Airlines have been experimenting with CRM systems through Frequent Flier Programs (FFP) for years and they are very popular amongst the airline industry. The basic concept being that a flier will earn more points as you travel, which then earns the flier rewards. However, FFPs do not guarantee that your luggage won’t be lost or that an apparent “free” flight is actually 100% free. Those who are a Frequent Flier expect a lot from their airlines, which don’t give back much in return (1). So how do the airlines increase the number of returning customers and guarantee satisfaction for their fliers? Well, implementing CRM systems is not enough; the airlines themselves much focus on the problems of the program, along with increasing their own capital from the use of the program.
The airline industry used to be commodity based, focusing on cost and adding customers (1). However, 9-11 drastically changed the airline industry, as many people were skeptical about flying and simply afraid to. This completely changed the industry to customer-based and CRM systems that have been directed towards cutting costs are no longer relevant. The airlines can now take advantage of the technology given to them from the CRM system they implemented by using the data they collect from the FFP to redirected the focus to loyalty and customer relations. "The advantage of all this data is that you can begin to determine different types of customers and then target your marketing to them”, says Raul Arce, the vice president of travel and transportation at IBM (1).
I completely agree with Mr. Arce when it comes to dissecting the data collected to focus on the customer’s needs. The FFP collects so much data from customers that can be used to remarket their airline. For instance, home addresses and businesses can help target a certain geographical area, along with destination and what kind of traveler you are – business trip, vacation, etc (1). All of this data can be used to increase customer experience and loyalty, which is so important in a service-based industry.
By appropriately using this CRM technology, airlines can enhance customer relations and better focus their market areas to their best customers in order to increase capital. Separating frequent fliers and best customers can even greater enhance capital and customer relations. The IT gathers information on all fliers and their specific needs. If all employees of the airline have access to this data, every customer can be treated specifically to their needs, which enhances customer relations. Better customer relationships increase customer loyalty and the percentage of returning customers, which in turn, increases capital.
I believe the best strategy for the airline industry is to take advantage of the CRM technology provided to them. Redirecting information brought in through the FFP can be utilized to increase customer loyalty by focusing on the frequent fliers and best customers of a specific airline. The use of a CRM system in a service-based industry can help companies focus on customer needs to then increase capital for the companies.
(1) Higgins, John. "Taking Airline CRM Efforts to New, Higher Altitudes." CRM Buyer. CRMBuyer: The Essential Guide for CRM System Purchasers. 1 Feb. 2010. Web. 7 Feb. 2010. .">
The airline industry is definitely missing their calling by not utilizing their CRM systems to its full potential. It is true that airlines collect enormous amounts of information for Frequent Flier Programs (FFPs), but they must tap into those statistics since it appears to be a gold mine. I agree that employing the information provided by FFPs will only enhance customer relations. Airlines would be able to learn what pleases customers. With this information, marketing campaigns and customer service would be more personal thereby increasing revenue.
ReplyDeleteIt seems that the airline industry has already implemented the CRM systems necessary to keep customers happy, but the fact is they aren't using it correctly. All of the imperative information is there; the airline industry just isn’t interpreting it to benefit them. If airlines have the demographic information of their customers along with the most frequent type of flight booked (vacation, business, etc), airlines can change their marketing strategy and target certain target markets. I think that if airlines learned how to use the information they already have, customer satisfaction will increase, and Frequent Flier Programs will be improved and more effective.
ReplyDeleteIt is very interesting to talk about what a company should do after implementing a CRM system. We have talked about the benefits from a CRM system, but just adding more technology will not solve the entirety of a problem. Companies need to actively work with the CRM systems in order to provide the maximum service for a client. Once the CRM system categorizes customers, it is the companies responsibility to utilize this information and effectively target the markets established by the CRM system. I agree with MacKenzie when she says the airline industry has to take advantage of the CRM system. But it is up to the companies to appropriately use the system and the information provided.
ReplyDeleteHaving flown a few times in the past year for various reasons, I feel that most airlines are not utilizing their CRM systems to their fullest advantage. The feeling that flying is a luxury no longer exists in the industry. Flying no longer is an experience that people enjoy, instead it is a headache that starts and ends many trips. With the use of these CRM systems airlines should be able to make travel more pleasurable, while still keeping costs low. I feel that for the industry to advance its IT systems it must look at how they are being implemented before they put in place new systems.
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