First published on 18th October, 2016
Ai Editorial: The explosion of data, backed up by affordable processing power and storage plus the expertise of data scientists is taking machine learning to a new level, writes Ritesh Gupta
How accurate a prediction can be that a human wouldn’t be capable of making?
Finding an answer to this question is fascinating indeed, as machine learning algorithms are now more luring than ever.
Before probing into this, I would like to recount one remark from a speaker, who explained the meaning of machine learning during one of our conferences held in Fort Worth, Texas around the same time last year.
“Machine learning is not big data,” he said. The executive even spoke about the significance of being data-driven, right from being clear with what to look for, how to work around it with the help of a proficient team etc.
Today it seems 12 months is a long time.
Today we are talking of sophisticated use cases. Travellers’ experience, be it for planning a holiday or optimizing miles, is being shaped up by smart algorithms. Even combating fraud or revenue leakage is being controlled with the help of algorithms.
An algorithm that essentially is about learning patterns in data (and then foretells similar patterns in new data) can propel the operations of an airline. It is true that machine learning isn’t new – data scientists, analytical software developers, and even use cases have been around for a while. But the explosion of data, backed up by affordable processing power and storage is paving way for outcome that is being deemed as fast and reliable. As it turns out, machine learning often encompasses different types, and simply using one type (predictive analytics) is insufficient.
It is also important to understand that pattern recognition, deep learning and stochastic optimization all have a role to play. Yes, carries have been using algorithms for operational decision-making, such as maximizing the profit on each flight based on the types of fares offered on that specific flight. But new avenues are opening up. For instance, there is a different approach to airline ticket sales auditing leading to revenue protection, featuring knowledge algorithm to manage the complexity and dynamic changes in terms and conditions, flight schedules, reservations, check-ins and fares.
Here we explore some of the areas in which machine learning algorithms are helping travel organizations:
· Cross-device targeting: The world of ad tech continues to find an answer to cross-device advertising as travellers’ shopping journey is fragmented. This subject is complicated. Matching the intent of a traveller and delivering a marketing message/ ad with laser-sharp precision, irrespective of the device, location etc. isn’t easy. How well a digital consumer is being identified? Can machine learning understand a traveller’s immediate context and forecast the desired experience of the moment? Single-ID based targeting technologies that rely on probabilistic algorithms have been around for a while. Such type of matching is derived from algorithmically assessing anonymous data points – device type, operating system, location data etc. Yes, a machine learning algorithm can process data and assess if it’s more likely than not that two devices are linked. The outcome is shared in big data records comprising groups of pairs of matched devices. Specialists continue to refine their algorithms by learning what works and what doesn’t. Also, other than probabilistic, there is deterministic or exact match methodology. It is pointed out that travel isn’t similar to retailing, the decision-making is prolonged as there is lot more time to use more devices. So it would be worth following how algorithms play their part as cross-device targeting is still a work in progress.
· Fraud management: It is being highlighted that airlines can rely on an algorithm –an optimized fraud risk management algorithm – to make decisions designed to optimize sales as much as possible while keeping fraud and chargeback rates under control. Fraud management is going beyond predicting future fraud based on historical data. With pattern recognition, even without any prior historical data, the machine is able to detect patterns across different transactions and diagnose if the transaction exhibited bot behaviour or human behaviour. Using big data, the system collects information from the merchant’s website, such as the user’s web movement behaviour, social media accounts, likes or comments on the website, e-newsletter subscription or alternative payment methods. Combined with pattern recognition, the system draws patterns (for both positive and negative behaviour) to map the DNA profile of the user, and determine if other incoming transactions exhibit the same (fraudulent) behaviour or not. The large quantity of information collected from big data makes it difficult for fraudsters to cover all of their tracks, therefore increasing the effectiveness of preventing fraud.
· Loyalty: Machine learning is being spoken highly about in the arena of transaction monitoring. For instance, in case of loyalty programs, once a loyalty transaction take place in the blockchain environment —issuance, redemption, or exchange—an algorithm-produced loyalty token emerges. This token is foundation for all sorts of rewards, including points. The availability of this token and distinct identiﬁers are rationalized on each participant’s ledger. Various online protocol terms administer how points behind these tokens function. On a basic level, interoperability between programs and partners that use the same dataset to record and transfer value will result in enhanced efficiencies in transaction processing and invoice reconciliation. For travellers, this will result in quicker availability and better usability of their points and miles.
· Personalisation: Algorithms are being used to analyze and predict customer behavior, sharpening retailing by looking at historical data, buying pattern etc to evaluate propensity to buy. A major aspect is consideration of personal preferences. The blend of right algorithms and customer data can strengthen personalisation strategies. As Boxever highlighted in a blog positing recently, with greater automation and reliable queries, filters and propensity models, companies can maximize their investment in developing their customer database, extending the value of having a single customer view by making the data actionable.
While machine learning, as a concept, always strives to improve, there are times when things can go awry. For instance, algorithms can’t be as meaningless as targeting wrong audience. Also, there are times when one comes across a challenging remark from the proponents of machine learning. For instance, it isn’t a routine task to keep pace with developments in the world of ad tech, analytics, ecommerce, mobile technology etc. Programmatic buying, deep linking, new payments options, progressive web apps, robots, mobile wallets, etc…it seems like a tough ask to manage digital assets and marketing. As one of the senior marketers from Lufthansa told me: It is very challenging to merge all data points, apply the right algorithms and have the right text and visual components come together to create a seamless flow of information to our customers. But yes coming across a relevant message from an advertiser on my chosen device or dealing with fraudsters is a welcome change, and it means machine learning is delivering today.
Interested in machine learning? Hear from senior industry executives at the upcoming 7th Mega Event Worldwide 2016, The Event for Loyalty, Ancillary & Merchandising & Co-Brands, to be held in Toronto, Canada. (25 -26 October, 2016).
Twitter hashtag: #MegaEvent16
Follow Ai on Twitter: @Ai_Connects_Us
Ai Editorial: Be it for interoperability between programs and partners, targeted offering or enabling stronger relevance in a customer’s everyday life, blockchain technology promises to lend a new dimension to loyalty, writes Ai’s Ritesh Gupta
Blockchain, as a database technology, is opening up new value propositions.
As a concept, blockchain features a distributed ledger, which is an array of cryptographically-linked blocks supporting data records. This data, which could be a Bitcoin transaction, a smart contract etc. is decentralised, and, as it is being said, this data can’t be manipulated. The possibility of working with a network’s shared ledger is via a “chaincode”. Such codes “read and write values” to the ledger.
The use of blockchain and smart contract technology is exploding worldwide, says Robert Moerland, EVP – Global Business Development, Loyyal.
Referring to a recent report issued by the World Economic Forum, he says over US$1.4 billion has been invested over the last 3 years in the technology in the financial services industry alone. Over 2500 patents have been filed.
“Many believe that 2017 will be the year that blockchain will break through on a wide scale,” says Moerland.
In the travel industry there are a number of projects underway, for example, secure biometric authentication of passengers by SITA that will simplify document checks during the passenger journey. Loyyal is the only company that has a built technology stack available for travel loyalty programs today.
So how this emerging technology is proving to be beneficial for the travel industry, especially loyalty programs?
Here are a couple of concrete examples:
- Increasing efficiency: One of the advantages is cutting down complexities associated with cross-enterprise business processes. “On a basic level, interoperability between programs and partners that use the same dataset to record and transfer value will result in enhanced efficiencies in transaction processing and invoice reconciliation,” Moerland says. “For travellers, this will result in quicker availability and better usability of their points and miles”.
- Targeted offering: One can also bank on smart contracts for a special offering. “One can create a whole new world of value propositions. One example is the possibility of multi-branded points that have a special value or benefit associated with them, potentially for a limited period of time. This means for travellers that more relevant targeted offers with an increased value will become available in a higher frequency,” says Moerland.
Sub-programs or multi-branded offers generate more value not only for customers, but also for merchants as program partners
- Increasing relevance: As Moerland says, there are cases that help to boost engagement and hence program profitability by enabling stronger relevance in a customer’s everyday life, greater currency liquidity and higher velocity of transactions. For example, the interoperability powered by Loyyal allows programs to join efforts in rewarding members leveraging each others’ redemption capabilities. Also, it can be used to create “fungibility of loyalty currencies” by easier and faster exchangeability or combined offers.
So how should airlines prepare for blockchain technology?
Moerland says most programs are looking how to continue and expand the monetization of their data and currency.
“As such we find that they are open to making changes to their infrastructure in order to become “future proof” and get ready for an increasingly connected world (think also IoT). This connected world means in the case of the loyalty industry a global distributed ledger catering for new and broader ecosystems compared to the fragmented and siloed way the programs co-exist today,” pointed out Moerland.
In general distributed ledger networks face a number of challenges relating to regulations, security, privacy, speed and performance, infrastructure replacement and standardization. However, when applied to ecosystems like loyalty programs, a lot of those challenges can be addressed by creating multiple interoperable private networks on one universal permissioned distributed ledger. In fact, Loyyal aims to become that standard protocol/ ledger that enables interoperability between programs and partners, whilst providing the tools to agree on the rules of engagement between the parties via their patent-pending Abstracted Value Consensus Protocol.
Moerland also asserted that blockchain is not the solution to each and every problem.
It is important to evaluate whether the solution one is looking for is best solved by a blockchain solution or in another way. It is also important to recognize that an effective blockchain solution depends to a large extent on the data that gets into it in the first place. Again, blockchain caters for more efficiencies and new capabilities, but it only gets as good as the data that gets into it.
In layman’s terms the blockchain itself creates a shared repository that helps multiple parties to look at the same data, a layer of truth so to speak, says Moerland. This not only simplifies data exchange and invoicing processes, but also enable new datasets for analysis and target marketing purposes.
But just recording data is one thing, actually doing something with the data is what matters. “Smart contracts allows to apply rules to points and miles, that not only govern the way they are recorded or what action they trigger, but also enable to assign dynamic qualities to them. Points and miles become records of behavior rather than simply units of value, and can be targeted as such with “incentification,” shared Moerland. “Interoperability between parties combined with this new way to generate relevance and value will help to shape the next generation of loyalty programs.”
For Loyyal, being a blockchain technology specialist with a commercial product, it is still early days in terms of being able to fully demonstrate and substantiate the ultimate vision with tangible results. “We believe that next year we will see a major change of perspective on and uptake of blockchain-based solutions”, concluded Moerland.
Interested in blockchain technology? Hear from experts at the upcoming 7th Mega Event Worldwide 2016, The Event for Loyalty, Ancillary & Merchandising & Co-Brands, to be held in Toronto, Canada. (25 -26 October, 2016).
Twitter hashtag: #MegaEvent16
Follow Ai on Twitter: @Ai_Connects_Us
First published on 15th September, 2016
Ai Editorial: A traveller is dissatisfied with a flight experience, the airline compensates. But is there a way this passenger would be recognized, in case he or she decides to book with the same carrier, explores Ai’s Ritesh Gupta
How to win back the confidence of a disgruntled traveller?
Can today’s analytics software or the so-called single view of the customer derived from several sources and the eventual sum of customer interactions, appease and encourage a peeved flyer to opt for a particular airline brand again? Can a targeted message be displayed to the customer as per the previous experience when airline.com or app is being used to book a seat?
One of my recent experiences with Lufthansa and SWISS made me dig deeper into the same.
Here goes the experience: I flew with Lufthansa, the seats allocated were messed up despite being a word given for it at the airport. I had an indifferent experience at the gate, and was unsatisfied with the fact the team managing the airline's Twitter account couldn’t handle my request or even respond with the status despite a five-hour window before flying. The in-flight crew was considerate but couldn’t help. So I, as a non-loyal flyer, Tweeted about my experience, wrote on Facebook, reviewed on TripAdvisor, wrote an email and eventually the airline called up to sort out. I was compensated, and the episode ended on a much better note.
Now say after a week or a month you are planning your next booking, and you access airline’s site and mobile app, do you think it is possible that you are going to be greeted with a personalised as you are looking for tickets on the same airline's website/ app? In my case, I checked Delhi-Munich flight twice in a span of 10 days – never received any personalised message based on my experience on the airline website, and no message via retargeting, too.
Is personalisation for real?
I spoke to two senior industry executives from Switchfly and Boxever about the possibility of a disgruntled non-flyer getting identified via a digital touchpoint when he or she visits an airline-owned platform again. This is what they had to say:
Kevin Wray, Chief Commercial Officer at Switchfly: There are various technologies available for user tracking, but no company seems to be able to link actions seen on social media to a CRM system that will enable the web experience to be different the next time the user visits. The best chance you have would be to force all users to log in, which would access their profile from the CRM system, and could then potentially show a message relating to their previous poor experience and offer a make-good. But there is a lot of tech that would have to sit in the middle of such an experience, for example:
How do you find comments on Facebook that a user has posted?
o You don’t know their FB ID – it could be a private account.
o How do you correlate that to the ID you have in your CRM?
o There are privacy and terms of service issues with “scraping” FB pages and looking for comments, and storing that data on your servers.
Same comments hold true for Twitter.
You have a better chance if the user posts to the airline’s Twitter or FB account, but they would still have to tell you their true name, which you would have to correlate back to the UID in your system - not easy, very expensive to build.
Even if you could do all this, most, if not all e-commerce sites, allow account-less checkout, and even with cookies used as a tracking mechanism, you would not be able to drop a cookie onto the user’s browser from the Twitter or Facebook interaction – you can only drop a cookie while they are on your own website or a hosted forum that your company sponsors. So – the vision is ambitious and could give customers a true feeling they are being “heard” and taken care of, but the effort would run into a great deal of privacy and access issues. Most companies today seem to be able to email users after an interaction with a call center, with an offer or make-good. Connecting that back to the web experience can be done within closed systems inside an airline or company, but not using social media unless you also capture Facebook and Twitter handles as part of your own registration.
Dave O'Flanagan, CEO and co-founder of Boxever: A customer can be greeted with a personalised message. This is because “customer intelligence cloud ensures all of those interactions are recorded in one place and provides the ability to anticipate what the customer needs next using the AI engine”. However, it totally depends on which airline you are using as only some will have the ability to offer a personal greeting based on your history with them. However, many are still struggling with integrating all of their various consumer channels to be able to provide a single customer view in real time. They have antiquated systems and silos of data that they are unable to unlock as most airlines don’t have an end to end CRM. When it comes to tracking every interaction and then reconnecting from where the customer left the last touchpoint or finished a particular experience, not many in the industry have truly achieved this goal, but companies are investing to solve it because there is incredible value in doing this. Our technology essentially connects with every moment in the customer’s journey (online or even in flight or at the check-in desk) using historical and real-time data across all of your consumer channels to provide a better customer experience or true omni-channel personalisation.
Airlines need to focus on a system that unifies demographic, transactional and behavioural data from silos such as web or mobile clickstream, email campaigns and transactional feeds. We consolidate this data to deliver a detailed picture of every individual customer in real-time. In addition, this customer view isn't limited to only previously identified customers, you can also see every customer that participates in every travel booking. So when a customer starts a new search or is in the early stages of the booking funnel, our system will quickly decide how to handle this specific customer and decide what the most appropriate action should be to increase the likelihood of a sale. This action may include sending a personalised message or personalising the homepage of the airline’s website or retargeting that customer on Facebook as one can work across any platform to deliver true omni-channel personalisation.
Hear from senior industry executives about personalisation and omnichannel marketing at the upcoming 7th Mega Event Worldwide 2016, The Event for Loyalty, Ancillary & Merchandising & Co-Brands, to be held in Toronto, Canada. (25 -26 October, 2016).
Twitter hashtag: #MegaEvent16
Follow Ai on Twitter: @Ai_Connects_Us
First published on 12th September, 2016
Where do 3 leading US carriers - American, Delta and United – stand today after transitioning from their mileage-based FFPs to a spend-based one, explores Ai’s Ritesh Gupta
Moving from a mileage-based FFP to a fully-fledged revenue-based FFP isn’t a new phenomenon. But for me it wouldn’t be wrong to say it isn’t settled either.
With American joining the fray, now all 3 major legacy U.S. carriers, including Delta Air Lines and United Airlines, have embraced revenue-based programs. Factors such as basis of accrual, implementation, the extent to which earnings of miles can be dynamic etc. have been under scrutiny.
“Every FFP is different – there is nothing wrong with basing your earning structure on spend – but I certainly wouldn’t be looking at American, Delta and United as a best case illustration – far from it,” says Catchit Loyalty’s Director – Travel and Loyalty Programs, David Feldman.
In fact, Feldman terms American, Delta and United as “bad examples” of revenue-based programs.
The first thing is to clarify what we mean by “revenue-based” when it comes to rewarding customers. The main premise – is that customers who spend more – should be rewarded more than customers who spend less.
Feldman explains there are many earning/ reward mechanisms available for a loyalty program to implement the same and they don’t necessarily have to be based on raw dollars-spent. In fact, often raw-dollar-spend can lead to misleading assumptions and sub-par performance from the program initiatives, he says.
The single biggest risk to FFP profitability is that (with recent changes and devaluations) if customers no longer perceive an airline’s currency as valuable and aspirational – then the entire business model of selling miles to third-parties is at risk.
For Delta, American and United – this was worth $7.65 billion in 2015.
Gaps in FFPs of American, Delta and United
Referring to these carrier’s new and old programs, especially from their structuring perspective, Feldman says, “With all the press surrounding the recent changes to US airline FFPs – many people mistakenly believe that the old American, Delta and United programs only rewarded folks for the distance they had flown and didn’t reward higher-spenders - which, according to gospel, has now been corrected. This is far from accurate.” He further adds, “The old systems awarded both more award miles (used for free flights) and more status-earning miles to those who flew in premium cabins compared to those on cheap tickets.
The problem with the old systems was that the “spread” or “differential” between cheap-fare earning and high-fare earning was minimal. In many cases as low as 1.5. That meant you really didn’t “much more” for spending more, explained Feldman. “Other airlines around the world including leading alliance partners of American such as British Airways, Cathay Pacific and Qantas have much greater “differentials”. For example – the differential on Qantas between Discount Economy and First Class is a factor of 6. So – to move to a more “revenue-based” earning system – the imperative was to increase the “spread” or “differential” to better reward high-fare customers relative to low-fare customers.”
So the problem – is that the exact system that Delta implemented and United and American blindly copied, as Feldman points out, has almost as many weaknesses and risks as the model which it is replacing, although these can be patched with some minor tweaks.
Here are some recommendations to make the most of spend-based program:
- Managing the shift: You need to ensure that in increasing benefits for your best customers that you don’t make the program irrelevant to others. “This is especially true in major airline FFPs where significant revenue is driven from non-flying activities (which are often underpinned by the actions of medium and regular Best-Fare-of-Day passengers). Award miles are but one minor component of the decision-making process for high-value customers, who often care more about the “recognition aspects” of the program such as priority security/ boarding/ baggage, reduced or eliminated fees, lounge access and priority support when things go wrong. The additional marginal utility of a few extra award miles isn’t going to get a customer to switch airlines as much as poor (or superior) customer experiences will,” mentioned Feldman.
The other aspect that undermines the “we’re rewarding our best customers more” argument is actions such as devaluing the highly-valued systemwide-upgrades that American gave its top customers; and the airlines limiting mileage earning to 75,000 miles per trip. This means a First Class passenger spending $15,000 on a fare is rewarded the same as a Business Class customer spending only $7000 on a fare, added Feldman. This ill-thought strategy undermines the entire premise of the program changes”, he says.
- Identifying the biggest challenges: Feldman referred to 3 of them.
1. Unnecessarily spending money on issuing more miles to some high-fare customer segments who will not actually contribute any additional revenue in return. For example – customers who are “hub-captive”, on managed corporate contracts, those who have no influence over travel decision-making or those who make decisions based on fare/schedule/route and airline hard product;
2. Losing many mid-tier loyal customers by devaluing the program value-proposition (both on the earning and the redemption sides) to the point that many will no longer see the program as relevant and will just choose their airline on the trip-by-trip basis on cost. B.F. Skinner refers to this psychological concept as “extinction”.
3. By “cutting too much” on lower fares and failing to maintain a minimum-mile-guarantee as a safety-net – many self-funded professionals (and casual passengers) who purchase low-fares will fail to be incentivized to sign-up to the program in the first place - which means they have no interest in listening to American’s 5-minute-long PA announcement for a credit card who’s currency doesn’t interest them, said Feldman.
- Just don’t copy a revenue-based accrual / earning structure: Feldman says the important thing to remember is that real currency of a loyalty program lies in its ability to drive changes in consumer behavior. “If you’re an airline executive – you need to stop making decisions about your airline’s FFP.
What you need to do is to ensure that you have the very best loyalty folks running your FFP for you, and that they understand how to leverage consumer behavior. Give them your macro financial goals – and let them come back to you with models that will deliver your desired outcomes.”
Feldman complimented Delta for “going out on a limb and trying a new structure. Unfortunately – it’s pretty disappointing to see United and American simply copy Delta’s program word-for-word - faults and all. The new systems can be fixed to ensure that they are successful. The most prudent move would be to place a safety-net on low-end mileage earning so that all customers feel the program is worthy of enrollment and engagement.” Lastly – when devaluing the redemption charts – it’s important to remember that it’s the very aspirational nature of high-end rewards that attract customers to these programs. Take that away – and you take away the very behavior that generates profits for your FFP.
I also thought of how FFPs are trying to be a part of a flyer’s lifestyle. For instance, letting a member garner points for everyday purchases. Since those members who spend low tend to be perceived as low in value in revenue-based programs. So is there any innovative or meaningful way of engaging them? For instance, rewarding for everyday purchases or working with co-brand partners like fuel, retailers, finance etc. to tap behaviour and act more like retailers.
Feldman says failing to adequately reward and engage lower spending passengers will result in them either failing to enrol, or failing to engage with the program. Customers will only engage in high-margin partner earning opportunities such as co-brand products if they perceive value in the underlying points currency. This is the very real financial risk facing American, United and Delta.
Some commentators erroneously assume that the only people losing in these changes are folks flying on $50 airfares – but analysis has shown that not only are fewer miles being award in total to all passengers – but many business customers, including first class customers are losing out in the new programs. The resulting erosion in loyalty may, or may not be compensated for by an increase in wallet-share amongst the biggest spenders; but will most certainly result in a decrease in partner mileage engagement by the rest of the customer-base (and hence revenue), concluded Feldman.
Hear from senior industry executives at the upcoming 7th Mega Event Worldwide 2016, The Event for Loyalty, Ancillary & Merchandising & Co-Brands, to be held in Toronto, Canada. (25 -26 October, 2016).
Twitter hashtag: #MegaEvent16
Follow Ai on Twitter: @Ai_Connects_Us
First published on 22nd August, 2016
Ai Editorial: Malaysia Airlines is looking at profiling and “segmentising” members of its Enrich loyalty programme, and is also working on a host of other initiatives to embrace data-driven operations, writes Ai’s Ritesh Gupta
When we talk of how technology and touchpoints are shaping up loyalty in today’s world, the discussion can be unpredictable – long, tricky, and complicated, too!
Can I expect a brand to keep track of every iota of digital data of what all I do when I am connected? And to what extent all of this can be amalgamated with offline experiences, too. A herculean task if we think of the so-called “micro-moments”.
The world of data and analytics is multi-layered, and one can say complicated, too.
I recently chose to check what does a typical “privacy and cookie” mean when I visit a website. IP address, location, log-in information, browser, device, URL clickstream, page response time, clicks, scrolling etc. Add on to this cookies – functionality cookies, performance cookies, targeting cookies etc. There is 1st party data, 2nd party data, 3rd party data. Plus, there is data analytics - prescriptive, predictive etc. The list just seems to be an endless one!
The blend of data, analytics and technology is paving way for more work, and prioritizing isn’t easy. And when we talk of loyalty, airlines also work with a host of partners, and that’s where 2nd party data as a source also comes into the picture.
I recently interacted with an experienced marketer in Khairul Nisa Ismail, Head of Enrich & Loyalty for Malaysia Airlines.
The organization is making steady progress and clearly focused on engagement via offering recognition and value to its loyal members.
Excerpts from the interview:
Ai: Can you provide an insight into the current status and profile of Enrich, the loyalty division of Malaysia Airlines?
Nisa: We review based on the qualifying criteria that we have outlined for our members to adhere to (check out our Enrich Qualification URL). Currently our top 3 memberships are Malaysian based, Australia/ New Zealand-based, and the UK and the rest are ASEAN. 70% of our members are Malaysian based and for the last 3 years, we have been focused on unlocking our basic tier members i. e. Enrich blue members with activation campaigns to remain active as our members.
How we define “active” in our programme is as long as they have accrued miles, redeemed miles on both air and non-air partners plus converted credit card points to Enrich miles in the past 36-months, we consider them an active member. Moving forward, we aim to develop more unique members of different tiers in order for us to better understand them in terms of profiling and segmentation with data intelligence. This will ultimately help us to better serve our members.
Ai: What sort of changes/ transformation you are looking at?
Nisa: We are working towards understanding our members better by profiling and “segmentising” not just based on tiers but also their airline and non-air preference and behaviour. We are enhancing our platform to be more robust with the ability to further maximize the usage of our Enrich currency as a form of payment in our airline eco-system to our members. Apart from the airline, we are working with strategic partners that represent daily transaction behaviour, e.g. banks, petrol, online retailers, to provide more value to our members to earn enrich miles when shopping with these partners. These strategic partners truly reflect the lifestyle of our members beyond flying for Enrich. Of course, we do have the standard FFP partners that compliment flight purchases such as hotels, car rentals and duty free.
Ai: How about managing databases within an airline to craft a personalised offering for loyal travellers?
Nisa: I believe in all loyalty businesses it is about capturing the right data for the purpose of your business. What is imperative in our business is to go through all aspects of data points of the customer journey and combining it with the intelligence of the CRM which enables us to segmentise our customers and members to ensure we personalize the right offers to the right customers/ members based on the data points.
However, it is still a major challenge especially as to whether we are capturing enough data. As much as we capture the flying data there are still elements of daily purchases, such as co-brand cards/ financial partners/ petrol partners/ online retailers partners, that we need to capture to enable us to monetize our members with value added rewards.
Ai: What about acting on real-time operational data?
Nisa: Every FFP provider strives to provide the best service to the members by capturing every mile for every dollar spent by members from air partners and non-air partners. The loyalty technology is constantly being developed and enhanced to ensure that real time data is captured, especially at the critical data points. This is to ensure accuracy as well as to win the members’ loyalty whilst managing their experience in ensuring miles are credited in a timely fashion. As for Enrich, we aspire to have real-time credit of miles for our members.
We have seen many loyalty solutions enhancing their features and products by developing dashboards for the analytics team to review and derive the next campaign mechanics for members. However, not all have the dashboards that will meet individual requirements; hence loyalty experts will look out for plug and play features to include non-air platform data to compliment the overall FFP programme data.
Ai: What about offering benefits to different segment of loyal customers? How being data-driven can help in this context?
Nisa: Back to the topic of big data. It can be overwhelming to extract our members by looking at the complete customer journey of the airline from a marketing perspective. For a realistic perspective, it is best to start with something basic.
For example, let’s start with our top tier members, from the booking of tickets experience all the way to boarding the flights. We know how unique these segments are and we can start to customize the different levels of personalisation to top tier members by simply addressing them at the check in counter or by personalised emails on marketing offers. The latter is an interesting feature especially in differentiating our partner offers based on their tiers and their travel and booking or spend behaviour. Once we get the basics right, we can work on segmentisation to our mass members e.g the Enrich Blue base. By identifying their annual travel patterns, their credit card conversion patterns, their non-air partners accrual patterns etc, we can tailor the offers exclusively to our Enrich blue base and continue to inspire them to go on to the next tier via flying and other value methods they can earn from being our loyal member.
Ai: It is being highlighted that partnerships are the biggest opportunity to cross-pair offers to relevant customers and grow them into loyal customers for each of the brands. What’s your opinion about the same?
Nisa: Enrich believes in strong partnerships and is always on the look-out for unique partners that we can exclusively cross pair to our diversified customers and relevant members. We always need to look at both sides – our partners, who have invested in the programme via miles, who have ensured the right offers for our programme members, and also the programme owners, making sure we bring the value back to the partners. From a member’s perspective, the differentiating offers and attractive mechanics to constantly keep them engaged and remain loyal to the programme is core and challenging at the same time but once we get the formula right, it is a win-win partnership and successful marriage for the programme owner, the partners and the members.
A successful loyalty programme requires ongoing investment and agility in order to respond to a dynamically changing market.
Nisa agrees and says it is a balancing act and one has to ensure that the loyalty programme brings more value back to the airline. The more the members are engaged with the programme with the right offers to them based on their profile, the better it is for the airline revenue as we will have recurring and, more importantly, loyal members, she says.
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Nisa’s LinkedIn profile: https://www.linkedin.com/in/nisaismail
First published on 25th July, 2016
Ai Editorial: Be it for capturing of data or integrating various sources of data or getting closer to recognizing each individual, airlines acknowledge there are hurdles. Ai’s Ritesh Gupta looks at 5 issues
Airlines are battling on many fronts to sustain the bond with those who have chosen to be a part of their loyalty initiative.
The most fascinating bit is that the consumer is playing the commanding role in the equation. Airlines need to respond and anticipate, and then only they can expect a fruitful bond.
So what do airlines need to consider before they look at their loyalty programs in detail:
- Be on top of content consumption, devices etc: So if I use multiple devices or consume content, then as Google also says, airlines have to win such `micro-moments’. So airlines need to understand my behavior and link it with my preferences. And then how to count on programmatic buying, remarketing or web personalisation to target me with precise messaging or ads.
- Being a part of consumer’s spending: Airlines have to pave way for an aspirational desire among loyal travellers to reach the next spending threshold. So they need to find their way into the travel-related shopping plus other spending (be it for grocery, electronics etc.) and incorporate their loyalty programs into it. As consumers gain more value for their spend, they end up giving a lot more back to the FFP or loyalty program they are associated with.
- Making every interaction fruitful: Each and every part of the journey needs to be facilitated with a top-notch experience. For this all touchpoints need to be ready to serve the way consumer intends to be served. So, for example, can a loyal customer be inspired via a recommendation engine that creates contextual marketing offers? Is airline’s website counting on location, device, historic behavior and real-time information? Or if something goes awry at the airport, can a request made via Twitter be seamlessly attended at the departure gate by the airline? So an airline would need to streamline all offline and digital channels, and make the most of resources driven by technology and human inputs.
Being pragmatic with data-related set up
· Capturing of data: Airlines have rich data of their program members, as they capture members’ travels and even possibly credit card details and information from other program partners. “Proper analytics will allow these airlines to better engage with members, with relevant communication of offers, at the right time, via the right channel and so on. This is unfortunately lacking,” says a source based in Asia. There usually tend to be many databases within an organization. The task for CRM would be to consolidate all this data throughout the organization and use this to analyse, segment and connect with customers accordingly.
“The push must come from the top to consolidate and merge all data available within the organization, into a single data warehouse, for better engagement and eventually better customer experience. From experience, the biggest challenge would be to get the internal buy-in, from the various departments, on why a consolidated, single view of the customer would be better for the organization and in the long-term, reap the benefits of a highly engaged and loyal customer,” mentioned a senior loyalty executive.
Another area is linking loyalty data with other useful sources of consumer data.
Also, an executive told me it is still a major challenge especially as to whether we are capturing enough data. As much as we captured the flying data; but there are elements of daily purchases such as co-brand cards/financial partners/ petrol partners/ online retailers partners that we need to capture and able to monetize our members with value added rewards.
· Infrastructure for integration of consumer data: Data is resulting from business systems like CRM, tweets and other social media data etc. So the platform being used need to manage today’s analytic workloads. Other than managing this aspect, airlines are also looking at how to manage transition of their data warehouse to the cloud, to on premises, and back seamlessly.
As a specialist, HPE recommends a clustered method to storing big data, paving way for top quality query and analytic performance; Enhanced compression, needing less hardware and storage than comparable data analytics solutions; Scalability to step up when workloads go up; Built-in predictive analytics etc. Of course, the investment needs to be linked with return on investment or cutting down cost.
There is evidence that personalization is profitable because it drives conversion up, but there is also evidence that it only works when you get it right and only on a highly segmented audience. As a consequence, you have to be careful with the cost, both economic –high investment is needed- and also opportunity cost. Hopefully, personalization tools and CRM technologies will be inexpensive in the near future.
· Utility of dashboards: There is talk of sophisticated dashboards which monitor real time data. This allows loyalty programs to stay on top of trends in the transactional data so they can react more quickly to the economic environment and proactively make changes.
Specialists point out that with tracking of live customer interactions from a single dashboard can bring intuitive insights. The goal should be to look at behavioral data on top of transactional information.
But one needs to be cautious about the utility of such dashboards. “We have seen many loyalty solutions are enhancing their features and products by developing dashboards for analytics team to review and derive the next campaign mechanics for our members. However, not all have the dashboards that will meet your requirements; hence loyalty experts will look out for plug and play features to include non air platform data to compliment the overall FFP program data,” explained a source.
· Getting closer to recognising individuals: The industry at large is falling short when it comes to “personalisation to individual needs”. A marketer with a major airline acknowledged that airlines have so much data available to address individual needs, but yet they usually blast offers to all customers in newsletters, apps, social media etc. Marketers are hopeful that with progress in areas like social CRM, and advanced ways of customer recognition, geo-localization and real time communication will help in delivering contextualized and relevant product offerings.
Other than dealing with the issue of capturing the right data, airlines are also looking at how to combine such data with the astuteness of CRM. “This would in segmentation, and ensure we personalize the right offers to the right customers/ members based on the data points are ideal in our business,” shared the source.
As we learnt from Vueling recently, even though most airlines offer a great deal of ancillary products, even the ones that have been slow in introducing them. And more are to come, of course. What is not so common is to offer them in a personalized way. Selling ancillaries is about identifying a need in a particular moment. It would be interesting to see how quickly can airlines understand loyal members and also link their program to non-point-based rewards.
· Operational capabilities: An effective loyalty program calls for real-time, operational capabilities.
Specialists point out that data warehouse must be transactional and operational to enable sites, apps etc. while at the same time enabling analytics and storage of massive amount of data.
“We do aspire to have real-time credit of miles for our members,” shared a loyalty head from an airline based in Asia. “At the moment it is very challenging but in the future we are going to address exactly this point, which will help us to differentiate us from competitors and enrich our customers journey, which should result is loyalty beyond the classical FFPs.”
Gain an insight into latest trends at the upcoming Loyalty & Ancillary Revenue Conferences - 3rd Mega Event Asia-Pacific, scheduled to take place in Kuala Lumpur (23-24 August, 2016).
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First published on 14th July, 2016
Ai Editorial: Airlines need to raise the bar for customer experience (CX) when it comes to the day of travel, in-flight experience etc. writes Ai’s Ritesh Gupta
The gap between what all a traveller possibly needs during the course of the journey, and what data, analytics, cloud computing, artificial intelligence etc. can offer is huge. The intricacy lies not only in making the most of technology, data and analytics, but also cross-functional collaboration.
There is a need to remove uncertainty associated with travelling. And this would be only be possible if airlines do away with siloed systems at the technology and business level, and equip their staff with real-time information.
I was recently in Switzerland, and used the SBB Mobile rail and transportation app as part of my travel. My travelling experience could have been better with right recommendations/ information at an opportune time:
- Mapping: Changing trains and switching platforms isn’t easy with luggage and a kid. As I travelled from Lauterbrunnen to Montreux, I changed train thrice. On two occasions hopping to another platform was to be done in a span of few minutes. At this point of time, directions via mobile app would have helped. The same holds for air travel, too, as transfers and moving to another terminal can be exacting at times. Yes, signs are there, but why not trigger an automated direction guidance?
- Alerts: The SBB app clearly states “all information without guarantee”. So as we reach the station, depending upon the itinerary chosen and my location, there could be an update about platforms. Similarly, in air travel, too, there are times when the confirmation of gate comes closer to the flight. A mere push notification can again eradicate uncertainty if any.
- Customer service: I also had mixed experience with Lufthansa while travelling from Geneva to New Delhi via Munich. SWISS messed up our seat allocation for Munich-New Delhi flight, and when we contacted both SWISS and Lufthansa via Twitter, they weren’t able to change despite being aware of the situation five hours before the connecting flight. In fact, Lufthansa’s staff at the gate in Munich wasn’t even aware despite a deluge of Tweets from me. So clearly on the day of travel the operational plan isn’t reaching the airline staff in a timely manner. Another area of hassle is losing baggage. Airlines are responsible for the bags they allow you to check in but their responsibility is limited. On a positive note, the industry is talking about using a RFID tag instead of the digital bar code tag to track the location.
“Most airlines do send customer's notification to support their journey, such as sending gate information updates (via in-app push notifications), but I've not yet been advised which check-in desks are for my flight, easy directions to the lounge, how long I should leave to get to the gate and shopping opportunities,” pointed out James Lever, CTO, CWT Digital.
Areas of improvement
Of course, it is pleasing to hear how the Internet of Things, artificial intelligence, big data and predictive analytics can anticipate the needs of a passenger, and streamline the journey.
According to Sabre, airlines need to assess whether they have:
· Streamlined or automated workflows?
· Access to real-time data from other departments?
· Configurable systems than can adapt to change in your business?
· Integration with external systems and processes?
· Automated communication streams to and from other stakeholders?
From a passenger’s perspective, areas of improvement could be:
Ø Airport experience: As a passenger, I would prefer real-time, location-based information on a single platform. For example, I have a couple of hours to board my flight. Can I use one app, preferably an airline app, to search for the nearest shopping outlet where I can buy what I wish? I can rely on artificial intelligence feature on my smartphone, and gain access to information desired. There are other aspects that are related to my travel. For instance, as I walk past the baggage collection area, can I automatically be informed about ground transportation information such as the location, arrival and departure times of buses, taxis etc. Airlines are definitely improving, a prime example being biometric-enabled self-service bag drop units. As Amadeus IT Group points out, airports and airlines need to focus on a single token which can “link passengers’ biometric data to their boarding pass and passport to remove the need to present their documents at multiple stages of the airport journey”.
Ø Integrating touchpoints: When any aspect of travel isn’t going smoothly, the worst part is a traveller accessing a touchpoint, and it shows no alignment with another touchpoint. A case in point is the example of being unable to change seats at the airport while in transit. So when I access a self-service kiosk and can’t change it, it only increases anxiety as I have to wait till reach the boarding gate. During my recent flight, even Lufthansa’s personnel accessed the self-service kiosk, but in vain. So there is lack of integration, no real-time alignment and employees might be going through numerous systems or data sets to find the information they need. As Sabre states, silos at the technology level (i.e. multiple disparate systems) and silos at the business level (i.e. disjointed workflows and processes) often result in siloed decision making.
Ø Data and intent of passengers: Airlines need to look at cognitive computing and artificial intelligence to make the most of structured and non-structured data – could be about offering my favourite seat. It’s time to count on loyalty data, trip data, previous purchase data and with apt permissions in place for social data for a personalised experience. Not too sure about the efficacy of how automated way of answering emails or Tweets is helping, but at least signifies progress. A traveller can tweet 20 times knowing the airline isn’t able to help just because the social media doesn’t have access to a reservation system. So how about getting back to this disgruntled customer? Airlines need to have a consolidated view and real-time visibility into passengers’ interactions, even understanding those who aren’t part of the loyalty program. There is a need to quickly analyze data from any source, including legacy systems, social media, the IoT, machine-to-machine communications etc.
Airlines need to be wary of the personalisation/ push notifications going awry.
Lever says apps such as TripAdvisor are pushing notifications upon airport arrival, the challenge here is as the technology develops we risk overloading the user from push notifications from different vendors - which will result in the user disabling/ rejecting the benefit.
But airlines need to look at the available data and the course of the journey. For instance, as Lever says, this data could be used for in-flight entertainment, ordering content such that it is more relevant to passengers. As Lever points out, if I’ve travelled the same route 2-3 times, do I want to watch the same thing? Do I need to scroll though complex screens, why couldn’t my “favourites” be shown on the home page. “This captive environment when combined with Internet access may be a way for the airlines to understand the user (cookies and privacy law permitting),” said Lever.
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First Published on 6th July, 2016
Ai Editorial: If airlines refrain from owning the customer experience via their own product and touchpoints, then they are in danger of falling way behind Google, writes Ai’s Ritesh Gupta
There are several big questions that airlines need to answer today when we talk of managing customer acquisition cost and even going beyond to optimize the experience.
One of them relates to avoiding wastage and even annoying travellers with irrelevant “retargeted” digital ads. It’s true that retargeting drives conversion when the intent is understood, but no point in showing London-New York routing when the idea has been dropped. Also when we talk of creative or messages, airlines need to look at every single piece of data that’s available, and segmentation would result in tailored ads.
The other one is about how to work with Google. If airlines continue to share their data around price and availability, then the prowess of Google would only get stronger. Google can stitch unstructured behavioral data like social posts or searches together, providing context and determining intent. This data helps shape the audiences for its advertising network, ultimately enabling Google to only serve up the most relevant ads. Be it for paying for leads/ bookings or ensuring airlines dampen their own ability to directly sell non-air ancillary products, airlines need to minutely scrutinize how they count on Google, both as a supplier and an advertiser.
Competing with alacrity
Philip Rothaus, Director, Global Business Development, EveryMundo, recommended few areas that airlines need to look at:
Ø Garnering data: Rothaus says airlines and other travel-related business aren’t data-omniscient – it’s not as if they have automatic access to all of a traveller’s digital preferences. “In order for an airline (or any other entity) to acquire data on a consumer's activity and tendencies, the consumer has to engage directly with the brand,” he says. “Right now, online aggregators - such as online travel agencies and meta-search engines have the lion’s share of high-value customer data, chiefly because they attract more travellers through online search than the airlines do. That provides them with the intelligence to deliver targeted marketing offers tailored to their interests.” Until airlines invest in the digital marketing infrastructures and customer acquisition strategies that can help them compete with OTAs and meta-search engines, they won't have the data do the same.
Ø Performance content: Software tools can help airlines compete in the search ecosystem more effectively. Namely, performance marketing technology can be integrated with an airline’s existing website and IT infrastructure to enable airlines to quickly deliver up to millions of high-performance landing pages, in any language or country, in response to consumers’ travel searches. Airlines need to transform existing inventory content into performance content – deployed via dynamic, SEO-optimized webpages showcasing every product, category, and segmentation relevant to their customers. The result: better search-engine results that encourage more direct-channel bookings.
Ø User experience: Consumers increasingly utilize their mobile devices during the travel-purchase process, but their buying experiences with most carrier websites is far from `omni-channel-optimized’. “Airlines’ mobile conversion rates are already averaging roughly one fifth of their desktop conversion rates due to poor mobile user interfaces and site experience,” says Rothaus. As mobile search activity continues to grow the revenue lost to airlines by not providing a mobile-optimized experience will increase drastically.
Moving on from acquisition to ownership
Whereas Google and the travel-aggregator marketplaces have the luxury of building entire businesses around online search, digital marketing, and data-driven customer engagement efforts, airlines have to focus on their core competency: transportation. To achieve greater parity with the OTAs, MSEs, and Google, airlines will need to find cost-efficient ways to perform better in online marketing and customer acquisition, as well as deliver a desired experience across the journey.
A lead that results in a customer reaching the airline-owned platform for booking or during the course of the journey should be optimized for experience, too.
Here, too, there are huge gaps/ emerging opportunities. Few examples:
Ø Fulfilling basic requirements via airline-owned digital assets: My online check-in experience is far from being satisfied, especially when I travel multiple airlines in one journey. While the experience of Delta and Air France/ KLM is streamlined, I struggled with my online check-in when it came to KLM and Transavia, and Lufthansa and SWISS. For instance, flying back from Barcelona to Delhi via Amsterdam, as I tried checking in via Transavia (for Barcelona to Amsterdam flight) there was an error. Also, when it came to the terminal, there was lack of clarity. In fact, when I searched for the same via Google a day before, the terminal was stated in the status of the flight. This makes travelling strenuous and the brand experience isn’t optimized. Rather if such requirements are met in an easy manner, a customer would cut down on accessing 3rd party sites every time a trip is planned.
Ø Integrating different touchpoints: There are big gaps when we talk about customer service across different touchpoints. For example, if you want your seats to be changed after being allotted your boarding pass, which would be the easiest way? I recently conveyed the same to Lufthansa’s Twitter account. The team acknowledged but couldn’t find a way to do it for me despite a five-hour halt in Munich. The point is why social media team can’t assist, and the same could only be done at the gate. I tried self-service kiosk in Munich, too, but in vain. In fact, when I interacted with the airline staff at the gate, they weren’t even aware of this!
Ø Product needs to stand out during the booking flow: Do I even know I am sitting in a brand new A330-300 as I take my next flight? Can I get my favourite dish as I take a 14-hour long flight? Irony is that content exists, but the industry struggles to show the same in the transaction flow. Get customers excited about your products.
Ø Engaging loyal members: As airlines work on every bit of the passenger experience, members tend to response better. Airlines have so much data available to address individual needs, but yet they usually blast offers to all customers in newsletters, apps, social media etc. One should look at tier level, communication preferences, contextual information etc. in order to come up with offers and promotions that are likely to resonate with members. Also, the focus needs to be on predicting what they are likely to do.
Ø Customer-centric set up: Airlines need to look at a modern CRM platform framework that paves way for integration of all relevant operational systems. Besides the PSS it’s possible to integrate an external identity and access management system as well as social media, real-time arrival and departure information and many more. “Based on all these source data it’s possible to develop applications that can use and combine these data to serve the customers in the best way,” says PROLOGIS’ Matthias Hansen, who added that such CRM platform can create customer profiles based on historical data, and are enhanced with data that the customer is willing to add. The customer service will have access on this information, so if the customer calls the call-centre, they have transparency on his/ her profile. The possible ways to enhance this initial CRM platform will be to integrate the pricing engine as well, so that the airline will be able to first identify the customer within the booking flow and then react on booking requests by offering him a unique and personalized flight-package.
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What lessons should we have taken from past events and new innovations?
25th May, 2020
Nik Laming, Airline Loyalty Consultant
This is the first post in our two-part optimizing airline loyalty programs series. In this, Nik has shared certain momentous events that have shaken the industry over the years, and what‘s there to learn from them. The second post, scheduled for next week, is set to feature 5 recommendations while working on structuring of such programs.
There have been certain poignant moments in airline loyalty program history that can be counted upon to formulate the best corporate structure for success. The objective is to learn from our mistakes and optimize structure and governance to best serve members, partners, shareholders, and parent airline. It is definitely a complex equation to balance.
Typical Airline Corporate Structure
Typically, an airline has a holding company and several subsidiaries to separate the core businesses. For example:
In principle this makes good sense, except if you consider a loyalty program to be a core business in its own right. It is surprising to see many airlines with a substantial loyalty program business buried in the hierarchy of the parent airline under marketing, commercial or even technology functions. One example comes from American Airlines with total operating revenue of $45.8b in 2019, including $863m from its cargo subsidiary but $2.9b reported from other revenue (AAdvantage affinity cards and partnerships and airport clubs).
The loyalty business is triple the size of the cargo business, so why does it not warrant its own entity and governance?
American Airlines is certainly not alone in this approach with Singapore Airlines and many other examples of the same approach around the world.
There have been a couple of failures, too, that command attention as far the corporate structure is concerned:
Transforming airline loyalty programs into digital disruptors
In 2014 Virgin Australia sold a 35% stake in the Velocity loyalty business to Affinity Equity Partners raising A$335m. It recently bought back the stake for double the amount. Unfortunate timing but it demonstrates the strategic value of these assets. The question has been raised by commentators, should Virgin have sold the stake at the outset? I believe the answer is a resounding yes. Firstly, it raised cash more than 5 years ago, but more importantly it ensured independence, high quality management, commercial discipline, business drive and rigorous accountability. The program and the business grew fast over the period and delivered stellar results. In 2019 Velocity delivered the second highest EBIT to the group A$122m with the only other profitable segment being Domestic with $133m.
The fate of Virgin Australia is unknown, but there are several interested parties to buy the ailing carrier and no doubt transform it into a leaner and meaner animal to take on the might of Qantas. Velocity is set to play a large role in the revitalization or complete overhaul of the airline. The customer data coupled with external revenue streams make it a great foundation stone from which to rebuild or build an airline. Velocity can survive even if Virgin Australia cannot find an investor to save it, but it is a much better scenario for all if the airline is saved or reinvented as then the loyalty business can thrive.
In July 2018 AeroMexico made a rather cheeky offer to buy back the 49% stake of its spun-out loyalty business - PLM from the strategic investor AIMIA for $180m. The offer was immediately rejected by Aimia which was still reeling from being smashed into submission by Air Canada to relinquish Aeroplan. A short aside, an airline should never sell the totality or even the majority of its loyalty program because it simply does not work. An invested strategic partner, as an independent voice, is healthy but it needs to be managed very carefully including a well thought through and tight legal agreement between airline and loyalty entity.
Returning to AeroMexico in the present, a deal has now been reached. In summary there is now the following value for all the parties:
A great example of a win for all the stakeholders underpinned by strong management, the 3rd party strategic partnership with Aimia, financial independence and using a separate loyalty dedicated entity.
Qantas has been quietly achieving in Australia for many years with a mature loyalty program and an ambitious drive into new business areas such as insurance, media and data. The extract below from the 2019 annual report shows just how significant the loyalty business is for Qantas delivering the second highest EBIT with a meaty A$374m:
Moreover, it achieved the same level of EBIT on $1,654m in revenue versus JetStar with$3,961m and a vastly different risk profile, potential for volatility, cost structure and capital requirement. Qantas Loyalty is a separate entity with an independent CEO and a dedicated and experienced leadership team. It has a substantial income from a huge range of partners and has built out a data analytics and marketing business called Red Planet which serves to monetize the vast data set available. Qantas is using its loyalty subsidiary as an incubator for new business and revenue streams building a substantial payments and insurance business. New business earnings increased by 27% and insurance grew by 46% in 2019 diversifying income sources and future proofing the business. Qantas has resisted the urge to sell off a stake in its loyalty program as it realizes the potential to generate consistent income and uses the program and its gold-mine of data to grow new digital and data businesses.
The second post will cover - The Ideal Corporate Structure for Airline Loyalty and 5 recommendations. What should we take from the past and how do we optimize corporate structure to serve all the stakeholders sustainably?
Nik Laming is the founder of Urban Leopard Ventures a boutique consultancy helping companies reboot and build loyalty programs to extract which deliver maximum value and revenue for airlines, banks, retailers and other companies. He is now focused on helping companies optimize and build loyalty programs into digital and data businesses.
Formerly he was SVP Asia Pacific at AIMIA both managing the SEA regional business and working with clients across all disciplines in loyalty marketing and consulting. Most recently he designed and built the GetGo coalition lifestyle rewards program for Cebu Pacific Air, an LCC and the largest airline in Philippines. A next-generation, lifestyle rewards program targeting and monetizing a broad base of 5.5 million members and serving 250+ partners.
He is a regular commentator and adviser on all things loyalty including the potential and requirements to create a new model - digital and data incubator business from traditional loyalty programs or under-utilized customer data assets.
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