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The future of CRM in the airline industry: A new paradigm for ...

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Topic: Airline Industry

Sort Desciption: The future of airline CRM. Issue. The airline industry is facing one of the most challenging environments in its history. A ...

Content Inside: IBM Institute for Business Value The future of CRM in the airline industry: A new paradigm for customer management By Declan Boland, Doug Morrison and Sean O’Neill As airlines struggle to gain market share and sustain profitability in today’s fiercely competitive and economically demanding environment, they must develop new ways to manage their customer relationships to optimize cus- tomer loyalty and revenues. What tactics should airlines use to acquire, develop and retain customers with greater precision and improved results? The future of airline CRM IBM Institute for Business Value 1 The future of airline CRM Contents 1 Executive summary 2 Issue 4 Analysis 8 Implications 14 Moving forward 15 Conclusion 16 About the authors 16 Contributors 17 References Executive summary The airline industry has reached a crossroads. The effects of the worldwide economic slump and the aftermath of September11th attacks have severely impacted airline economics and viability. While the U.S. and certain European markets were most severely impacted, air- lines worldwide are striving to both regain and improve profitability. Many have focused on operational improvements to reduce costs, but the customer cannot be ignored. Customer rela- tionships must be fostered for airlines to maintain competitive advantage and profitability in the long term. Airlines’ immediate focus is on cost reductions in driving to more efficient operations. However, many airlines are turning to customer relationship management (CRM) as a tool for managing customer relationships. Unfortunately, in many cases, they have failed to recognize CRM as a holistic strategy, instead viewing it as synonymous with their frequent flyer programs. In order to manage the customer more effectively across all lines of service, airlines must change their approach to CRM in a number of ways: • Customer segmentation—Airlines need to recognize that mileage-based segmentation is inadequate, whereas value-bas ...

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