By Steve Arsenault

 

The debate over the value of airline frequent flyer programs (FFPs) rages on, and will likely continue for several years. But, all industry experts agree these programs are the source of a large amount of customer data. FFPs have conditioned customers to self-identify at each transaction point and grant you permission to collect personal data about them – even beyond the data strictly needed to operate your program.

 

One strategy to ensure the value of your FFP is to maximize the value of the customer data you collect. There are three simple rules for maximizing the value of customer data – flexibility, flexibility, flexibility. More specifically, these rules are:

 

Flexibility in data collection 

Flexibility in data analysis and 

Flexibility in data use.

 

Flexible Data Collection

 

All FFPs collect, store and update some basic types of data. Typically, this data falls into two main categories: customer registration information (name, address, phone number, etc) and transaction data (activities to be debited and credited for both reward and recognition).

 

Beyond this basic data, each program decides what additional information is important. In an industry as dynamic as airlines, there is no way of making long-term decisions about the right data to collect and store. Regulations, competitive pressures, changes in your airline’s strategies and changes in your program will all change what is most important to know about your customers. Any decision made today about what customer data to collect and store will, over time, prove to be incomplete (at best) or just plain wrong (at worst).

 

So, your program needs to be able to quickly change and customize the types of data that you collect and store. For instance, you may want to collect lifestyle data – like sporting and cultural interests – so you know to tell your customers who ski about new service to Vancouver while the theatre fans receive discount offers for London weekends.

 

Or, perhaps you’d like to collect more demographic data to help your marketing department identify customers most likely to have large amounts of disposable income. It could be affiliation data, so you can recognize base-tier members who are related to other higher value customers. Survey or communication data, may help you identify customers who are less than fully satisfied and may need a bit of additional attention at the next point of contact.

 

Your business goals will help you determine what types of data to collect. But, whatever data you collect, it will likely change as your airline and your operating environment change.

 

It’s also important to be flexible in how you collect the data. Since you will be asking your customers to update much of this data you will need to be able to provide easy web access, so that each customer engages in a dialogue with you and becomes the source of information they want you to know about them.

 

Flexible Data Analysis

 

Ask your Vice President of Marketing what are the five most important things she wants to know about your airline’s customers. If you ask again in six months, chances are the answers will be dramatically different.

 

These shifting needs are the reality of our industry – and it means you must be flexible in analyzing data.

 

If you are relying on standardized reports to understand what is going on with your customers, you are flying with one eye closed. While these reports may be necessary, you also need to be able to quickly answer ad-hoc queries and the resulting follow-on questions. Slicing your customer data any way you want, you gives you a deeper understanding of your customers, customer segments and markets. This is a competitive advantage - and it increases as you keep asking new and better questions and getting answers faster than your competitors can.

 

Flexible Data Use

 

Ultimately, the value of collecting and analyzing customer data comes from using these results to drive retention, loyalty and incremental purchases.

 

Flexible data use means using lifestyle data to build and deliver tightly targeted promotions that really matter to the customers who receive them – like those special “theater-lover” fares to London or ski weekend packages to Vancouver. This approach allows you to drive the maximum amount of incremental travel at minimum cost.

 

Flexible data use also means getting actionable information out to all points of customer contact. When customer-facing employees have access to this data, they can appropriately service each customer. They can deliver targeted offers, handle service recovery, and offer differentiated service based on each customer’s needs, preferences, and value to your enterprise. In other words, your airline will invest its time, attention and resources where they matter most.

 

Conclusion

 

The primary source of value in frequent flyer programs is in customer data. Because change will continue to be the only constant in our industry, we must expect that data to change – as well as how we collect, analyze and use it. This flexibility will prove to be the biggest competitive advantage that loyalty professionals can offer in the future.

 

Steve Arsenault is a Worldwide Sales Director (iLoyal) at IBS, a leading global provider of new-generation IT solutions to the Travel, Transportation and Logistics industries

 

Published: February 04, 2008