Customer Relationship Management (CRM) is the new mantra for travel companies struggling to differentiate themselves in a heated marketplace.
To gain a leading edge, the majority of major travel companies are developing one-to-one marketing strategies centering on their Web sites. But too many are managing their online and offline customers differently because of separate databases, reservation channels and customer service channels, according to One to One in Travel, a new report published by PhoCusWright Inc. and Peppers and Rogers Group. Because of these hurdles, no travel company has yet to offer true one-to-one marketing.
Travel companies that have not integrated their online and offline customer databases cannot provide consistent service through every channel. While the Web allows companies to easily capture a customer’s needs and preferences, companies now need to tap into this knowledge everywhere they have customer contact. Most travel companies know they have to better integrate their online and offline channels, but they’re restricted from quick action by the enormity and expense of the required technology implementation.
Alaska Airlines is stereotypical of the travel industry’s approach to one to one. Alaska spent much of 2000 meeting with dozens of CRM strategy and technology vendors trying to find the right enterprise CRM solution for the company. Airline executives realized they had to move ahead so they built and launched a profiling database behind alaskaair.com. MyAlaskaAir, which allows a customer to specify flying and lifestyle preferences, is based by a SQL server database and built to be open and scaleable. But the airline, which wants to drive its one-to-one marketing out of its frequent flyer community, still needs to tie the Web site’s profiling database to its Mileage Plan frequent flyer program database.
Alaska is not alone in its struggles. Travel executives all cited major challenges of merging databases to create one record of each customer, a necessary step to differentiating customers. One problem is that a number of travel companies, including US Airways, Continental, Delta, Carlson and British Airways, outsource their Web site’s customer support. As a result, Web customers are not speaking to the same call centers as offline customers. These companies have to work harder to integrate customer information, databases and customer service policies; they have an added challenge to make sure they treat each customer consistently through every channel and have one view of the customer.
Other findings from One to One in Travel include:
á For the first time, travel companies can use what they’re learning about customers through their Web sites to customize their services, i.e., to let customer needs have a bigger place in the development of new products and services. For example, ANC Rental, owner of Alamo and National brands, has about a million different rental car offerings - car type, length of rental, insurance options, etc. The company is moving toward customizing all of its services. Already, Alamo reports higher customer retention because it can campaign to customers based on purchase history.
á Travelocity.com and Expedia have been rolling out their own proprietary high-margin vacation packages, a perfect opportunity to develop new products based on customer needs and preferences. Now airlines, hotels and rental car agencies are using their Web sites to be a single source for all a traveler’s needs. Many airline sites, such as Southwest, now offer hotel and car rentals; hotels, such as Hyatt, are offering air and car bookings; and rental car companies, such as Dollar, are selling air travel and hotel rooms - all examples of travel companies moving toward gaining a larger share of each customer’s annual travel spending.
á Travel companies know they need to better assess a customer’s value. Most are judging value by frequency (e.g. frequent flyer status), which ultimately is a shallow measurement.
á United, American, Continental and other major airlines are implementing enterprise-wide customer data warehouses from which their airport agents can access a customer’s profile and history and provide more personalized service - at the airport or on the phone. But personalization efforts are at their earliest stages. Most e-mail notification services are still sent en masse. In general, airlines and online travel agencies have made the most progress, while lodging and vacation packagers are slower to offer personalization.
Despite the challenges, travel companies pledge that CRM and one-to-one initiatives are at the forefront of their marketing plans. They believe that knowing their best customers is their biggest opportunity to build share in this competitive environment and the only way to stand out in a maze of travel options.