Archive: Issue 1: August/September 2005

The Secret to Effective E-Mail Campaigns
An interview with Siebel's Jason Salfen, by Roger Williams

Biography of Jason Salfen

Jason Salfen, Travel & Hospitality Segments Lead for Siebel Systems, is Siebel's resident loyalty program expert. Jason managed the design and development of Siebel's next generation frequent flyer solution, and is currently working with companies across multiple industries, including airlines, passenger railway, retail, and communications, to design and implement loyalty programs that deliver tangible benefits for members and create long-term competitive advantage for the host company.

About Siebel Systems

Siebel Systems is the world's leading provider of solutions that help organizations of all

sizes optimize their people, processes, and technology around their customers, leading to outstanding customer experiences and superior business results. Siebel's customer relationship management, business intelligence, and customer data integration solutions

are the product of more than $2 billion in direct and partner investment and reflect over 11 years of experience with more than 4,000 organizations.

Jason, how does an airline striving to communicate exclusively by e-mail for loyalty marketing , balance the amount of expected information (activity statements etc.) with unsolicited promotional information?

There are two key factors when using e-mail to build both customer loyalty and increase revenue: customer preference and value delivered. 

How does an airline determine these factors?

An airline should always ask for a customer’s preference regarding desired channels of communication  and then honor these preferences in all interactions. Many airlines today do a good job at managing customers’ preferences, the key differentiator is the value delivered.  

Can e-mail enhance marketing programs?

Absolutely!  Unfortunately, most companies (and this is not just airlines, the issue cuts across industries) do not leverage their rich loyalty program data to perform true targeted marketing. 

Rather than sending generic e-mails to all members of a tier who have opted in for weekly specials,  airlines should strive for “mass personalization.” This is a concept that received a lot of attention a number of years ago, but the technology wasn’t ready and the cost was prohibitive. Today, mass personalization can be realized thanks to sophisticated marketing

and analytics tools.

With this approach, airlines can create behind-the-scenes segments and groups for regular, pre-scheduled, but more targeted campaigns.  And then, for specific distressed inventory situations, use customer segments that are created in real-time (e.g., everyone who has flown segment A-C within the last year on ticket class Y, but not flown in the last month).  It’s this type of personalized “win-win” marketing (truly helping the customer get a better deal while also improving the airline’s revenue and profitability) that creates competitive advantage and success.

From your experience are most loyalty members okay with just receiving information by e-mail?

Loyalty members generally have different channel preferences by type of information received: e.g., a frequent flyer may say send FFP statements via e-mail and that marketing e-mails directly from the airline are acceptable but not from partners.  And then, any critical information, such a flight delay/change, should be sent via SMS. If an airline honors customers’ preferences and the marketing communication adds value, members will generally be willing to give the airline greater leeway in marketing to them.

Can e-mail based communication actually diminish the reach of the airline, with the issue of keeping addresses updated, a variety of bounce back triggers, recipient e-mail overload, spam blocking software; are these real dangers and how can they be handled?

E-mail communication, if managed correctly, actually increases an airline’s reach by enabling the airline to cost-effectively interact with a greater number of customers in a more personalized manner.

Consumers – especially frequent flyers – are becoming more savvy in managing their electronic communications. They know they have a choice (often mandated by various government regulations) to opt in or out of email communication. They also know how to add email addresses to their address book to let in only what they want to see. This is where the concept of value comes in – if a customer believes they’re going to receive targeted information that meets their needs, they’ll open their inbox.

But how does one ensure that the message gets through?

It starts with delivering value. Problems arise when customers are bombarded with low-value e-mail  – they’ll turn off all communication with the offending company.  The issues that you raise are real challenges, but each can be addressed successfully, some via the marketing strategy (e.g., ensuring that each e-mail sent is viewed by the customer as delivering value, (which must be supported by business intelligence, loyalty and marketing systems that enables this type of targeted marketing)), and others by base technology solutions (e.g., managing bounce backs, circumventing anti-spam filters, etc.). 

Jason, one could argue that many people receive some type of solicited information [e-mail] such as a loyalty statement, or perhaps even flight status alerts. What is the main factor that will cause an e-mail to stand out and be read?

The e-mail must be from a) a trusted sender who has b) historically provided value.  The e-mail should immediately show that the sender understands the customer’s needs and that it will help the customer.  In general, this means that the e-mail should be very targeted both in its content and the offer its promoting, and in the audience to whom it is sent. 

Is this factor a magic bullet or is the process of distinguishing e-mail marketing a fluid strategy?

There is no one magic bullet; a successful customer relationship is created  over multiple interactions.  Every time customers interact with your airline, it affects their opinion of your firm, their loyalty to it, and their willingness to be receptive to your marketing message.

We call this managing the “Travel Customer Management Continuum”, and it includes all contact points such as pre-purchase marketing, reservation, check-in, in-flight service, lost baggage, customer feedback, FFP rewards, etc.  An airline’s marketing and loyalty strategy cannot operate in a vacuum, it must be part of holistic strategy for managing and strengthening customer relationships (and, thus, the revenue and profits generated from those customers).

Can mobile phone messaging be used to support an e-mail campaign? Are there any hot regions in the world for this and other types of mobile messaging?

The most effective marketing campaigns are those that interact with customers via their preferred channels in a seamless manner, including SMS, e-mail, mail, call center, etc.  They are also often multi-stage.  For example, you may start with an e-mail and then follow-up that up with a SMS for targeted customers.  The key is that each of these channels and stages must be tied together – for example, if a member speaks with a call center agent, that agent must know which e-mail and offer was last sent to that customer, and any subsequent e-mail marketing should reflect the customer’s previous response via the call center channel

Approximately how long will it take an airline to establish the necessary systems and procedures to implement an effective e-mail marketing campaign?

It depends upon the scope of the project and the level of customization.

In terms of scope, how an airline manages marketing should be part of a comprehensive customer management strategy.  Once that strategy is understood, a company can decide which pieces of the technology needs to be improved first in order to have the biggest impact.  It may be that the e-mail marketing application is the weak link and should be upgraded, or it may be larger where the firm realizes that  both the marketing and FFP systems need to be completely overhauled.

The level of customization, also called configuration, will affect the implementation schedule.  In general, I suggest that companies do the minimal amount of configuration necessary in the first release of a new system.  Then, as users become familiar with it, they often generate new and better ideas about how it should be changed to meet an individual company’s unique needs (which is one of the key ways a firm gains competitive advantage).  The airline can then roll-out subsequent versions of the system internally, all still based upon the original base product.

In terms of implementation, a hosted, minimally customized marketing solution can generally be up and running in a matter of weeks, while a more complex, multi-product, customized solution can take 6+ months, and then there’s a range between those two.

Does Siebel solutions work with other popular applications such as ACT or is it a purely stand-alone solution?

Siebel’s applications, and this applies to products offered by all CRM vendors, never operates alone.  To truly manage customer relationships in a cohesive, integrated manner, a CRM application will need to work with multiple airline systems, such as the reservations, check-in, mail and card fulfilment houses, etc. 

Siebel provides a comprehensive suite of applications that can be used to manage the entire loyalty marketing lifecycle, from Marketing to FFP to Call Center to Business Intelligence.  However, each of Siebel’s applications can also with other systems (e.g., Finnair uses Siebel Loyalty (FFP) and Marketing, Iberia uses Siebel Marketing but not Siebel Loyalty, and Alaska Air uses Siebel Business Intelligence on top if its own home-grown CRM application). 

How would one measure ROI on [implemented] e-mail marketing, besides the cost savings realized from not sending snail mail; is this an issue of pure cost savings or is there also tangible value to be gained?

Marketing ROI can be measured in a variety of ways, including both reducing costs (e.g., via transferring outbound telemarketing and snail mail to e-mail) and increasing revenue (e.g., improving the yield on campaigns/promotions). 

The revenue increase can be estimated using data on similar past promotions or comparing the target audience with a control group’s response.  In addition, the ROI for real-time marketing campaigns targeting specific undersold routes can be calculated based upon how many seats were sold after the promotion started versus historically have been sold (and these additional seats, since the variable cost of another passenger is so low, are virtually all profit).

One best practice is to have customers register for a promotion before giving the reward.  While that does not guarantee that the purchase was made as a direct result of the promotion, it does mean that they were aware of the improved incentive to make that purchase.

Jason, very valuable information indeed, thank you for taking time out of your busy schedule.

It was my pleasure Roger. 

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