Issue 6: Special Conference Edition Ensuring personalization from customer database through sale to service delivery Interview with Andy Martin, industry director – transportation, Oracle Europe Middle East and Africa |
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By Airline Information Correspondent Legacy carriers are increasingly turning to CRM solutions as a platform on which to build differentiation for their premium traffic. But is this differentiation resulting in personalization of the entire the buying experience? Andy Martin, industry director – transportation, Oracle Europe Middle East and Africa acknowledges the initiatives taken by airlines for personalization and moves to cut costs and reduce fares in the back cabin. “We are noticing a significant difference between the approach being taken by some of the legacy carriers, and the approach being taken by new entrants. Sure, new entrants and low-frills carriers – “value based airlines” as we like to call them - want to do some marketing, but we’re increasingly seeing legacy carriers wanting to really focus resources on the high-yield, front-end traffic,” says Martin. On the fact that legacy carriers are eyeing CRM solutions, he says, “Differentiating at the offer stage is only a part of the solution – legacy carriers in particular need to carry that differentiation through to the sale, to the airport, and to onboard if they really want to make a difference.” Such outlook of airlines surely depicts a change. “We are seeing demand from all parts of the world, increasingly from the legacy carriers now that they’ve finally realized that they have to change in order to meet the challenge posed by new entrants,” says Martin. Martin one of the speakers during the Airline Information’s eConference 2006, held in Muscat recently, spoke about how airlines are looking beyond traditional frequent flyer market, usage of database in an optimal manner, personalization and much more. Excerpts from an interview with Airline Information’s Ritesh Gupta.
Ritesh Gupta: Considering Oracle’s expertise in offering integrated Customer Relationship Management (CRM) solution, what new trends have you witnessed as far as airline industry is concerned? Andy Martin: Firstly, five years ago, maybe even two years ago, most major airlines were really only thinking of CRM in the context of their frequent flyers. Airlines are now moving way beyond the traditional frequent flyer market. In developed markets, commercial databases are now allowing airlines to uniquely identify above 90% of all of the customers who get on their aeroplanes. Building a profile for these customers, understanding their travel patterns, managing the service delivery to those customers, and maybe even marketing to those customers (subject to data privacy laws) is really beginning to take off – pardon the pun. Airlines have started to realize that there are so many more repeat customers than those who carry a frequent flyer card, and they want to capture the loyalty of those customers as well as those who are voluntary members of the loyalty program.
Andy Martin: To a limited extent, yes. However, everyone is used to personalization now – not so much in airlines maybe, but in many of our interactions with business. The biggest challenge airlines face is carrying the personalization from customer database through sale to service delivery – its all very well personalizing the offer, but if you can’t personalize the buying experience, the service at check-in, in the lounge, at the gate, on the aeroplane, and afterwards, then personalization doesn’t really deliver the real differentiation that it could. That’s why we at Oracle have been working with some of the major reservations, check-in, DCS and GDS providers to work out how customer information can be carried from corporate data warehouses through to operational systems. We’re now starting to see a new generation of airline reservations, check-in and DCS systems that are customer-centric (rather than PNR-centric) and which can support a customer database. Once integration between CRM and front-office solutions has been achieved, then all sorts of value-added services can be offered to customers.
Andy Martin: There’s always going to be some price sensitive customers in today’s market, given the accessibility to which you refer. And where customers are price sensitive, there are two choices – either compete on price, or offer a better service. At some point, many legacy airlines have decided that there’s only so far they’ll go with competing on price, and therefore they start to look at how to offer a better service. This is where CRM comes in. The first part of the challenge is to recognize more of the customer base, and get the customer data out into the front-office solutions. And not just basic customer data, but detailed customer data including true customer value rather than just frequent flyer tier. Once that’s achieved, it’s a whole lot easier to deliver some real value-added services to the true high-value customers – preferential pricing, preferential seat availability, upgrade, downgrade, priority re-routing during disruption, and of course the traditional follow up following a previous service disruption can all become so much more focused on the customers the airline really needs to nurture and retain.
Andy Martin: The first challenge many airlines face is bringing the data that they have in-house together. At Oracle, we’ve worked with a number of airlines that have over 20 customer data repositories, often not shared between departments and certainly not used in a coordinated manner to ensure that everyone has a complete 360-degree view of the customer. Providing the tools to allow all of that data to be brought together, and then allowing the airline to expose that data to sales and customer service functions, makes a great starting point. We’ve also seen airlines start to increasingly draw on commercial data sources to both clean and add to their customer knowledge – again, one major airline we’ve worked with has used these data sources to enable them to uniquely identify a very significant proportion of all of the customers who get on their aeroplanes, not just those who happen to register on their website or join the frequent flyer program.
Andy Martin: Actually I think things are just going to get better – the airlines are going to get better at profiling and targeting, and technology is now really able to help them do that. Firstly, its about getting all of the customer data together in one place – only when you have that full 360-degree view of the customer can you really start to profile properly. Next, its about using all of the channels to market that are now available and using them in an appropriate way at an appropriate time and as is appropriate to each customer – not just written, but voice, e-mail, SMS, etc. Again, we at Oracle are now able to deliver these services and allow airlines to start using them effectively. Finally, its about making sure that the marketers have the right tools available to do their jobs, and since Oracle acquired arguably the leading CRM solution provider – Siebel – we’ve been able to offer a much more proven solution in this space, and not just generic solution but one that we’re increasingly tailoring to the airline industry.
Andy Martin: Its already starting to happen – we’re doing it for some airlines. Legacy technology has traditionally held businesses back, primarily because its been too difficult to make the systems talk to each other or the business rules and processes have been embedded in the code of the systems. Solutions suppliers such as Oracle can now, finally, provide tools that both integrate end-to-end business processes at data and process levels across both internal airlines solutions and the rest of the travel trade, and provide the flexibility to change processes rapidly when the business model changes. We’re doing it internally with our own Fusion applications, we’re doing it for airlines, and increasingly we’re doing it to allow airlines, the travel trade, and even the GDS providers to work together more seamlessly and cooperatively without them having to invest huge amounts of money in software re-engineering.
Andy Martin: I think that’s absolutely correct. Partly that’s happened because LCCs (value-based airlines) have been able to start with a clean sheet of paper and new systems, whilst legacy carriers have been inhibited by their incumbent systems and commitment to the travel trade and to the GDS services. Of course, the new entrants also don’t usually carry around the overhead of multi-carrier itineraries and the need to interline and integrate with partners. Technology is definitely now allowing the legacy carriers to start to change too. In the past there’s been a general reluctance for legacy carriers to commit too much to new technology in the [arguably mistaken] belief that new technology was risky. At Oracle we’ve been able to demonstrate that new technology can provide the volume and throughput needed support major legacy carriers, both in their own internal systems and now even in some of the major reservations and departure control systems on the market. Proven new technology coupled with the legacy airlines finally realizing that they do need to change their processes in order to compete has finally broken some of the barriers. I think we’ll see many more carriers changing over the next few years – the real challenge will be for the long-established distribution channels to find ways of preserving their business.
Andy Martin: Its really down to the carriers to decide where they want to go – the number of ideas are endless. We at Oracle have a role to play – we can and are providing the technology e-commerce platforms, the integration tools, the business process management tools, and the web services, that take the pain out of developing new business opportunities. We can do this on a scalable basis for both small and large airlines, and its becoming an increasingly noticeable part of business.
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