Digital Consumer

If there is one industry that can use a technology overhaul, it's the airline industry.  As a frequent traveler, I've seen the best and worst that the airline industry has to offer and I'm constantly amazed at the different levels of service.  Perhaps bewildered is a better term.  And I can't think of an industry where data mining, personalized profiles, and customer preferences can make a huge difference in service offerings - which could lead to different tier pricing.  The end result could be better customer service and heftier profits.

Let's start with a familiar anecdote.  Members of my family were traveling recently from Mumbai to Bangalore.  The flight was supposed to depart at 7 p.m., but the time came and went, and they were never told why there was a delay - despite their asking several times at a help desk. 

They had to spend the night at the airport waiting for a flight that never departed.  Unfortunately, this is standard operating procedure for many airlines.  I'm sure many travelers can share similar accounts of a non-functional flight by a non-communicating carrier. 

Even if you're a low cost carrier the overall negative impact is often more than a few angry customers that missed a flight.  A lack of concern for customers can go viral very quickly.  Another example:  a colleague told me that when the same behavior by an airline occurred in a flight from Newark to Miami, the carrier's personnel brought out a coffee cart two hours after the scheduled flight was to leave - the pilot was stuck in traffic!  As if a free cup of coffee could appease angry customers.  One passenger immediately took out his laptop and began writing a poison pen letter to the company CEO that said he was never going to fly the airline again.  He then shared the "form" letter with other customers.  (The letter writer received $300 in vouchers for him and his family for future flights to apologize for the inconvenience.)

Everyone wants to know the status of their flight and if the airline had kept everyone informed passengers could have found alternate flights. The airline could have mitigated the damage to its image too.

Even for a low cost airline, better communication can be a differentiator.  Forget the extra legroom, fancy meals and wifi connection.  There's plenty of room to differentiate on the basics, like knowing if your flight is going to take off or not!

Every business needs to differentiate itself and the airline carriers are no different.  But even in an industry that competes heavily on price, effective practices (in any businesses) can be developed anywhere in the service delivery chain. 

What bothers me most about these stories is that there was no effort to communicate what the problem was.  Equipment failure?  Bad weather en route?  A sick pilot or crew member?  There are many ways to diffuse the situation.  Saying and doing nothing is the worst possible response.  In most businesses, repeat customers are a key to success.  

It all begins by knowing who your customers are and who provides the value.  This isn't as easy as it sounds.  Frequent flier miles, revenue spent, re-bookings at a higher rate are all good proxies.  The best choice will align with the airline's positioning.  A budget airline that wants seats filled may look at revenue spent.   

Another way to look at customer response to the problem:  Suppose your high-end traveler is paying top-dollar for his seat and needs to absolutely "get there on time."  He may react much differently from the low-fare payer who booked months in advance and whose travel plans aren't as time critical. 

Optimizing the experience for the target customer is where airlines are looking to gain the edge.  Airlines are mining Facebook, Twitter feeds and other social networks to uncover these insights.  They are well aware that everyone loves to share their horror stories with friends and family.  Customers name names, and when these reviews go online, they are carefully considered by viewers. 

The carriers that are able to leverage this information to create personalized service will have the edge in the long term.  And it doesn't have to add to the cost base.  If my preferences are known to the airline I would likely take advantage of higher profit ancillary services offered by the airline or its partners.  As a (wannabe better) golfer, I'd like to see highlights of the latest tournaments from my entertainment console or be given free access to a golf e-magazine on my tablet I wouldn't normally have time to read.  

The potential is enormous (not to mention that the extra leg room would be nice, too)!