If you’re anything like me, you’re tired of getting exactly the same offer from an airline website each time you book an itinerary.
I just booked my next trip to Chicago, and the first question was, "Would you like to buy insurance?" I checked the "No" box and the next question popped up: "Would you like to upgrade to business class for $169?" I selected "No, thanks," but was then asked, "Would you like to earn additional miles for $128?" I pressed the "No, thanks" button again and I was finally directed to the payment page. I flew more than a million miles with this airline the last 20 years and I’ve never opted for insurance, upgraded to business class or purchased additional miles. Although I've bought food and internet service on the plane, and paid to access the business lounge plenty of times, I was never offered the option of buying a meal or accessing the internet or lounge after I finished booking my itinerary.
Why doesn't my preferred airline know the ancillary products or services that I’ve bought over the last six to 12 months and bundle them with my itinerary to offer me a package that I would actually buy? And my favorite airline isn’t the only one that doesn’t do this. The majority of them don’t.
New technologies for gathering and analyzing data are bringing significant changes to how airlines use their growing cache of personal information about passengers and how agents sell travel. Airlines can now do this to a greater degree than ever before because they can marry real-time data about each step in a customer's travel with increasingly accurate data about the customers themselves, mined from outside sources. Airlines can use the data to identify customer behavior patterns and know that if a customer does A and B, then that customer will probably respond to an offer for C. The intended results are a better customer experience and an improved bottom line for the airline.
Can’t my favorite airline do the same with its loyalty program members? Wouldn’t it be so nice if my favorite airline could utilize these new technologies to enhance its e-commerce capabilities to offer me individualized packages while booking my itinerary on its website?
There are three reasons why airlines haven’t achieved this yet:
- They aren’t considering customer information in cross-selling. While airlines can distinguish the “elite” level of customer who’s shopping, they aren’t using other customer information to decide what ancillary products to offer.
- They aren’t utilizing segmentation techniques to cluster customers into groups. Segmentation is a powerful tool that will enable airlines to effectively select the right products for each customer group based on how the customers purchased ancillary products in the past.
- Their e-commerce platforms lack bundling functionality. Existing platforms aren’t able to build bundles in real time by leveraging segmentation intelligence.
Using exactly the same techniques that other companies are using to target their customers, airlines can proactively build targeted packages for elite customers like me. The three key steps to achieving this effectively are enriching customer data with information from outside sources, intelligently segmenting the enriched data and implementing predictive analytics, and upgrading their e-commerce platforms to offer the right bundle to the right customer.
For the past three summers, my family has flown on my preferred airline to a beach destination. Each time, we pre-selected and purchased better seats, and paid for extra luggage at the check-in counter. Undoubtedly, we’ll take a similar vacation this summer, too. However, will we travel my preferred airline? It’s already June and I haven’t received an offer on my mobile app for a beach destination. Perhaps I’ll have better luck with airlines for which I’m not an elite member of the loyalty program.