Qantas Airways uses mobile customer engagement to increase customer loyalty

“Moving loyalty schemes to smartphones is the obvious next step, as it means customers have access to the brand or retailer’s latest deals and their scheme membership wherever they are” (Pritchard, 2015).

Channel preferences have changed overtime and consumers expect to use a broad variety of communication channels when searching for new products and services. With technology changing drastically, airlines have transformed the way they manage their customer base and engage consumers. Even though customer relationship management software has been around for some time, there is a growing trend of implementing mobile apps for customer relationships. Mobile users are inviting airlines into a more personal aspect of their lives as they have been using their phones like extensions of who they are. From this new dynamic, it means that the airline industry can develop deeper connections with their customers through digital channels.

The CRM strategy and multichannel approach should lead the development of the mobile channel. It is quite easy to get carried away when it comes to technological features and possibilities, but it should be more about supporting the customer experience. If consumers can use mobile channels to book flights or make payments on the go easier and safer then customer value is being created (Peelen & Beltman, 2013). Creating a personalized experience through mobile apps is one element of the digital arena that will become even more important in the future. Airline mobile apps have become popular because services such as check-in and electronic boarding passes offer an immediate benefit to the passenger experience. To encourage app usage, airlines need to think beyond simple promotions, and look at integrating technologies; including mobile payments and location awareness, so the app knows if you are at home, at work or travelling.

An airline that has surpassed its competitors is Qantas Airways who is creating customized experiences and offers through their mobile apps. Since 2007 Qantas has made a major push by collecting and analyzing their customer’s behaviors, preferences, purchases and demographics to increase sales and customer engagement. Prior to their flight, passengers can download their favorite newspapers and magazines in more than 60 languages, from across 100 countries. Once a passenger downloads the Qantas App on his or her smartphone, passengers can read it anywhere, anytime. Additional to this is the Qantas Joey Play box which is an app for children that encourages them to design their own airport, help prepare the runway for planes to take off, collect baggage, and decorate digital paper planes, postcards and bags. They can also scan their Qantas boarding pass to unlock additional features for the planes and postcards, which they can then share with friends and family (Sydney, 2015).

To conclude, airlines can own their relationships with their customers by creating timely, relevant and customized content to maximize customer engagement. Today it is not enough to only know who your customers are but also where they live, travel, shop and how much time they spend on their trips. Using mobile engagement to create customer loyalty will be a useful tool in the airline industry as it helps to personalize their travel experience. Customers will see your company as more than just airline but more of a human organization that is capable of listening to their needs and desires.

 

Bibliography

Peelen, E., & Beltman, R. (2013). Customer Relationship Management. United Kingdom: Pearson Education Unlimited.

Pritchard, S. (2015, 9 8). Loyalty schemes must keep pace with mobile. Retrieved from Raconteur: http://raconteur.net/business/loyalty-schemes-must-keep-pace-with-mobile

Sydney. (2015, 12 22). Qantas Designs Kids Ipad App just in time for the holidays. Retrieved from Qantas News Room: http://www.qantasnewsroom.com.au/media-releases/qantas-designs-kids-ipad-app-just-in-time-for-the-holidays/

Sydney. (2016, 3 21). Qantas Frequent Flyers to earn points for ‘walken’. Retrieved from Qantas News Room: http://www.qantasnewsroom.com.au/media-releases/qantas-frequent-flyers-to-earn-points-for-walken/

 

The relevance of RFM Segmentation in Customer Loyalty within the Airline Industry

What if you knew the exact number of customers who have purchased with you recently? What if you also knew how often they have purchased and how much they have spent? You may be wondering how all of this information would help your company in the long term. By segmenting your customer database, you would be able to focus directly on customers who most likely would find your offers suitable to their needs and desires.  

As the airline industry grows, segmenting your customers can significantly enhance your marketing performances, making products and services more relevant to more of your customers. The goal of segmentation is to approach customer groups in a differentiated manner so that they become more satisfied, loyal and spend more with the supplier. But, before you get to know who your best customers are you need to identify them by understanding their historical actions.

According to (Peelen & Beltman, 2013), direct marketers find that behavioral segmentation produces the most useful results. Behavior observed in the past appears to be a better predictor of future behavior than pronouncements made by customers regarding their purchasing intentions and attitudes. And that is where the customer segmentation technique called RFM analysis can help airlines maximize the return on their marketing investments.

The RFM analysis suggests that each customer is scored based on three attributes, specifically Recency, Frequency, and Monetary value.

•Recency: The most important factor of customers who have purchased recently from you and are more likely to purchase again.

•Frequency: The second factor is how frequently these customers have purchased from you because the higher the frequency, the greater the chances are of them responding to your offers.

•Monetary: The third factor is the amount of money these customers have spent on purchases, this is a great way to distinguish heavy and light spenders.

To calculate RFM scores, you will need the values of the three factors such as most recent purchase date, amount of transactions followed by the total number of sales for each customer. For example an airline may follow a system from 1 to 5, with 5 being the highest score. By choosing this method of scoring, customers who purchased a ticket within the last month will have a score of 5, customers who purchased a ticket within the last 1-3 months will have a score of 4 and therefore you can continue scoring. Likewise, the frequency is calculated based on the amount of times a customer has purchased so the higher the frequency the greater the score. Lastly, the last scoring is based on the amount that a customer has spent which is calculated by the actual amount spent per visit. To receive a final score, you must then combine all three scores and the customers with the highest scores are considered to be the ones most likely to respond to your offers.

After this, airlines can take the results and form RFM segments for example frequent travelers, business travelers or even budget travelers. In this case airlines can focus on frequent travelers as they are a more lucrative market who tend to fly more often throughout the year.

Customers who have a high overall RFM score but a frequency score of 1 are new customers. Airlines should then provide special offers for these customers in order to increase their booking behavior. Customers who have a high frequency score but a low recency score are those customers that used to book quite often but have not been travelling recently. For these customers, airlines should then offer promotions to bring them back to frequent travelers, or can also run surveys to find out why they have not been travelling recently.

Ultimately, it is apparent that the RFM analysis is a powerful segmentation technique that allows you to identify your best customers to create better marketing performances. It will increase customer loyalty while increasing response rates, customer retention and sales revenue.

Bibliography

Customer Segmentation Using RFM Analysis. (2014, 11 26). Retrieved from Gain Insights, Better Decisions, Better Solutions: http://gain-insights.com/solutions/retail-analytics/customer-segmentation-using-rfm-analysis/

Peelen, E., & Beltman, R. (2013). Customer Relationship Management (Second Edition). United Kingdom: Pearson Education Benelux BV.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Future of Customer Service through Co-Creation in the Airline Industry

Let’s face it, customers are the new visionaries of today and developers have shifted the traditional boundaries between organizations and clients into solutions for meaningful customer experiences.

As technology has emerged at an expeditious pace, many airlines have issues to think outside the box in order to develop innovative ideas for new products and service. Overtime they have realized that it is better to team up with their customers to co-create new concepts in the industry.

An example of co-creation can be found in Delta Air Lines, who has been voted number 1 for the fifth year in a row in the U.S. Based Business Travel News. Delta scored highest in all ten categories, including “Quality of customer service”, “Overall price frequency” and “Network, partnerships and frequencies” (Skrbec, 2015). Delta Air Lines believes that its customers are a part of everything that they do and so they have applied the DART Principles such as Dialogue, Access, Risk and Transparency as well as the steps to guide Co-creation to enhance customer engagement.

According to Weber (2011), successful co-creation starts with formulating “a precise question” to the appropriate level of detail. In the example of Delta, their online community called Sky Panel was created with the goal to interact with their customers in an iterative environment to develop new products and services that catered to their customers needs. The next step is “proper phasing”, which is the second step that requires dialogue in the phase of the innovation process. In the example of Delta, participants are presented with a challenge that asks them to use their inner creativity to solve a problem by submitting ideas as an interactive fun way to come up ideas for products and services.

The third step is to “involve the right people” during the idea phase which is interesting for the organization because they can include a number of people from a wide variety of backgrounds. However according to (Peelen & Beltman, 2013), during prototyping and testing, the number of people involved should be limited and their background more classically oriented towards the requisite expert knowledge. In the example of Delta, customers are asked to rank their favorite ideas which allows the Sky Panel Team to help them identify the best concepts for new products and services.

The fourth step is “choosing the right format”, which is the way in which customers or users are involved in the innovation process. In the example of Delta, this was powered by crowdsourcing as they wanted to turn traditional research by getting collaborative insights from a large group of consumers rather than individual responses, so instead of little ideas they’ve created one big concept. The fifth step is “motivating properly”, which is best to acquire some insight into why people participate in the first place. In the example of Delta, the challenges were a fun way to engage their customers to get their creative juices flowing. Through different levels of participation, they can earn points or prizes with Delta Air Lines.

The sixth step is “deploying appropriate techniques” which are specific techniques to help people to develop creative ideas and arrive at solutions, using proper standards to evaluate them. In the example of Delta, customers had to design their ideal logged in experience which created an atmosphere that challenged their energy and input to create new ideas with well-constructed explanations for their outcomes. Lastly the seventh step is “providing feedback”, continuous feedback on how participants’ input is being processed and used is important. In the example of Delta, feedback was supplied by the internal Delta Team and the Sky Panel Team to inform their customers that through these challenges they’ve identified the key learning objectives for Delta to flush out their ideas and make them into viable solutions for the airline.

With that said, interacting with your customers in an iterative environment can stimulate great ideas created by your consumers and your internal team. This will allow your customers to help induce the process while supporting the airline industry to make better decisions.

 

Bibliography

 

Kl Communications, I. (2015, 10 16). Soaring Through Co-Creation. Retrieved from Greenbook: https://www.greenbook.org/marketing-research/Soaring-Through-Co-Creation

Peelen, E., & Beltman, R. (2013). Customer Relationship Management. United Kingdom: Pearson Education Limited.

Skrbec, P. (2015, 12 15). Business Travel News magazine names Delta No. 1 airline in annual survey. Retrieved from Delta Airlines: http://news.delta.com/business-travel-news-magazine-names-delta-no-1-airline-annual-survey

Conversational Commerce is the key to Customer Relationship Management

Customer relationship management is referred to as a process or a sequence of activities. According to (Peelen & Beltman, 2013), this definition requires that more attention is paid to the customer and the objective one hopes to achieve vis-à-vis the customer. Nowadays, customer relationship management has changed from boring call centers to a social platform that has induced successful investments through technological services. In the airline industry, going forward with customer relationship management, airlines should have less to do with displaying the actual physical inventory and seeking more of building a community amongst their customers to help them better understand their customers’ needs.  

Conversational commerce is the new revolution to enhance customer experiences through messaging apps, chat-bots and in-app messaging. As tech-savvy consumers who favor simplicity to connect with their favorite brands, the millennials are the perfect target market for the airline industry. It is a huge phenomenon that airlines can’t afford to ignore, conversational commerce is a one-to-one relationship that millennials will want to use as their communication channel. A study by Zobgy has shown, that 87% of millennials surveyed claimed to have their phones at hand at all times. And so the millennials will be a natural target market for airlines to communicate while maintaining customer engagement and retention strategies (Golkar, 2016).

Conversational commerce will be convenient throughout the entire booking process for airlines. From passing on itineraries, boarding passes, receiving flight information, checking in, requesting additional informational, can all be done through messaging apps. Even though conversational commerce offers airlines a more convenient way to enhance customer engagement, there can also be challenges. The main challenge will be the deliverance of customer experience. Traditionally, communications have been a nuisance to customers who do not want to tell their problem to every customer representative that they speak to. With conversational commerce, it will lead to be exceptionally brief and to-the-point as a new ways of interacting with customers (Golkar, 2016).

An example of this can be seen through the Dutch airline KLM. In 2015, the airline offered booking confirmation and boarding passes for their customers via Facebook messenger. KLM is the first airline to be active on Facebook Messenger and plans to add additional services for their customers such as a booking service and the ability to purchase ancillary items. KLM sees the messenger app as a place for business where their customers can interact directly with customer service representatives. Since launching Facebook messenger, KLM has already experienced significant increase of 40% in the volume of questions from customers and plans to use other messaging apps such as WeChat and Korea’s KaoKaoTalk as the future of customer communication through messaging apps (Fox, 2015).

By incorporating conversational commerce, the airline industry can get to know their customers and develop a personal relationship with them and not only the interest of making sales or profit. It is important that airlines and customers’ interest in one another cover a longer period of time than just the simple moment of a booking transaction, which is why conversational commerce will be the key to customer relationship management.

 

 

Bibliography

Fox, L. (2015, 11 13). KLM confirms Facebook Messenger play. Retrieved from Tnooz: https://www.tnooz.com/article/klm-facebook-messenger/

Golkar, G. (2016, 9 15). Conversational Commerce is Key to Millennial Customer Engagement. Retrieved from Vocalcom Digital Native: http://www.vocalcom.com/en/blog/conversational-commerce/conversational-commerce-is-key-to-millennial-customer-engagement/

Peelen, E., & Beltman, R. (2013). 2nd Edition Customer Relationship Management. Amsterdam: Pearson Benelux BV.