Customer relationship management, or CRM, is becoming increasingly important in service-oriented industries. The airline industry is no exception, showing particular growth in its CRM efforts after September 11, 2001 . There was no longer a steady stream of eager travelers to sell to, causing airlines throughout the industry to change the way they do business. Rather than selling a commodity, airlines began selling a service, and implemented programs such as the frequent flier program (FFP) . The institution of frequent flyer programs allowed for the collection of data on customers like never before, but now the need for improved IT systems is necessary to utilize this data to its full potential.
I think that this article presents an important concept regarding data collection and information technology. Well-organized and researched CRM provides a competitive advantage to a business, allowing differentiation and focus (segmentation), top-line initiative, and growing the organization . The goal of CRM is “treating customers better, understanding their needs and wants, and tailoring offerings in response.” . As such, using collected data applied with an effective IT system is an excellent way to improve CRM, and in turn the success of the company as a whole.
Airlines have been able to collect a great deal of data regarding their customers, however this information is worthless if it is not used properly and accessible to those whom it would be the greatest advantage. In his article, Higgins provides the example of a customer who previously had a bad experience with an airline. Should the personnel checking the customer into their next flight know this, they can compensate the customer and build on that relationship . Without access to that information, however, airline personnel are left without tools which can help them immensely, especially considering that they are the only personal contact with customers.
Additionally, the improved organization and implementation of data on the corporate level allows airlines to make changes on a grander scale to assist their customers. Higgins also mentions the possible further segmentation of customers with the use of collected data on customers, which would allow for a more personalized experience for customers and more effective marketing. Currently, the airline industry focuses of two major segments, vacationers and business travelers . There are many more customer segments to focus on though, such as college students or more specifically families with children, or young couples. With all of the data that has been collected with FFPs, airlines have the ability to be very specific when targeting different segments, which can greatly benefit its customer base.
The fact of the matter is that airlines have a great deal of information at their disposal, but need the proper IT system in order to use it effectively. Using their collected data more effectively will allow airlines within the industry to appeal to customers more directly, build customer relationships, and eventually build on their top line. Growth in the customer base and revenues of the company allow for more general, corporate growth of the company, in this case the airline. CRM allows the company to improve, and IT allows for the improvement of CRM.
John Higgins, “Taking Airline CRM Efforts to New, Higher Altitudes,” ECommerce Times, February 1, 2010, http://www.ecommercetimes.com/story/69239.html?wlc=1266367417
Ibid.
Stephen Haag and Maeve Cummings, Management Information Systems for the Information Age, 7th ed. (New York: McGraw-Hill, 2008), 71.
Stephen Haag and Maeve Cummings, Management Information Systems for the Information Age, 7th ed. (New York: McGraw-Hill, 2008), 72.
John Higgins, “Taking Airline CRM Efforts to New, Higher Altitudes,” ECommerce Times, February 1, 2010, http://www.ecommercetimes.com/story/69239.html?wlc=1266367417
Ibid.
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Evaluating the airline industry after 9/11 is interesting because of the changes that event forced companies to make. I think it forced airlines to change for the better, creating a completely new flying experience. I think it would be great if airlines started using the research they are currently doing on smaller customer segments to create a personalized experience. The first airline to do that will definitely see significant growth.
ReplyDeleteI definitely think that customer service is one way that airlines differentiate themselves. For instance, Southwest has the lowest prices, AND no extra charges for pillows, blankets, etc. Actually I just read on their website that they were voted for #1 in customer service by air travel consumer report in 2008. With a low price, and great service, why would you choose any line but Southwest? (Unless you want to fly first class on another line).
ReplyDeleteIn addition, I agree it's important that airlines segment the market into vacationers and business travelers. These customers need to be treated differently, but both need great service. This article reminds me of the movie, "Up in the Air" where George Clooney's character is constantly flying. I also agree with the connections you made between the IT and the CRM and the company's strategy.
I agree with Tim’s point that the airlines can definitely differentiate themselves through customer service. Frequent Flier Programs collect so much information that customer service should be the airlines' primary objective. For example, the article discusses a customer who had a bad experience. Without a doubt personnel should have this documented so that the customer’s experience is better the next time around. Airlines are missing their calling. They need to use Frequent Flier Programs to build relationships. Positive relationships generate revenue.
ReplyDeleteI agree with the above comments in that, differentiation is mostly achieved through customer service when it comes to the airline industry. The service provided in the airline industry ultimately remains the same from airline to airline, and that is air transportation. It the customer service aspect that is going to bring an airline an increase in market share and the ability to reach new market segments. There is a video on youtube entitled "United Breaks Guitars", which illustrates how United Airlines broke a flyer's guitar under deck and the customer was actually destined to a location where he needed the guitar to perform. This video, I can guarantee did not shed a positive light on United Airlines customer service, and is definitely caused a loss in market share because of it.
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ReplyDeleteI think it is an interesting point that a company can have a plethora of information but unless they have the proper IT system to analyze and access it then the information is useless. Service is a very important part of the airline industry now and as the above posts mentioned it helps differentiate companies from one another. These systems will help build relationships and customer loyalty. The airline industry has recently become a service oriented industry and through the use of these IT systems the companies can continue to build on this change and increase profits.
ReplyDeleteGiving the workers at the airports information about a customer’s past experiences seems like a great idea. Even if the client had a bad experience on his/ her previous flight, their attitude about the company would definitely be strengthened if they received some sort of special service. Many of the lower cost airlines, just the idea of a free drink or snack, can make a customer happier. I think that the airline industry is one of the industries that will benefit most from new changes and improvements to the CRM systems. For years people have been dissatisfied with the industry, and now as the attitude is turning around the companies must capitalize and show all customers that they are the airlines top priority.
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