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we're here with Raj Sivakumar who is
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head of travel technology and strategy
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at wns Global Services and Peter fader
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who is wharton marketing professor and
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most recently co-director of the wharton
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customer analytics initiative welcome to
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both of you great to be thank you so
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we're here to focus on the airline
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industry and how customer analytics has
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really changed that industry so can you
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talk about some of the evolution of the
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use of analytics in Airlines yeah thanks
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so Debra just to provide some backdrop
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about the airline industry it has been
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perhaps one of the most distressed
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industries you know ever since no it
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started and in then entire airline food
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chain or the travel food chain the
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airlines make the least amount of
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profits you know compared to the other
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players in the ecosystem what they're
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just meant you know putting a positive
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spin - that is Airlines you know in
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particular have become the hotbed when
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it comes to innovation technology
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decision support optimization etc and if
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you look at any leading sort of a
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decision support system you know it's
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safe to say that the airlines have led
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the way okay whether it's a frequent
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flyer program whether it should have any
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management system whether it is a
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scheduling systems etc and because
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neccessity is the mother of invention
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now where this all fits in from an
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analytic standpoint is in the early days
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of decision support analytics played a
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supporting role okay so as revenue
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management for example sort of you know
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got enhanced okay clearly the advanced
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revenue management systems required
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better data it required more accurate
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data but there was very little
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personalization it was you know just to
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talk about airline parlance here it's
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looking at PN RS as opposed to looking
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at customers it is looking at the travel
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records as opposed to looking at the
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customers so while the data collection
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and the data enforcement so to speak has
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been there right from the beginning what
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we have seen in the last I would say
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five years or so is more of an emphasis
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on personalization okay understanding
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the customer more okay understanding the
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attributes of the customer more talking
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about you know
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what is it that we can glean you know
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from the data that we observe not just
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from that customer but also from the
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class of customers that look like that
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customer and that evolution is pretty
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market and clearly that evolution has
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become you know more prominent not only
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because you know of the advanced
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analytical techniques but also because
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of that ones need like a drink
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techniques and the technology that is
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available for us to parse the data now
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on a highlight would Raj said which is
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every other industry I was such an
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incredible debt of gratitude to the
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airline industry as he said they truly
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led the way they for instance you look
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at loyalty programs today we all take
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them for granted they're ubiquitous
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think about how many different programs
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you belong to but every one of those
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programs in a way is is paying homage to
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the airline's
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they did at first they did best that it
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continues to be a major strategic weapon
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there and on a very personal level I
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spend a lot of my time these days I'm
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looking at a revenue management or the
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notion of dynamic pricing in fact they
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just completed a paper where we apply
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different dynamic pricing techniques to
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a major league baseball club something
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like that would have been unthinkable 5
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10 20 years ago and it really was the
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airlines who not only brought those
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words into our vocabulary but legitimize
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them and made it possible that indeed
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different people could pay different
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prices for the very same product and
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they made it acceptable and they made it
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profitable and so the and it's
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incredible that those two things alone
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loyalty programs and dynamic pricing
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really game-changing for every industry
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and it's remarkable that they that those
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innovations among many others come from
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one industry as airlines increasingly
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adopt data analytics tools what are key
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factors of success data analytics you
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know is about better decisions at the
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end of the day and in the airline space
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you know probably more so than any other
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space the decisions are all about
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trade-offs okay we are talking about no
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we are talking about customer centricity
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we are talking about revenue enhancement
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and we are talking about cost reduction
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and more often than not
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you know these three objectives are
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conflicting and as opposed to
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collaborating if I can say that so it is
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absolutely crucial that the scientists
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and the practitioners in who focus on
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data analytics understand the trade-offs
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well because at the end of the day we
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got to sell data analytics program or
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practice and make it viable in the
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industry and those airlines and those
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practitioners that are able to
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understand the trade-offs well are the
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ones that are going to succeed
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are they another day when Raj says is
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deceptively simple but actually much
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more complex to actually implement this
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idea of trade-offs which I completely
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agree with it sounds simple in fact
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we've had statistical techniques for
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decades they're gonna let us measure the
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trade-offs and understand how people
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will will make those and how they'll
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vary across people and how different
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kinds of contextual factors such as
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marketing messages might impact those
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trade-offs so from a pure measurement
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standpoint it's easy that's a solved
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problem but from implementing from
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building a business not just to
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accommodate those trade-offs but to
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build it entirely around those kinds of
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trade-offs the idea of taking customer
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centricity instead of saying oh yeah we
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got to be cars into the customer but say
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no that's the focus of what we do
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that's what's gonna drive our analytic
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success that's gonna mean much more than
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just having a bunch of smart people who
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can collect data and crunch numbers it's
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going to mean changing the corporate
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culture it's gonna mean changing the
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kinds of metrics that we use to judge
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the business so instead of just looking
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at things like volume and overall
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revenue and market share we're going to
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be looking at metrics such as customer
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lifetime value and customer retention
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metrics that by their very nature
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represent some of those trade-offs it's
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going to mean a different structure to
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the organization so it's it's not enough
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just to say we have to embrace
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trade-offs this has to come from the top
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down it has to be the c-level people say
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that is these kinds of trade-offs that
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is this notion of customer centricity
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that's gonna be front and center and in
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some sense if you can get that right
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then the honor the analytical
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capabilities are going to follow quite
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naturally well Airlines today are making
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a lot of alliances with outside partners
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such as hotel chains car rental
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companies and the like but in the
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process they do encounter
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some challenges can you talk about some
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of those challenges and how they can
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potentially overcome them
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sure it's a very interesting problem oh
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so airlines have stopped looking at
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themselves in isolation they have
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partnerships with the other airlines and
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they also have partnerships you know or
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could be having more partnership with
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other players and the ecosystems you
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know whether it's a car rental company
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whether it's a large travel intermediary
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like an OTA you know etc the challenge
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quite simply and from a customer
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standpoint the customer demands and
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deserves recognition and the customer
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demands and deserve consistency in the
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treatment and these two become
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challenges as you look at how do we deal
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with the customer from a
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NTD standpoint of the enterprise
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standpoint and the problem quite simply
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is does every player in the ecosystem
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would like to own the customer to use
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the parlance and in the process of
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owning the customer and the way they own
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the customer for the most part today
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okay is through the loyalty programs the
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airline frequent flyer programs or the
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hotel loyalty programs are such and the
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challenge there is is to be able to have
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an adequate treatment on how information
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is exchanged how if there is any
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monetary exchange of a customer that may
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you know but that may travel in a in a
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certain flight and stay in a certain
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hotel and take a certain car rental
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company okay who benefits more you know
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from what treatment okay because one
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could argue that you know the hotel or
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the airline in two brings bulk of the
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revenue okay in the car rental company
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plays a subsidiary role whereas the car
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rental company could could argue the
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other way you know because of their
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attributes is why you know a certain
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person is flying or whatever the case
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may be
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so the adequate treatment of the cross
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company sort of you know the the
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benefits and the value that is being
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transcended to the customer is going to
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be absolutely important you know between
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this you know between this company being
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able to recognize and reward the
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customer and then how they divvy up the
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value I'm not going to say revenue here
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how they divvy up the value you know
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that the customer brings to the
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ecosystem amongst themselves is going to
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be crucial they're getting better at it
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but a lot more work has to be done and
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indeed the idea of partnerships over
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there was it's it's an idea it's been
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around forever uh and in fact there
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there were some really bold initiative
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it's happening long before a lot of
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these operational ideas really came to
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pass so I'm thinking back 2530 years ago
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I can't remember the name of the entity
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when United Airlines bought Hertz and
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and Weston and the whole idea is let's
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get all these things together the
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problem is those partnerships were way
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ahead of their time and I'm thinking
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about all the words that the Rogers
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using over here the idea of customer
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centricity the idea of being able to
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track individual customers through all
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those different touch points and then
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allocating their value accordingly to
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them none of that was possible back when
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let's stay with that one case study when
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when when United was was buying up
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certain kinds of hotels and car rental
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companies at that point there were still
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entirely separate databases for the
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customers to the extent that were
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attracting customers at all across those
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three players there was no way to get
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that holistic view and there was no way
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on any kind of personalized level to be
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able to serve up differential
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experiences to customers based on what
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they were doing with one of the other
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partners so the partnerships ideas has
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been around forever and that's it's good
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it's nice to see an industry that's
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willing to take risks like that but
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we're on the verge right now because of
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this belief in data because of the
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belief in analytics because of the
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belief in customer centricity that these
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partnerships are going to start to
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really bear fruit and they're going to
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do so in a way that's going to be
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synergistic to all of the partners it's
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gonna be just tremendous insights
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arising from it and everyone's gonna be
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better off not only the partners
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involved but the customers as well so
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how can hairlines best use social media
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and other customer level data to drive
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product differentiation to boost sales
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and provide a superior customer
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experience social media that's that's
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that that's the great unknown that's
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that's the the world that we're stepping
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into right now and as always airlines
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have been truly at the leading edge of
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it and it's interesting cuz they're at
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the leading edge kind of in both ways
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which is on one hand being the producers
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being but really a proactive users of
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social media so whether it's you know
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hiring armies of people to monitor
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Twitter and every time they tweet about
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your name you know you're you're on it
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right away
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or one of the area's I just just love
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about Airlines it seems like every
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Christmas
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that's lots of different airlines to
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coming up with some some amazing viral
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video about how they're doing some
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surprise and delight weather was WestJet
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in Canada or a KLM over in Europe lots
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of examples of Airlines kind of began
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proactively using social media but then
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they're also on the receiving end of it
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as well because it's an industry that
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that that creates so much passion you're
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gonna get viral videos like that the
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famous United breaks guitars and and
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it's a famous example but it's been
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amazing to see how well not just United
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Airlines but the airlines in general
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have been doing there's a kind of a judo
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move to take a medium that had that in
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some ways can be used against them but
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to turn it around and turn it into a
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real strength now in no way am I
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suggesting that it's game over and that
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they figure this thing out but all I'm
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saying is that they are leading the way
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and I think a lot of industries are
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looking at the airlines to see in many
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ways they're the canary in the coal mine
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to see how they're using social media
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and I think in that same way the
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airlines are being proactive about
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looking for best practices outside the
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industry as well so just to add to what
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Peter said social media is incredible
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you know from a couple of different
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standpoint one is it's a rich set of
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independent data source right okay
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compared to the traditional data sources
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that airlines are used to and other
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companies are used to and secondly
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they're spontaneous okay and it says
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there's a remarkable level of importance
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you know that has to be at a attached to
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the spontaneity of the data you know
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just to kind of put this in context
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traditionally airlines have you know
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invested you know millions of dollars on
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contacting service right so whether
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in-flight survey or service that not
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nowadays come here email you know after
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the travel has happened hey what do you
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think about the booking process what do
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you think about the the travel process
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in-flight food etcetera etcetera okay
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and typically these services are sent
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you know you know month later or week
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later or whatever the case may be okay
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but even if the service or the sent
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spontaneously the response is about a
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month or two after the process happen
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you know for example a customer may have
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made the booking you know six months ago
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and now you're asking you know hey or do
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the booking process though right now
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with the advent of the social media what
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what it has done is
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the customer is able to spontaneously
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respond and in a very uncommon way
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respond to a certain experience and that
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provides the airlines with a very rich
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data source okay for them to think about
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what is the world thinking okay or at
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least a certain class of customers
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thinking about that particular aspect of
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the service good or bad and what we are
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doing in W illnesses you know there's a
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fair amount of investment that is going
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on we have an advanced social media
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analytics tool okay that captures the
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footprint social media footprint and
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maps it to certain airline attributes
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whether it's meals whether it's baggage
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whether it's a check-in process okay
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that and compares it with a peer group
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okay so you're able to do all this in a
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very unconstrained way and that makes it
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incredibly powerful compared to the
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traditional place because we you know
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just to repeat when you kind of look at
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the service for example or when you even
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when you look at the complaint data it's
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only a small fraction of the customers
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that actually take the trouble of
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complaining the vast majority of the
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customers just walk with their money to
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some other airline okay now as you
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capture this in real-time and be able to
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respond to it in real-time you know that
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puts the airlines in a better light and
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more importantly increases a loyalty
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element as well with that customer
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you
