an integral part of a member’s lifestyle: Other than luxury, fashion or any high aspiration products, airlines are also looking at integrating their respective loyalty programs into a member’s everyday life. This could be for earning miles for fuel for your car or grocery shopping.
How are airlines going about rewarding travellers for their loyalty? Hear from senior executives at the upcoming #MegaAPAC (2018 Mega Event Asia-Pacific to be held in Bangkok, 28-30 August). https://lnkd.in/fTPx4xw
First Published on 17th July, 2018
Ai Editorial: Team effort and an iterative and phased approach have stood out in the way the likes of JetBlue, Lufthansa and Ryanair have gone about digitalization, writes Ai’s Ritesh Gupta
Airlines that have embarked on the path of digitalization are open to recruiting people from different backgrounds – VC, start-ups, data science etc. and encouraging their staff to think autonomously to innovate and validate at speed.
There are certain carriers such as Lufthansa and JetBlue that have chosen to incubate new, stand-alone digital ventures of particular strategic relevance. Among others, Ryanair and Air New Zealand have chosen to transform the digital experience of passengers by recruiting specialists in the arena of user experience (UX design), data science, product designers etc. These carriers started their journey of digitalization 2-4 years ago. There are already signs of how dedicated resources and investment are improving upon the passenger experience. And the approach of these carriers needs to be considered:
· Team effort: JetBlue, as a parent company, chose to assess the early stage start-ups via its arm, JetBlue Technology Ventures (JTV). The team at JTV not only evaluates the course of an early stage start-up but also links them with the parent company in take caring of pain points in the passenger experience. As explained by JetBlue in an interview with Ai, majority of the JTV’s portfolio “are companies that would work with JetBlue in 2-5 years”, even though some might begin commercial pilots in less than 2 years, and a small percentage of the portfolio includes moonshot investments. Among the list of companies that JetBlue has already chosen to work with includes Gladly for its customer service platform. The plan is to have continuous, real-time conversations through whichever channel they prefer at any given point of time. JetBlue chose to bank on a modern messaging interface that gives the airline the ability to communicate across channels. And Gladly asserts that the platform equips the airline with a passenger profile, not a case number. The customer service software captures the full history of every conversation. The output is a single conversation stream that brings human touch to serve a passenger in an earnest manner.
As for the approach of units like JTV or digital labs, the core team, including senior and experienced staff from the airline gets involved as early as possible. The work isn’t done in silos, expertise of various stakeholders involved – the airline, the VC arm or digital labs and the start-up jointly comes into play and eventually a specific solution for passengers is created.
· Iterative and phased approach: Ryanair has come a long way from an airline that was associated with ways focused solely on reducing cost. In fact, the shift to focus on digital assets is gaining traction as the airline’s "MyRyanair” membership has grown to 43 million. It was at 20 million or so in March last year. Also, the revenue generation by refining of digital assets is paying off, too. According to Ryanair’s annual results, the mobile and digital platforms have delivered a 13% increase in ancillary revenues (+4% per guest) to over €2 billion. Ancillaries accounted for 28% of revenue. Even as Ryanair has been focusing their digital retail platform, it needs to be mentioned that there could be shortcomings if the structuring isn’t handled properly.
If a full-service carrier intends to embrace a digital retail platform, then how should they go about drifting away from a heavy focus only on their process-centric IT system and bring in a business-critical digital platform? It is imperative to go after continuous delivery while running legacy systems, get closer to a series of quick wins in order to instil confidence in the organization and the digital platform has to be decoupled from legacy release cycles. There is a need to recognize the distinctive nature of digital platform economy versus traditional IT systems. “This may mean that the internal team is split into two parts so that it does not lead to confusion. It is very likely that airline will need to look for external partners to initiate digital platform strategy, just like Ryanair did,” explained Marko Javornik, VP/ GM Mobility and Travel, Comtrade Digital Services.
Javornik also underlined that the strategy is very important.
“Airline should be realistic in terms of what it can achieve. This means it should not try to compete with giants directly, but it also means it should not run away from ambitious plans. Another point of consideration is the significance of iterative and phased approach. Amazon started with books and then went to CDs and other things. The same applies to airline. Having a very small vertical slice working well can be immensely powerful. Building a kingdom in one go will probably fail in the digital world,” shared Javornik.
In an interview with Ai, ThoughtWorks also indicated that from a technical standpoint, the early digital initiatives are sustained via digital technologies that act as a 'shock absorber' between two systems running at different speeds. This ensures that neither system compromises the other’s speed and performance.
Hear from senior industry executives about the significance of running a digital platform at the upcoming #MegaAPAC - Mega Event Asia-Pacific (Ancillary, Loyalty and Co-Brand Conferences) to be held in Bangkok, Thailand (28-30 August, 2018).
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First Published on 25th May, 2018
Ai Editorial: Uniting all the sources of data, tailored dashboards for relevant teams and integrating the customer data platform with all the operational systems that airlines use it key to delivering 1:1 personalisation, write Ai’s Ritesh Gupta
How are airlines counting on data as a core asset? Is it improving a passenger’s journey on the day of the travel or during any phase?
It seems there is hardly action today based on data coming in from various touchpoints and sources. Even in the case of travellers who are flying with an airline, their queries in the middle of a journey are being addressed in a disjointed manner. For an example, a traveller’s flight gets delayed and promptly uses Twitter to convey to the airline that there is a connecting flight. Whether the airline is entitled to help or not, at least the airline can acknowledge the hassle that one has to go through at the time of boarding the connecting flight. It seems the staff is oblivious to the conversation that took place via Twitter. So even if the same passenger manages to catch the connecting flight by rushing to the gate, the staff managing the departure control system is simply clueless about the plight of this traveller.
There are certain questions that airlines need to answer:
· Can there be a sum of all interactions?
· Can there be one relevant dashboard, including one for the offline staff serving the passengers, to take apt decisions?
· How to respond to a query or a service request in real-time or in a seamless manner?
Here we assess 3 areas that need to be sorted:
1. Uniting data: A common challenge tends to be what to expect from a customer data platform. “Airlines first need to assess what kind of assets they have. So there tends be CRM, loyalty system etc. and along with this is their PSS, various touchpoints such as digital assets, city ticket offices, at the airport etc. So ensure the solution helps in uniting data from all the sources,” explained a source. “There is no need to do away with your CRM, but consider working out a customer experience management (CEM) platform. So CRM is where an organization could already be identifying and profiling passengers, how we bring it together and match it with data from the PSS, from loyalty systems and also make the most of data from social channels to craft a single view of the passenger. And then to operationalize after segmentation and working out of personas, the same (to operationalize) has to be done across all the touchpoints. So this CEM works in conjunction with all existing systems/ data sources for everyone to gain access to the single view of the customer. This CEM can be a foundation for customer-centricity, but airlines are on different paths. And this has to be studied closely.”
In case of JetBlue, a passenger doesn’t need to share their story or request again in case they are interacting via a company-owned channel or account. Because all interactions (say featuring a JetBlue account on Whatsapp, Facebook Messenger, Instagram etc. or an interaction at the airport or with a call centre executive) are captured and aggregated into a single conversational view of a customer. (This doesn’t encompass conversations from 3rd party sites). This solution sits on the top of a CRM and enables customer service. It can aggregate data on its own too – relating a profile’s social media handle, email id, phone number etc. So it’s an adaptable platform.
Airlines should start with data they have – whether they are loyal customers or not – from their own channels. Then over a period of time they can see how to work with 3rd party channels.
2. Tailored dashboards for different departments: The robust data management platform needs to support different use case functions. “Extract data as per the requirement and publish through analytics using business intelligence tools to work out a relevant dashboard say for the marketing department, or the finance team etc. So slice and dice for the relevant team,” mentioned the same source.
3. Passenger-facing touchpoints: Other than collecting data, organisations also need to gear up for decision making algorithms to handle increased complexity. Eventually, one would end up working out a key hub for business decisions to be made at scale. This should also encompass a dashboard for the airline staff to complement the interactions in the offline mode. A major differentiator would be how passenger are served at offline points. That’s a major facet of how the actual consumption takes place. So, for instance, a traveller had abandoned a ground transportation option at the time of booking a flight on airline.com, but didn’t convert. Can the airline take this forward on the day of travel, say via their staff at the airport? How can the screen (at the check-in counter or the boarding gate) share relevant, contextual information about the passenger?
On how would this work, a specialist mentioned that there won’t be two different monitors or main access points – one for usual departure control at the boarding gate and the other one featuring information about passengers. “This shouldn’t be the case. This is where the integration into the systems becomes very important. So if the airline staff is using the DCS and there is also CEM that has information about the profile of passengers, then the technology partner needs to streamline the interface for the staff by making extremely simple to use since there isn’t much time for one to interact with passengers. “It could be only few seconds (interaction with passengers), if we consider the paucity of time,” said the executive. “Integration is key, the staff at the boarding gate can open up a separate screen within their main access point. Alerts would hold the key. You can expect the staff to go through all the information about the passenger to deliver a personalized service. The robustness of the tool comes to the fore via a central hub for business decisions to be made at scale.”
Hear from experts and assess the journey of airlines at the upcoming Mega Event Asia-Pacific (Ancillary, Loyalty and Co-Brand Conferences) to be held in Bangkok, Thailand (28-30 August, 2018).
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First Published on 26th March, 2018
Ai Editorial: It is not easy for an organization like airline to collect data, unify it to work on a profile and "operationalize" into actionable data. But airlines are moving in the right direction, writes Ai's Ritesh Gupta
"If you are just looking at data, then you aren’t really doing anything. The problem is everyone sees data and don’t really take action," this statement from a senior executive from Hong Kong Express Airways is an apt answer to why airlines tend to lag behind in the race of data-driven decision-making.
One of the biggest gains that has emerged from what the likes of JetBlue, Hong Kong Express Airways, Finnair etc. have done over the last 18-24 months is their decision to start, be it for loyalty or customer service. Here are few examples:
Hong Kong Express Airways’ reward-U program: This lifestyle and loyalty program, launched in April 2016, had over 1 million members in 16 months. Serving a growing segment of Millennials, the program has been working on a plan to club members according to their preferences, behavior etc. and forming different tribes. The concept of “tribes” is based on overall activity, for instance, travel, retail, food etc. and a member can be in multiple tribes at any time base on a minimal level of activity. The team has been analyzing data and this new initiative is a direct result of spending pattern that the team has been observing in terms of consumption and activity. The team also asserts that they have been getting a picture of what people are doing, and the association with a low-cost airline doesn’t mean that the members are "low spenders". They are high spenders. They might save money on airfares, but they can spend (relatively lot more) money on accommodation and so forth. Their retailing activities are not low-cost either, can be termed as high-spend. They are bargain hungry but not averse to spending, too.
The airline decided to take specific learnings from data, chose to act on it, and then observed what happened. "We try to experiment from what we are seeing, try to stimulate activity or some type of behavior. Rather than accumulating data in huge amounts, we are taking snapshots and acting on it," shared a senior executive from the airline.
JetBlue's focus on customer service: JetBlue today is able to aggregate a single view of the customer (on service channels). So all interactions (say featuring a JetBlue account on Whatsapp, Facebook Messenger, Instagram etc. or an interaction at the airport or with a call centre executive) are captured and aggregated into a single conversational view of a customer. The airline is looking at adding information to the “profile” of a traveller. Their platform sits on the top of a CRM and augments customer service. It can aggregate data on its own too – relating a profile’s social media handle, email id, phone number etc. By capturing data and maintaining profiles, any organization can move from mass personalisation to macro personalisation to micro personalisation, and eventually to analytics-driven personalisation.
Finnair's journey of personalisation: Finnair also has been on the path of moving from rules-driven personalisation to an analytics-driven phase. The team is clear that every time passengers interact with the airline, the team ends up learning more about them. The focus is on behavioural profiling, demographics and personal data, as well as historical and preference data. The airline has been displaying targeted content based on segmentation analysis, dynamic content for the upcoming flight (ancillary up-sell) etc.
Hear from experts at the upcoming Ancillary Merchandising Conference, to be held in Edinburgh, Scotland this year (9-11 April, 2018).
For more info, click here
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First Published on 13th February, 2018
Ai Editorial: JetBlue Technology Ventures (JTV), the corporate venture capital arm of JetBlue, not only understands the trajectory of an early stage start-up but also partners with the parent company to find innovative technology solutions that resolve pain points from the customer journey. Ai’s Ritesh Gupta learns from JTV’s Christina Heggie how the efforts are coming along.
As travel brands find themselves in the midst of what is being described as the “Fourth Industrial Revolution”, the race – to survive or to innovate as a business, to excel in the arena of customer-centricity, to outrival competitors – has clearly intensified.
In today’s era of “datafication” and unceasing connectivity, businesses have to consider a broad swath of technologies to serve travellers optimally; how to be part of the trends including the Internet of Things, data science, artificial intelligence etc. so that these businesses can emotionally connect with travellers?
Imagine what needs to be done in real-time to make every interaction with a traveller contextually relevant and personalized.
Companies today are trying to solve the issue of a digital identity in a connected world, understanding each and every click, evaluating unstructured questions, considering past interactions and buying patterns, and coming up with a relevant answer or deal via the customer’s chosen touchpoint in real-time. Yes, the conundrum is riddled with complexity, but that’s what the race is all about. Owning the customer data and shaping up experiences that fit in perfectly within the passenger journey.
So where do airlines stand today?
If one were to assess the parameters of knowing about a traveller/ customer and having a say especially in the early part of the booking funnel, then airlines lag behind. That has been the story for years, but now the gap, with front-runners being the likes of Google, Amazon, Facebook etc., will increase if airlines don’t respond.
She asserts that it is imperative for travel providers, including airlines and hotels, to gather customer data in a single database or warehouse, build on it with additional customer insight, and accordingly make progress in the right direction. “If a company can’t access their own customer data, record behavior, analyze purchase history and access all information in a single repository, then we (airlines) can’t even get close to attaining customer-centricity.”
While data platforms, or even marketing technology and automation tools, have been around for a while, airlines have rather been slow to act. And a lackadaisical approach wouldn’t help as trends like artificial intelligence-powered booking are gaining momentum. So even as there are promising developments such as voice-powered search or immersive virtual reality experience that can make it much easier to plan a trip, airlines likely have a number of steps to take before they’re able to deliver a seamless travel journey.
Heggie acknowledged that factors such as legacy technology and a siloed approach to decision making have for long bogged down the functioning of carriers but it is time to brace up for the future. Other than transforming themselves as organizations to embrace digital agility, airlines also need to be a part of the emerging digital API ecosystem. It is important to note that today’s digital economy works through a platform economy model.
Being part of an innovation curve
It’s been almost two years since JetBlue, as a parent company, chose to incubate, invest in and partner with early stage start-ups via JetBlue Technology Ventures (JTV). The team at JTV not only understands the trajectory of an early stage start-up but also partners with the parent company in removing pain points from the overall journey of travellers. In all, there are around 16 portfolio companies that JTV is associated with. Heggie shared that the majority of the JTV’s portfolio “are companies that would work with JetBlue in 2-5 years”, even though some might begin commercial pilots in less than 2 years, and a small percentage of the portfolio includes moonshot investments. Airlines are adept at doing what they have been doing over the years, and since operations are process-centric and complex, it can be challenging to divert resources into new innovation projects. “So we would typically interact with the JetBlue team, bring about the new offerings in front of them, and get closer to a point where start-ups would be ready to work (with an organization of JetBlue’s stature and size),” explained Heggie.
So, whether capitalizing on artificial intelligence for trip planning (via partnership with Utrip, a destination discovery and planning platform that helps in crafting a personalized, hour-by-hour vacation itinerary) or counting on big data to predict airfare (via FLYR) or keeping track of all interactions related to customer service taking place on a JetBlue-owned channel (via Gladly), JetBlue is ensuring that it is preparing for the future through partnerships and pilots that steadily lend a new dimension to what it has to offer as an airline.
Overall, the team at JTV focused on five investment themes which include a seamless customer journey; technology-empowered service; the future of maintenance and operations: innovation within distribution, loyalty and revenue management; and evolving regional transportation models.
JetBlue’s own ecosystem
It is being highlighted that certain companies are controlling the top part of the travel planning funnel, and airlines are increasingly relying on 3rd party sites for traffic generation. Heggie says there are clearly limitations to what technologies companies can do in this sector, and one of them is having a say in the actual consumption of the travel product. “If our customers don’t care about us as a brand, then we are just another airline and risk becoming simply a commodity transporting them from point A to B,” says Heggie.
And if airlines intend to have a bigger say in the booking funnel, including monetization via targeting the “second wallet” in the era of “Fourth Industrial Revolution”, then crafting one’s own ecosystem is must. We assess one example of how JetBlue is gearing up for the same:
“Customer service is one of the areas that JetBlue has always been laser-focused on, and we wanted to find technology that would truly transform customer service, delivered by a company that puts people at the heart of what they do,” said Heggie. Today this initiative has progressed to a level where it complements tracking every interaction on JetBlue-owned channels and then linking with a “profile” of a traveller. “We chose Gladly in order to aggregate a single view of the customer (on service channels). So all interactions (say featuring a JetBlue account on Whatsapp, Facebook Messenger, Instagram etc. or an interaction at the airport or with a call centre executive) are captured and aggregated into a single conversational view of a customer. (This doesn’t encompass conversations from 3rd party sites). This means a passenger doesn’t need to share their story or request again,” said Heggie. “This offering (from Gladly) sits on the top of a CRM and enables customer service. It can aggregate data on its own too – relating a profile’s social media handle, email id, phone number etc. So it’s an adaptable platform that way.” There are multiple benefits of this approach:
The company is also constantly evaluating other trends, for instance, blockchain technology. One of the beneficiaries has been Filament. The company’s decentralized network stack allows any device to connect, interact, and transact value independent of a central authority. The focus is on asset management, and JetBlue believes the solution’s smart contract capabilities can contribute in operations of airlines by tracking of assets. Heggie expects blockchain technology to play a significant role in loyalty, travel distribution and payment space.
Standing out in the race
As it turns out, JetBlue is taking rapid strides to stand out in the race. By adopting the corporate venture capital model, the team is focused on strategic returns in today’s world of rapid innovation. And the outcome is expected to be robust – removing pain points from the journey of the travellers, and being in control of the dialogue with the customer.
And the culture of learning and testing with the entire organization involved is a major pillar. “The goal is to learn from the start-ups, strengthen the JetBlue ecosystem, and pave way for these start-ups to transform our industry,” concluded Heggie.
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First Published on 30th January, 2018
Airline loyalty programs are too heavily skewed towards “true frequent flyers”. Is it time for full-service carriers/ alliances to open up their proposition to the segment of infrequent travellers? Be it for such move being fuelled by the need to grow the program further or being creative enough to include the segment of infrequent travellers to capitalize on the opportunity, it is being asserted that it’s time airlines look into this issue. So how about serving a passenger who doesn’t travel 30 times but say 10 times, and adding them in the loyalty-fold.
As Comarch’s Piotr Kozłowski, VP Consulting, Airline, Travel Loyalty, highlighted during the recently MegaEvent in Palm Springs, California, there is a high-yield traffic of “very frequent travellers” and for them association with the brand is about comfort, privileges and they are looking for status recognition rather than rewards. The second set is of “frequent travellers”, who have high purchasing power, are looking for recognition and privileges, in search for broad accrual possibilities, combining various loyalty programs (FFP and retail) to achieve economy of scale effect. And then there is a group of occasional travellers or infrequent ones that are not being addressed by a typical loyalty program. “They tend to be the target of multi-partner loyalty schemes, they are eager to gain a variety of accrual and redemption options, have desired redemption on award flights,” said Kozlowski. FFPs require strategy for this segment in order expand their customer base and market position.
How to open up the proposition for such set of travellers? Hear from Kozlowski, who also spoke about learnings from Norwegian’s CashPoints, in this video.
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First Published on 3rd January, 2018
The role of mobile in the realm of loyalty should be seen as that of an ally. Loyalty is being a part of one’s lifestyle, which would mean a brand would end up building trust and a positive emotional connection. And since mobile is a personal device, it needs to counted upon as that key that would work for the loyalty program member – may be that perfect holiday recommendation or using a preferred payment wallet for shopping featuring airline co-brand card.
FFPs or airline loyalty programs, just like any app on mobile, have to make an impact with the first interaction. It is surprising, but yes, onboarding successfully when an app is opened first time is a huge challenge for brands even today! Similarly, the timing and utility of each push notification has to be spot on. Also, there are certain markets featuring relatively cheaper or low-end mobile devices, where the usage of app can be an issue, so how should airlines go about mobile web development, and ensure any sort of log-in is capitalized upon to offer value to return, loyal visitors.
At the same time, mobile doesn’t mean that travellers are bombarded or presented with irrelevant messages, says David Feldman, Director - Loyalty & Reward Program Strategy, Catchit Loyalty. He also added that not many travel brands are capitalizing on the prowess of artificial intelligence and machine learning. Any piece of content, be it for an ad, offer or a message, needs to blend the profile of the traveller with contextual signals that a device like a smartphone offers. So a traveller, on a trip with his family, could be offered a ticket to an amusement park, depending upon the previous trips, location, time of the day, social context etc. via a loyalty app being used.
By Ritesh Gupta
Ai’s 2018 Events - www.aieventdates.com
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First Published on 1st January, 2018
Ai Editorial: The prowess of data in uplifting the performance of loyalty programs is increasingly coming to the fore, be it for fostering a positive emotional connection with members or working out a viable financial model, writes Ai’s Ritesh Gupta
For airlines, any opportunity that can improve the performance of their FFPs needs to be grabbed since the lure of flying for free, an upgrade or making the most of loyalty currency means travellers tend to have high expectations from their FFPs. In order to meet these expectations, airlines need to count on data. We look at some of the critical areas, especially considering the fact travel marketers acknowledge the challenges associated with personalizing offers, content, and experiences based on data:
1. Preparing for digital API economy: Airlines aren’t agile enough to embrace change. But sticking to this approach isn’t going to help, as digital API economy will not make an exception for airlines. Imagine, a loyal traveller interacting via a chabot on Facebook or WeChat, and the preferences of the same traveller along with all sorts of data – loyalty, merchandising, fare, schedule, availability etc. being combined to work out the best possible set of recommendations. The more data you will have and the more systems you will have in your digital ecosystem, the better proposition you will have for your customers. Also, other than 3rd party ecosystems, airlines also need to dig deeper into their own platform strategy, because such economy works through a platform economy model. In a recent interview with Ai, Evert de Boer, Partner at FFP Investment and Advisory, pointed out that akin to the characteristics of digital disruptors, such as Uber and Airbnb, FFPs, too, don’t own the physical assets and are in a position to capitalize on data analytics and predictive modelling based on rich datasets that such programs have worked out. “Typically operating in a digital environment, (FFPs) it is a very agile business (and in comparison far more agile than a typical airlines business),” he said.
All of this is extreme importance as there will be no single customer journey. So in order to build affiliation, the loyalty programs need to be a part of the connected world.
Specialists also point out that organizational structure needs to be in place for various stages of the digital strategy – right from defining digital transformation mission to finalizing priorities to implementing them, and then also assessing the role of a digital business unit that eventually pave way for innovative offerings. So airlines need to evaluate areas such as structure, leadership, talent, operating model etc. to succeed as digital enterprises and in turn foster loyalty.
2. Reimagining loyalty with data: Data strategy is of no use if airlines can’t act on it to offer value to members or for competitive advantage. “We take specific learnings and then we act on it, and then observe (what happens). The problem is everyone sees data and don’t really take action. We try to experiment from what we are seeing, try to stimulate activity or some type of behavior,” says Hong Kong Express Airways’ reward-U program CEO Steven Greenway.
Here are few use cases:
· Offering value: Hong Kong Express Airways is working on the concept of “Tribes”, based on overall activity, for instance, travel, retail, food etc. and a member can be in multiple tribes at any time base on a minimal level of activity. This is scheduled for Q1, 2018. Tribes is about recognizing your everyday spending and everyday activity patterns. So if a user prefers to go out, they could be a part of wining and dining tribe. When combined with some of the existing activities such as relevant and personalized loyalty communications, this can result in strong engagement.
· Customer acquisition: Loyalty data can help in overcoming generalized assumptions. Blending data from CRM programs and other sources and integrating it with a loyalty solution can help in understanding customers. According to Merkle, organizations can dig deep to assess the profiles of their “best customers”, and then build on it further via data-driven look-alike modeling. So by partnering with 3rd party ecosystems or other companies, airlines can sharpen their customer acquisition based on real customer attributes.
3. Capitalizing on prowess of mobile devices: Travel companies need to capitalize on contextual signals that a device like a smartphone offers, and blend it with attributes or data available about a loyalty program member for them to avail an offer or even enable them to plan or book a trip. For example, a traveller tends to book in specific months and going by previous trip details (social context, price, destination etc.), how about an offer or a reward with all loyalty status details or possibilities of using the currency? In fact, the option to be rewarded from everyday purchases has opened up the realms of the FFP even to the average or infrequent traveller, how about incorporating traits of one's lifestyle and even coming up with a relevant content and deal? So, for instance, a co-brand card is used for a specific event, such as tickets for a ballet concert. How about considering the same and offering a similar ticket in a new destination? Interacting with a known traveller and better even if one can predict their needs, it would be incredibly powerful when it comes to building loyalty. It is imperative to assess how and where travellers expect to be engaged on their own terms; as they are hardly disconnect from their personal device such as mobile. So airlines need to shift loyalty rewards and experiences to smartphones, digital channels and social platforms.
4. Data and financial model: Behavorial and demographic segmentation, spend-level analysis etc. all have a role to play in working out the financial model of the program. And with better data, this can only sharpen the viability and profitability analysis. The model design depends upon various factors, and the sort of data available is one of them. As Merkle points out, airlines or loyalty team can feature passenger segmentation from custom data to study the impact that various customer segments have on four main summary metrics – enrollment, revenue, cost and profitability. Overall, a deeper study of member behavior can one to precisely assess how members’ accrual, redemption and engagement would change as the terms of the loyalty program get amended.
5. Data and redemption: Retailers are relying on data analytics techniques to evaluate rewards. Similarly, airlines can also study the efficacy of redemption options via a statistical experimentation technique (data scientists alert that a wrong group of travellers can also result in sampling bias). Plus, analyze the effectiveness of each reward and figure out the incremental revenue as well. Then also further study behavior before and after the redemption activity.
Other than working on simple earn and burn policies, paving way for fast and frictionless redemption experience and offer instant, relevant, contextual options for redemption, airlines need to gear up for latest developments in the arena of data, analytics, cloud, APIs etc. and how cognitive technologies can lend new dimensions to an organization’s ability to make sense of voluminous data to reimagine loyalty going forward.
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First Published on 18th December, 2017
Ai Editorial: Counting on computing power, algorithms, airline-specific IT offerings, front-end technology and customer profiling will lend a new dimension to personalisation, writes Ai’s Ritesh Gupta
Airlines are attempting ways to differentiate their offerings, and serve them to today’s always-connected travellers as per their preferences and the propensity to spend.
There are 5 factors that would contribute in taking web personalisation deeper from here on:
1. Computing power: It includes both the personal device being used by travellers including mobile devices as well as the power underlying the server infrastructure readily available in the cloud, says Kenneth Purcell, CEO, iSeatz. These elements are become cheaper with the passage of time and the trend continues. The mobile phone is a highly personal device, and offers an opportunity to capitalise on certain innate features, such as location. So the blend of device plus user profiling can result in contextual recommendations. So information such as the time of the day, weather, location etc. can be used for personalisation. A mobile device has a massive computational power, plus it has camera, location-specific features.
As for moving infrastructure into the cloud, it is time to leverage today’s technology at a much lower cost, and avail the benefit of scaling it up. Airlines consider factors such as such as security (the role of technologies such as encryption and tokenisation comes into the picture) as well as connecting legacy applications to the cloud at enterprise scale. Travel searching is heavy, and organizations are moving swiftly in this direction. Among airlines, American Airlines has decided to migrate to cloud a quota of their crucial applications, including aa.com, mobile app and network of check-in kiosks. The plan is to enable developers to swiftly set up and modify application functionalities for American’s passengers. These customer-facing systems will be on cloud. The cloud business model that the airline has chosen is a hybrid one.
2. Algorithms that run the sort order pertaining to the results that are being shown and how does that intersect with business rules, so that two of them in harmony as per the objective laid and outcome expected by an organisation are getting sophisticated in web personalisation. They can also be categorized – basic one such as showing what’s popular on the site to what’s new. Then there is collaborative filtering. Depending upon a user’s engagement with various products, say destinations chosen, bundles or ancillaries, they are clubbed into a group of users with similar likes and dislikes. Recommendations are crafted accordingly. Also, the sort of data that helps in personalising digital experience includes the source of traffic or acquisition data, anonymous visitor data, profile data as well as real-time interaction with the website. The process of serving anonymous passengers starts with some level of contextualisation – once a prospective traveller accesses a website or a mobile app, enters city-pair, dates, type of travel (family, with kids etc.), then algorithms can match them against pre-set customer segments and serve offers accordingly. At a deeper level, airlines can also focus on precise preferences, adding them for each user via deep behavioural tracking (a bunch of factors are considered - mouse movement, scrolling etc. + IP address, geo-location, device type etc. + other signals) to sharpen algorithms and make them even more relevant.
3. Sophistication of airline-specific engines: For any airline if their systems or engines get smarter over a period of time, then they are bound to come up with better recommendations or offers. And travel technology companies are looking at using data better, for instance, letting merchandising rules deliver better results. Similarly, the industry is looking at consistency in terms of what they have to offer, another engine - for shopping and pricing – would be the way to go forward, capitalising on all sorts of data – loyalty, merchandising, fare, schedule, availability etc.
4. Front-end technology: it is making rapid advancement in the industry. “This is significant in terms showing the different search results, how the entire page is rendered and paving way for segmentation all the way to user experience. So looking at the APIs, all of this needs to support sorting of the inventory, that is being outsourced, is done in a way that it is relevant for the user and the front-end is a layer on top of it. This would include using 3rd party tools or working them in-house to set up front-end in a more personalised way,” says Purcell.
E-commerce specialists point out that the efficacy of content management systems is coming to the fore when it comes to managing, personalizing, publishing, viewing and comparing different page versions. How to create create large web applications that use data which can change over time without the need to reload the full website? (Speed is an important element – a case study of how travel search engine Wego counted upon Google’s open source initiative called Accelerated Mobile Pages (AMP). In case of Wego, page-load speeds came down from more than 11 seconds to less than one second. AMP pages are stored in Google’s cache servers and load in milliseconds).
5. Preparing for customer profiling and 1to1 personalisation: “For 1to1 personalisation, factors such as “too hard to do it” or “too much storage is required” need to be done away with. The truth of the matter is there are lots of tools out there that make it easier to do it (whether its analytics provider tailoring the user experience on an individual basis or an organisation decides to develop the infrastructure in-house, open source frameworks pave way for the same, and even storage isn’t an issue today),” Gillian Morris, CEO, Hitlist told Ai in a recent interview.
It is imperative to bank on 1st party data. “(Data strategy) It’s not about how much data you have (and big data is inherently a vague term - how big is big?), but rather the quality of the data you’ re using. Travel companies that focus on loose intent signals from many different providers are acting on weak cues that might be misleading. The ideal situation would be to generate enough data within your own user ecosystem to truly understand where and why people are planning to travel. Google, Facebook, and theoretically Apple have the biggest leg up here,” asserted Morris.
As for the journey of personalisation, as explained in this article, start with segmentation and make steady progress to rules-driven personalisation. This means setting up and further reworking on business rules that are utilised against clusters of visitors, based on information one can garner about users. The second major component is progressing toward algorithmic personalisation, where one initiates with a relatively broad set of recommendations to ones that are specifically meant for an individual.
Interplay of all 5 aspects
Eventually, the interplay of all these 5 aspects – computing power, algorithms, personalisation and front-end technology come into play to deliver a relevant, contextual, personalised experience. For instance, the benefits of knowing a customer – not only steps up the conversion rate, but it also means less time spent on browsing, taking a decision faster on an airline’ site, and this would also cut down on the server cost.
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First Published on 12th December, 2017
1to1 personalisation is the only way to know your customers best, and factors such as “too hard to do it” or “too much storage is required” need to be done away with.
“The truth of the matter is there are lots of tools out there that make it easier to do it (whether its analytics provider tailoring the user experience on an individual basis or an organisation decides to develop the infrastructure in-house, open source frameworks pave way for the same, and even storage isn’t an issue today),” says Gillian Morris, CEO, Hitlist.
“The ideal situation would be to generate enough data within your own user ecosystem to truly understand where and why people are planning to travel,” says Morris. “Once you have a user-specific data, you can understand the purchase journey and also what to recommend. Once you work on a profile of a user, you can understand travel habits and accordingly recommend something relevant, contextual,” she says. So rather than just spotting one destination that a user is looking for and coming up with generic offers for that destination, one can also understand what a user is looking for “something warm over the weekend in Miami”. Morris says, “People dont opt for a destination, they go on a trip. In addition to destination and price, equally important are timing (say weekend vs. weekdays) and social context (family, individual, colleagues etc.).”
Some of Morris’ recommendations are as follows:
1. Assess what travellers are looking for
2. Collect data, ask for it
3. Offer value
4. Leverage social connections
5. Create accounts
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