Guest Post: The science of predicting consumer intent

Airlines have the data to drive differentiation, personalisation and revenue, says PROS Solution Strategy Director for Travel Aditi Mehta

Airlines have the data to drive differentiation, personalisation and revenue, says PROS Solution Strategy Director for Travel Aditi Mehta

Unlike some industries, airlines have no shortage of data. In fact, they have years of historical booking data, allowing them to measure things like how many seats were reserved before a flight took off, who their most frequent customers are – what they book, what they are willing to pay, and how often they travel. They can also record transactional data to see how travelers move through a booking flow, what add-ons they purchase, and at what point they may abandon the cart.

Airlines even have the master of all data – the PNR, or passenger name record, that tracks all of a passenger’s details, including the payment they used, and non-airline related bookings associated with the trip.

With this data, airlines have a unique opportunity to become successful retailers that appeal to customer needs. As retailers, they can create and sell products that customers really want – products they are willing to pay for, are profitable for the airline to sell, but also deliver a superior customer experience.

However, many airlines have fallen behind other industries in their ability to transform the customer experience with the data they have. In fact, we often hear airlines talk about how difficult it is to access their own data, and the lack of technology to compile, mine, and produce tangible business recommendations from it. So, what are some ways airlines can begin their journey to drive product differentiation, personalisation, and ultimately – revenue?

Getting under the skin of the customer

A recent study from Atmosphere Research showed that customers are willing to share personal information if this means more personalised products and greater safety – in fact, most us have come to expect this when browsing online.

With this in mind, airlines need to better listen and learn from the data signals of their customers. Information like the way they shop, what they book, and how they interact are invaluable in shaping an airline’s products, pricing, and storefront. Other factors, like data specific to the markets they are flying to, special events and demand fluctuations can also be used to create more relevant and better priced offers for customers.

Smart science to predict consumer intent

With this data at hand, the right technology partners and the know-how to dig deep, airlines now have the ability to learn about the markets they operate in and apply science to predict customer intent.

For example, as an airline adopts more advanced revenue management strategies powered by science, they can break away from rigid pricing constraints and move to dynamic pricing. Dynamic pricing is a key step to airline retailing, as it helps airlines to present relevant offers that make more sense to a customer. With dynamic pricing, airlines can marry the seat with relevant ancillaries and create personalised offers that customers actually want, using it to upsell products and services.

With a dynamic offer, the next critical step is using data and technology to shape the customer experience and present those offers in a smart, engaging way. This includes using strategies like A/B testing to adjust the shopping and booking path, and filtering or ordering ancillaries based on past customer preferences.

Re-wiring the organisation for success

Of course, none of this can happen unless an airline’s leadership can bring departments and groups together for a common purpose.

Today, many airlines have a siloed business structure – while one department owns pricing and historical booking data, another department entirely will have access to valuable frequent flyer information. Transactional and customer experience data for instance may only sit with the eCommerce department.

The good news is that airlines are increasingly looking for alternative organisational structures and technology to bridge those gaps, dedicating more time to digital transformation and improving the customer experience. They are looking beyond legacy systems, evaluating how to incorporate AI and Machine Learning, and ensuring that the right people across the organisation have a seat at the table.

Looking ahead to the future of the industry, it will require airlines taking all of the steps above in order to better understand their customer, and use the data at their fingertips to create more relevant and personalised offers that can positively impact the customer experience.

It’s a win-win for both parties – not only will customers benefit from a better product, but for airlines, this means increased revenue, greater conversion rates, and an opportunity to differentiate its brand. Research presented by McKinsey and Co at the 2019 IATA Retail Symposium noted that these changes could amount to $40 billion dollars in incremental revenue for the industry.

Airlines are at the point where they have the data, the vision and the business case – now it’s about rolling up their sleeves to make it a reality.