While the aviation industry continues to grow at an incredible rate, many airlines face intense competition. Once companies could differentiate themselves by price or service, but in nowadays market, with over 5,000 airlines worldwide and more than 3.6 billion yearly passengers, the key to success is a customer centric CRM strategy.
Carly Chynoweth, a freelance business and management journalist, indicates that consumer needs have witnessed in a significant shift in the recent years, leading to higher service expectations. However, many companies fail to think innovatively about what their customers actually want, and tend to talk more about being customer-focused than actually implementing it in the core strategy (Chynoweth, 2015). Particularly in the airline industry, being customer centric can help companies reduce costs, gain loyal customers and increase revenue (Birdsong, 2015), but it also means delivering offers, services and products based on their desires, providing individual treatment to clients, and ‘walking the extra mile’ to enhance their experience. In fact, in today’s market, delivering great customer value in the aviation industry is not anymore an option- whether flying with a low cost or luxurious service provider, passengers will gladly change the company for better service.
Low Budget Airlines
One of the companies that has been widely known for its low costs as much as for low service provision is Ryanair. Headquartered in Dublin, Ireland, over the years Ryanair has gained a title for being the ‘world’s most hated airline’ (Business Insider, 2010). The company’s solely sales-driven business strategy, the lack of customer management, frequent flyer programs, customer accounts and segmentation were some of the main drives for low customer experiences, yet the company still remained among the most popular European airlines for its low fare. However, as the customer behaviour began to change, and the company sales dropped significantly, Ryanair started to move towards raising the customer service bar by using current technologies to simplify the booking process (Mitchell, 2015). For Ryanair, and other low-budget businesses in the airline industry, a rising need for customer engagement and improved service are major challenges that require a carefully planned CRM strategy. Nevertheless, they seem to be successfully incorporating customer insights to reduce the gap between low and traditional service providers.
A more upmarket airline that has also dealt with challenges in the industry is KLM. Since 2001 more traditional airlines suffered from weak demand because of the emerging low budget competition, such as previously mentioned Ryanair. KLM started cutting the costs, but soon discovered that this would not ensure long-term success. Dutch airlines decided to stabilise its market position by changing its CRM vision, mission and strategy. Personalised and consistent service delivery, customer profitability based steering and being a customer centric organisation represented the three district strategic pillars of company’s long term goals (Riseley, 2004). Soon after the plans were put into action, KLM witnessed the success in the market, and was acknowledged for its comprehensive CRM strategy (Gartner, 2004). Customer focused initiatives aimed at enhancing the travel experience, such as Meet & Seat, Lost & Found, continue to be at the core of KLM, leaving its passengers more than satisfied with the service received.
To summarise, the developments in consumer behaviour, and their preference for higher service has had a significant effect on the airline industry. Both, low budget and traditional airlines show that customer centricity is gaining high importance in today’s business world. It does not only give a competitive advantage to the company, but has become a tool in creating unique experiences, increasing customer satisfaction, growing market share, and, above all, stabilising the customer relationships between companies and clients in the airline industry.
Birdsong, D. (2015). Customer Bonding: Why Customer-Centric Airlines Will Lead The Industry. Retrieved 09 17, 2016, from Ascend: http://www.ascendforairlines.com/sites/default/files/12-Customer%20Bonding.pdf
Business Insider. (2010, 12 02). The 10 Worst Airlines In The World. Retrieved 09 17, 2016, from Business Insider: http://uk.businessinsider.com/worst-airlines-in-the-world-2010-12?r=US&IR=T#1-ryanair-10
Chynoweth, C. (2015, 09 08). Putting customers at the centre of business. CUSTOMER EXPERIENCE & LOYALTY .
Gartner. (2004, 05 10). KLM Royal Dutch Airlines Wins Gartner CRM Excellence Award 2004 . Retrieved 09 17, 2016, from Gartner: http://www.gartner.com/newsroom/id/492030
Mitchell, N. (2015, 06 14). Ryanair (Finally) Discovers The Benefits of Customer Service. Retrieved 09 17, 2016, from MyCustomer: http://www.mycustomer.com/community/blogs/customer-technology/ryanair-finally-discovers-the-benefits-of-customer-service
Riseley, M. (2004). KLM Demonstrates the Power of Persuasion to Drive CRM Success. Stamford: Gartner Inc.