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Airline industry: How to Really Bond With your Customers?

During the last 50 years, the aviation industry has changed considerably. Hampered by modest profit margins, this relatively conservative industry has forced most carriers to focus on cost reductions. If you combine this with the constant accumulation of regulation, the fact that airline yields (average price per kilometer paid by passenger) has been on a downward spiral from 1950. These negative impacts have resulted in a sort of a gap between the transportation companies and their customers.

While there is no way to control these market trends and various disruptions such as security incidents or disease outbreaks, focusing on creating a unique customer experience can not only help to bridge that gap but also grow your revenue, reduce costs and create loyalty amongst your customers. How can you do it? Keep reading.

Increase revenue with customer experience

Customer experience is much more than fancy words created by marketers. In fact, it’s the most lucrative investment opportunity in the industry that, unlike most other attempts for differentiation and innovation, gives real and measurable results. In 2015, Forrester conducted a research in which they wanted to determine whether customer experience is just a hype or if it really matters to business success.

The results proved that superior customer experience drives superior revenue growth in all industries where customers can switch business and competitors offer a different customer experience.

Last year, they decided to repeat the study to see if the additional year of data will have an effect on their earlier findings. By isolating the revenue that could be traced directly to customer behavior and used it to calculate CAGR (Compound Annual Growth Rates), the results were same as the year before: the leaders in CX in all industry niches outperformed their CX laggards by 14% point advantage in global revenue. Even in the industry with the smallest spread, airlines, the CX leader enjoyed a significant 5% point advantage in global revenue.

Click here to discover how to learn from your customers and why customer experience should matter for your business.

Another way of measuring the results of your customer experience initiatives is the NPS (Net Promoter Score). By segmenting your customers into three groups – promoters, passives and detractors, NPS has proved itself in many different industries as one of the most trusted and most accurate metric.

One such example is the case of Southwest who was ranked as #1 in NPS Benchmarks Survey of US Airlines and, despite being in a highly challenging industry, has succeeded to remain profitable from 1967 when it was founded.

Reduce costs with CX

Besides using customer experience to grow revenue, you can use it to lower your costs and improve the overall efficiency in your organization. Again, if we take NPS into account, you can reduce costs by increasing the number of promoters and reducing the number of detractors in your customer base. While the classic scenario in which a promoter refers your airline company to a friend or a colleague is less realistic than in other industries, they are still great to have.

Promoters have a higher annual spend and retention rates, they complain less and are less sensitive to price adjustments.

Detractors have a completely opposite behavior and reducing their number can significantly improve the efficiency of airlines’ customer service and airport staff.

Offering personalized CX can improve loyalty

In most cases, traditional loyalty programs can be insufficient for creating customer loyalty. This is especially true in airline industry where customers will change their brand as soon as they notice a loyalty program with more benefits. Instead of using traditional loyalty programs to improve your overall customer experience, you should focus on personalization. By serving your customers with the right dialogue in the right time and over the right channels, you will create long-term customer loyalty and furthermore increase your overall revenue. With more than 20 disparate data sources in most airlines, it can be hard do find the right anything. So how can you get a single and comprehensive view of your customers, their expectations, and their needs?

Collecting customer data through customer surveys is becoming a common way for most airline companies to get information about their customers. Besides using it for your PR and marketing efforts, the customer data obtained through these surveys can be used to improve your customer experience and your overall customer loyalty.

As a result of this increase in loyalty, airline companies gain the opportunity to increase their ancillary revenue and improve their financial performance in a sustainable way.

Customer experience is no longer tied to telephone. It has evolved to online, mobile, and social networks. Each channel and each customer requires a different approach and customer surveys will provide you with the answer on how to approach them in the right way and in the right time. By improving your customer experience and adopting customer centricity as your strategy, you will be able to differentiate yourself from your competitors and benefit from more profitable and more loyal customers.


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