CRM Strategy & Objective Setting in Airlines

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SP
Member

Posted 15-Jul-2005 05:54 AM
Hi Jim,

I and team of consultants is in the process of designing the CRM initiative at one of the Airline majors in the Middle east

I find that there is already quite a bit of automation in the enterprise. This is mainly in the operations & revenue management areas. Automations now half way thru in the HR & Finance sections.

However, all of that happening without a clear a strategy . we are trying to make sure that does not happen in he CRM initiative.

Hence we have set in process a CRM objective setting excercise. I am looking for some fast guidance on this. Some real life experience sharing, some white paper, case study etc—great if from the same domain

Regards


Jim Barnes, CRMGuru Panelist
Advisory Board
Member
Picture of Jim Barnes, CRMGuru Panelist

Posted 21-Jul-2005 03:54 AM
Hi SP

You have run into a classic problem in CRM, namely the implementation of a CRM “solution” in the absence of a clearly-defined CRM strategy. You are right to stop and develop such a strategy before going further. I am convinced that one of the main reasons for the reported failure rate of CRM projects is that many, if not most, were implemented without a clear set of objectives.

It’s important to remember what the end goal of CRM is. It’s not about the technology or the software, but rather about building relationships with your customers. So, I would encourage you to determine what your company wishes to accomplish in this regard and then decide what role the CRM software (and other tools) might play in allowing you to get to the goal. You will find that the software is only one of several different things you will have to address. In fact, I would suggest that lining up the HR function with the goals of the company is often even more important.

Now, where do you go for guidance in developing that strategy. There are no quick fixes, and there hasn’t been a lot of great stuff written on the subject. As it happens I am currently working on a book on customer strategy, but I’m afraid it won’t be out until early 2006. In the meantime, you might take a look at an article in the Harvard Business Review in the February 2002 issue by Rigby, Reichheld and Schefter entitled “Avoid the Four Perils of CRM.” And, I like some of the things that are being written by Jennifer Kirkby of the UK. She has written a report in March 2005, entitled “The Must-Have Customer Strategy”. You can access it at http://www.insightexec.com/cgi-bin/item.cgi?id=131296

I hope this is useful. Good luck in building solid relationships with your customers.

Jim

Jim Barnes specializes in Customer Strategy as a member of the CRMGuru Advisory Board. For more information, please visit Barnes Marketing Associates.


Graham Hill
Guru
Member

Posted 21-Jul-2005 08:36 AM
SP

The other big thing to watch out for in Aviation CRM is the clash between CRM and Yield Management tools.

CRM is about treating different customers differently. In contrast, the much longer stablished Yield Management tools ignore customers completely in the drive to maximise revenue from seat sales. They are very hard to reconcile.

Yield Management tools aside. Don’t forget in your objective setting to take a three way view. The first view is what customers want, need and expect. Many companies and their CRM programmes do poorly because they miss out this view. The second view is the economics of providing different products, services and experiences to different customers. As all customers do not have equal value, you need to understand how to invest your resources in the way that provides the most value to customers whilst providing matching profits for the airline. The third view is the business capabilities you must develop to deliver this value. Capabilities are blended mixtures of processes, data, systems, people and other assets and resources which give the airline an advantage. You need to understand how to use the capabilities you have to deliver the most profitable value to customers, and which ones to develop in the future to do more of the same.

Consider these three views when developing your strategy and/or objectives and you are on the right road.


Graham Hill
Independent CRM Consultant

PS Take a look at John Kay’s article on Resource Based Strategy from the FT Mastering Strategy series (available at http://www.johnkay.com/strategy/135). It is perhaps the single clearest piece of thinking on what strategy is and what it isn’t available today.


Vladimir Dimitroff
Member

Posted 21-Jul-2005 03:58 PM
Hi, SP –

Your airline (or client) seems to be one of the few in the Middle East that truly need CRM. Quite a few operators in the region are monopolies with no domestic competition, and with not very ‘open skies’—well protected from competition, they can get away with not being too customer-centric.

The others (like the airlines in the UAE, for example) are facing tough domestic and international competition. Some have managed to differentiate on price and this competitive discipline sees CRM as unnecessary cost. I hope your case is one of competitive differentiation in the customer dimension.

All this is to emphasise the need for strategy, already mentioned in your posting. It has to start at the highest level of long-term strategic orientation. A good reference point is the 3D model of the key competitive dimensions (as in Treacy and Wiersema’s ‘Discipline of Market Leaders’). Your airline has to choose between product excellence, operational efficiency or customer centricity—you need all three but can lead the market in only one, and this is a critical strategic choice.

Even if Customer Centricity is not your chosen dimension, CRM can be deployed to help in the other two: an operationally efficient company (which competes on prices) can automate all customer processes to reduce cost. (EasyJet has just implemented a CRM solution).

A company focused on Product Excellence can also benefit, as the airline product is more than buying the latest Airbuses or Boing-s and installing flat beds and fancy entertainment. CRM can help dramatically improve customer service and the overall experience, providing a strong differentiator.

It is, undoubtedly, most beneficial where the chosen competitive dimension is customer relationships. It is here that you will ralise that CRM is more than just a ‘solution’. Even in the information architecture this usually involves multiple solutions working together:

– you will need diverse Contact Management and Sales Automation (the functions most often labeled ‘CRM’ nowadays)
– you will need a single view of the customer, i.e. some form of centralised depository of customer data (a data warehouse or datamart).
– You cannot be effective without a Marketing Automation solution (or several), most notably a Campaign Management system
– Targeting such campaigns requires sophisticated segmentation and profiling—hence the need for Customer Analytics (data access and reporting, statistical modelling, data mining tools)
– It is also unthinkable for a modern airline not to be able to interact with customers via all channels, hence the need for a Web platform, but also a good e-mail one, as well as a modern call centre platform (incl. IVR), SMS capabilities, airport kiosks etc.etc.
– Your cross-functionally manged end-to-end customer processes will benefit from a Knowledge Management system and,definitely, from a good Workflow solution…

The list goes on and on—all this is CRM, and more. which makes it nearly impossible to just ‘buy and install’ a ‘CRM solution’, you design and build a complex architecture with contributions form multiple vendors. Even the ‘one stop’ vendors can rarely cover all this spectrum and if they do, it is with considerable compromise on many required capabilities.

Graham mentioned the conflicting priorities of Yield Management and CRM—I have been involved in a project where a major ‘one stop’ vendor had both modules, but they were not integrated and the YM was often ruining hard-built customer relationships by refusing seats to Gold Card passengers or overcharging those who should be offered a discount.

which reminds me I forgot to mention you also need a ‘solution’ to run your FFP Smile

Are your consultants predominantly technology-oriented, or come from management consulting with a strategy background? If you have a team of solution experts, I would advise to partner with a strategy firm, particularly one specialising in customer centricity. They would be able to help you set the right objectives of a CRM programme, produce a roadmap for customer-centric change, and thus underpin the ‘ideal’ information architecture.

Best of luck in your work –

V. Dimitroff
Director, PRISM Consulting

Vladimir Dimitroff
PRISM Consulting (UK)
[email protected]

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