This week we talked about Customer Relationship Management (CRM) as a process and as a software application. Based on the CRM concepts learned, answer the following questions:
1. List the customer data elements generated when a customer interacts with an airline by (a) making a reservation, (b) using frequent flyer miles, and (c) completing a flight. How does information from CRM improve these interactions?
2. What are the benefits of integrating the sales, marketing and customer support function using a single software package and a centralized database?
Answer
1a. The economic engine of an airline is its reservation system. Using customer relationship management systems and managed services, this critical revenue engine can be transformed from an internally focused, product-based system to a customer-centric, service-based system.
By focusing on the complete customer life cycle (engage, transact, fulfill and service) or "total customer experience" and by implementing CRM strategies across customer touch points enterprise-wide, airlines will gain a comprehensive view of their customers and be able to deliver innovative, differentiated and personalized services. Through a highly secure, interoperable environment, taking a CRM approach will result in increased customer acquisition, retention, lifetime value and operational efficiency.
1b. CRM has enabled much up-selling of higher-end offerings and cross-selling of other product lines to existing accounts. Now, cross-selling and up-selling are fine, as long as the customer wants to know about those other offerings. Otherwise, they may feel a bit taken advantage of, and for good reason. If customer loyalty is to be encouraged by rewarding and not penalizing, then additional selling should be done with discretion and by invitation. It also matters how loyalty is achieved using customer information. There are those that would seek to buy customer loyalty. Through frequent flyer miles, discounted long distance service, and other means of discounting or coupons, customers are incentivized to buy a certain credit card, airline, or long-distance carrier. In the case of airlines, one could say that as the chance to win miles has gone up, the quality of service has declined. A further irony has occurred in airlines, long distance, and credit cards, when the offered price is better for the light user or prospect than it is for the loyal customer. Once again, this isn't exactly a case of rewarding loyalty.
1c. Establishing and strengthening long-term relationships with airline's customers is the key to success. It's the focus of a well-structured and coordinated process of customer relationship management.
The information can increase the profitability of a customer base; acquire more customers, optimize the value of existing customers, or retain the right customers longer. All of these benefits must be achieved with lower costs. As the economic climate continues to become more competitive, the fight over customers intensifies. Of the three choices above, acquiring new customers is the most expensive. Research shows that acquiring new customer costs 5 to 10 times more than retaining an existing one. Studies also show that loyal customers will buy more over their lifetime and are willing to pay a premium for doing business with someone they like and trust. Therefore, while organizations will clearly continue looking for new customers, once acquired, they now know that it is worth a significant investment to keep them. CRM is a way to do that.
2. The benefit of CRM single software package as below:
* Gain a 360-degree view of each customer to easily identify new selling opportunities and make recommendations.
* Enforce efficient and consistent sales processes across sales teams.
* Automate manual processes including lead routing to streamline efficiency and cut the cost of selling.
* Seamlessly process items from initial quote through to invoice within a single interface.
* Easily communicate new offers and products launches by email and mail.
* Create and manage marketing lists that can be used to generate a new source of leads.
* Profile individual contacts to select the right contacts for each marketing message.
* Track the results from phone calls and other communications with contacts
You've provided a comprehensive insight into the value of CRM for the airline industry. The YouTube video is hilarious as well ! Going back to Question 1, could you give three or four DATA elements that are collected by airlines when a customer (a) makes a reservation, (b) uses frequent flyer miles, and (c) completes a flight. Then explain how CRM data already existing in the system can improve these three processes.
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