When you ask someone how they’d improve an airline’s frequent-flyer program, you’re likely to hear the same old refrain: “Offer more miles.” “Make it easier to redeem them.” “Shower the customer with rewards.”
Given the air travel industry’s razor-thin profit margins, such advice isn’t always feasible to execute. But plenty of opportunities still exist to improve sales and participation by leveraging how an airline uses data and communicates with its customers.
When a traveler books a flight, the airline assembles the itinerary, any special requests, payment details, flight history, frequent-flyer miles and other critical information into a digital Passenger Name Record, or PNR. It was originally developed to help airlines share data on a multi-flight trip involving more than one airline.
However, frequent-flyer programs collect a wealth of additional data on customers’ broader consumer habits, such as meals, hotels, rental cars and even whether they tend to travel alone or as part of a group.
This allows the airline to send personalized offers to individual customers, such as a deal on luxury car rentals. It also helps the airline improve its overall product catalog, such as tastier inflight meal menus. The customer wins with a better travel experience. The airline wins with a bump in per-passenger revenue and, hopefully, a more loyal customer.
“Rewards programs are one of the most valuable means of collecting customer data,” says Lee Ann Dietz, Global Travel and Transportation Industry Consultant at SAS Institute Inc., which specializes in business analytics software and services. “The primary reason is that a customer has to opt in, and agrees to participate in the program. This means a lot of personal data can be collected and used for personalized offers.”
The good news is that most air travelers want to opt in. Approximately two-thirds claim to be “comfortable with an airline or travel agent tracking the optional purchases they make, and letting them know when these products are available,” according to a survey of passengers in eight countries released in 2015 by the International Air Transport Association (IATA).
The bad news is that most flyers don’t actually use their frequent flyer program. Of the 350 million people worldwide who are enrolled in programs run by US airlines, over 80% are “inactive,” according to informal estimates cited by the credit card giant Mastercard.
Across all industries, only 46% of loyalty program members in the United States are currently active, according to a 2017 report by market research firm Colloquy. It also notes that Canadians have more negative views of loyalty programs than Americans and also tend to ignore communications from these programs. Other research suggests that negative perception extends far beyond North America.
So, the challenge is not how to create a market for personalized offers, but how to wake up an existing market and keep it active. Here are 6 ways data can improve airline customer satisfaction.
“The personalized offer is more easily created when knowing enough about corporate travel policies to ensure that the customer can accept the offer.” — Lee Ann Dietz, Global Travel and Transportation Industry Consultant at SAS Institute Inc.
Inactive or nearly inactive customers simply don’t provide enough sales and data to make up a decent customer profile. As MasterCard wrote in a 2016 white paper entitled Travel Loyalty: New Program and Consumer Dynamics Fill the Global Agenda, “In the case of inactive loyalty members, it comes down to this: what are members spending money on when they are not engaging with your program?”
By adding aggregated anonymous data to a profile, you can better predict what kinds of offers might spark their interest. To that end, MasterCard partnered with Jet Blue to test the use of anonymized transaction data against more traditional “customer history” data. The result? “A 40 percent lift in email conversion rate, and a double-digit increase in ticket size versus the control group.”
Social media also provides a gold mine of attitudes and insights among flyers generally. While the unstructured nature of social media may seem difficult to quantify, market-research specialists in such fields as “buzz analytics” can translate tweets and Facebook posts into hard data that you can use, according to business process management firm WNS (Holdings) Limited.
When business people book trips through their employer’s internal travel department, they must comply with that department’s purchasing policies. So should you. “Make those offers within the context of corporate travel policies so the corporate customer is more likely to accept the offer,” says Dietz. “The personalized offer is more easily created when knowing enough about corporate travel policies to ensure that the customer can accept the offer.”
If you have to use one medium, make it a text message. According to the aforementioned IATA survey, approximately two-thirds of passengers in the eight countries surveyed “would find it helpful to receive timely promotional offers via text.”
Next, don’t neglect your smartphone app. Across all industries, Colloquy reports that 26 percent walked away from a program because it didn’t even offer an app.
Going even further, the IATA survey also discovered that approximately three-quarters of passengers claim that it is “much more convenient to have all my loyalty program benefits applied to the travel shopping process automatically.”
That said, some customers still prefer the warmth of a phone call or the convenience of email. So, give them a choice of how to receive offers.
“You can ask customers directly while collecting information, or ask on their profile,” says Dietz. “In that way, you can ensure the customer gets the information not only at the right time but through the right medium or channel.”
Improve customer retention after a flight disruption, bump or other negative customer events by offering a more personalized form of compensation.
“Having additional context and information — including information like rewards/loyalty program status, type of travel, length of travel and even whether the incident occurred outbound or inbound for that particular customer — can help you offer the personalized service that the customer will find relevant,” says Dietz.
If two-thirds of passengers are already sold on the concept of sharing their personal data with their preferred airline, that leaves another third who are holding back.
People don’t automatically make the mental link between giving personal information and receiving personalized service. “Some people know, but most don’t,” says Dietz. “They may have been willing participants if they knew what data [would be collected] and how it was being used.”
When asking a customer for personal information, clue them in on how it will benefit them personally. If they like renting vacation beach cabins, they should know that you’ll put them on the short list for great travel deals to tropical ports.
By improving how you accumulate information from passengers and transmit it back to them in the form of sales offers, you can increase both loyalty and the bottom line.