All travel firms already have enough of their own data to turn into additional revenue but are often tempted to invest millions in analytics technology unnecessarily.
That’s the view of marketing insights specialist Big Data for Humans which has struck up a strategic joint venture with Far Eastern budget carrier Air Asia.
Peter Ellen, founder of Big Data for Humans, says taking an automated Service as a Software approach should reap firms a 3% to 5% annual revenue increase on top of significant IT cost savings.
He adds three quarters of the costs of “old school marketing techniques” can be saved while savings in the cost of integrating third party analytics software could run into multi-millions of dollars.
“Typically a lot of money is spent with big IT providers which often starts with someone convincing a senior exec they have this huge lake of data they can make money out of.
“They look at use cases and try to construct huge analytical solutions for any business function which often takes 18 months and by the time it’s deployed half the staff involved have left.
“The world of analytics is littered with stories like that. We do not try to do everything, we’re only interested in how you get the data and make more money from the lifetime value of customers.”
Ellen said the tie-up with Air Asia came about “by accident” after founder Tony Fernandez attended an event on London at which the London-based firm was talking about its technology.
“He said it sounds like your software is doing something like we are trying to do,” said Ellen.
“They realise having an understanding of their data would have a major impact on booking revenues, ancillary revenue and direct business.
“They had already started investing in a data insights team but realised much of what they were trying to do could actually be automated by our software.”
Ellen said this was a familiar scenario and claimed Air Asia has saved a seven figure sum by partnering with Big Data For Humans.
“Often customer insights teams have pretty big and complex structures and objectives that are trying to solve almost every problem imaginable with data,” he said.
“But it’s very difficult to solve more programmatic problems about how to drive ancillary, booking and direct revenue. We automate insight and don’t try to solve every problem at once.”
As well as becoming a major customer of Big Data for Humans, Fernandez also decided to invest in the firm and a 50:50 joint venture was formed to work in south east Asia.
Big Data for Humans dispenses with the traditional customer segmenting approach to data insights for marketing and uses graph theory and social data to create communities if customers.
This allows it to look at the customer in a much more detailed way and the journeys they take to better understand their value to the business and likelihood of deriving more revenue from them.
“We do not squish people into pre-determined groups. We can group customers by the actual journeys they take.
“By looking at similarity of behaviour you can start predicting what customers are going to do next. If you want to cross-sell or upsell ancillaries you have a very strong basis for doing that.
“Take airlines. Normally you would analyse revenue per seat booking and consider how well you are doing on all routes.
“We can add how much revenue you are getting from customers over time who travel on those routes so you can start considering profitability of those customers.
“There are often repeated channel costs for acquiring customers again and again so you can understand those and develop marketing campaigns or apps to drive more direct revenue.
“We are really interested in people, products, and money. That’s the first order of insights you need to make more money.
“The most important thing is to understand what journey the customer will take through lookalikes by analysing how other bookers or passengers behave.
“Based on those patterns it’s about how we can understand what is the right time to offer them something new.”
Ellen said this approach results in 25 to 30 abstract communities, within which it can drill down further to 10 personas which firms can use to “pick their battles”.
He said this is pretty much the promised land of the single customer view in marketing arrived at through automation after which human resources can run and assess campaigns.
As a result marketing teams of 12 can be cut to just three because all the technical roles have been automated.
“All this can be done without any real technical skills. The human bit is planning and executing campaigns,” says Ellen. “Everyone has enough data to get started.
“People talk about data lakes, but everyone in travel has got booking data. No matter how much you have got that’s always where we would start.
“The data is there somewhere, it’s getting your hands on it in a useful form that a marketing person can use. There’s usually a whole bunch of frustrated marketeers in any organisation.
“The most actionable data any company has who their customers are, what do they book, how much are they worth, how frequently do they book and where do they travel to.
“That’s all they really need to sell more stuff to them. Our approach has been specifically built for retail and travel companies.
“The graph method is really effective when you have complex consumption and transaction and lots of bookers.
“Once you have customers it’s much cheaper to retain them than to acquire them again, the question is how do you do that.”
Big Data For Humans was founded in 2014 when it was a part of the Techstars global start-up incubator programme.
It has since gone through a couple of investment rounds so that today 60% of revenue is non-UK. It has 20 customers globally and as well as an office London it has a base in Singapore.