It is not a secret that airlines, especially low fare airlines, struggle with their customer data base (Rygielski, Wang & Yen, 2002). That is primarily because customer data management is not only about managing, it is also about acquiring and maintaining the quality of the data. Acquiring a customer data base is challenge one, which starts with registering the necessary information from the first contact onwards. Managing the information is key for having an integrated customer data base, using the information to deliver a better customer experience, create better products and target the market. Then lastly, is the maintenance of the data base. Data changes, from simple information as address and age, which is easy to update, to specific interests and needs of the customer.
As acquiring customer data is a time consuming and expensive activity, sometimes even requiring a special department to do this, it might be a sensible thing when companies identify their most profitable customer segment and take most care of acquiring detailed information on this segment, for example the business class flyers or members. The data on their most profitable segment in particular must be current, complete, correct and unique (Peelen, E. & Beltman, R. 2013). In this way new customers in the right segment (with the highest Customer Lifetime Value) have a higher chance to be generated if the extensive data on this segment is used effectively.
In the airline industry companies can make a detailed profile for their segment with the highest CLV and target these customers more, both for acquiring new clients and for retention. However, managing the data in such a way that this is possible is another challenge. The most crucial thing to have for an airline company is a good customer data base system, which can identify unique customers with correct information. Only then, the customer data base can be managed effectively, products are created based on accurate information, the customer experience will be accordingly and the right customers are targeted at the right moment and for the right product.
Unfortunately, little mistakes are made quickly in enormous data bases and this can make a customer feel unappreciated, such as an error in the spelling of their name. In addition, other information such as address is obviously even more important because advertising might be delivered to the wrong person. Without maintenance of the data, customers can be lost quickly. Variable characteristics of the customer need most maintenance, and this is a time consuming task. Therefore, focussing on the segment with the highest CLV is the most profitable way and investing less in customer data management for the segments that are less profitable or even cost airlines money.
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