Big Data and the Rise of the Empowered Consumer

By Diane Merlino

The travel industry is ahead of most other industries when it comes to implementing big-data strategies and programs. Those who are a little late to the party had better get in gear; what IBM describes as “the consumer-empowered economy” is making big data a business imperative.

“Clearly, consumers are in control,” says Michael Schroeck, partner and vice president of IBM Global Business Services. “They have access to a lot more data. They have real-time access to how your prices compare to your bigdatacompetitors'. As a result, it’s critical for companies in travel and other industries to have access to at least that much information, or more. If companies are going to be successful, they really have to get on top of this.”

Schroeck is co-author of “Analytics: The real-world use of big data,” a comprehensive report based on a 2012 research project conducted by IBM in conjunction with the University of Oxford. More than 1,000 organizations across various industries and around the world were included in the research.

This is the third and final excerpt from a discussion between Schroeck and Travel Weekly PLUS Editor in Chief Diane Merlino. The articles collectively cover the basics of big data, from defining what it is to examining how and why travel businesses should pay attention and get involved. 

Merlino: Your research on big-data adoption indicates that most of the organizations surveyed are in early stages. Twenty-four percent of the 1,061 respondents to this question are focused on understanding the concepts and have not begun any activities, 47% are in the planning stage, and just 28% have actually launched a program. Do those figures hold true for companies in the travel space?
We found a higher percentage — 37% in travel and transport, as opposed to 28% across all industries — have implemented at least one pilot program, and some have implemented an enterprise-wide big-data solution for their organization.  I don't think it’s surprising to find that travel and transportation is more advanced than the market in general in adopting big data. We expect that will continue to be the case.

Merlino: What verticals were included in the travel and transportation category for your research?
Primarily airlines, rail, and shipping, the cruise industry as well as commercial shipping. Hotels are also in there; so is the lodging sector.

Merlino: Hauling everything down to a boots-on-the-ground level, what's your best advice about what big data can or can't do for companies in any of those sectors?
For these industries it's going to be a business imperative. Their competitors are leveraging big data, particularly around better understanding of and access to existing and prospective customer information. It’s also critical to doing a better job of planning shipping or flying routes. Using big data for areas like real-time pricing and promotions is also very applicable to this industry. And one of the key drivers behind the co-branding and partnership arrangements we’re seeing in travel is the ability to share and leverage big-data information.

We recommend a pragmatic approach. An organization can begin by doing a better job of leveraging and analyzing information across various customer touch points and channels. We’ve found that can provide tremendous value to an organization before you even think about expanding out into social media.

Merlino: Are you saying a travel company can start by using data they already have differently?
That's exactly what I'm saying. They have the information, but in most cases they are not leveraging it to the extent that they can. Or, in some cases, maybe they've brought it together in a big-data warehouse but have not been able to apply the sophisticated analytics needed to derive value from the information. I may have a 360-degree view of my customer, but what am I doing with that in terms of being able to provide a more personal offer or service to that customer?

As an example, airlines used to look at information from a single system — their frequent flyer mileage system — to make decisions about who were their best customers. We all know you can earn miles in a lot of different ways, including  never having to fly the airline through co-branding with credit cards, restaurants, hotels. But by taking that frequent-flyer mileage information, which is valuable, and combining it with financial information, they could identify the most profitable customers for the airline. You can apply the same concept to hotels. That’s an example of how a company can bring together information they've had for a long time and analyze it in new and different ways.

Merlino: What’s the connection between what you describe as the “consumer-empowered economy” and the need for businesses to develop and implement big-data strategies?
Many companies start with a focus on information to better understand their customers and better anticipate and predict customer behavior. It’s from a multichannel perspective. Not only marketing, which is /uploadedImages/TW_Plus/xTW_Plus_Images_ONLY/MikeSchroeckIBM.gifcertainly leading the charge in a number of cases, but also websites, kiosks, agents — basically, all the customer touch points.

The ability to access customer information from all those various sites, analyze it, and push it out to those sites when the customer is actually there, or on your website, is a critical driver. That’s where we find a lot of companies starting, and that's information and resources that they control.

Then they expand their big-data analysis out to include social media to understand what customers or people at large are saying about our chain or our products or a particular promotion. Those are some real-life examples of the way companies are approaching big data around customer information.

Merlino: I've talked to a number of people about the rise of the empowered consumer, a trend driven by shifts in social values and by technology. Is that trend making big data a more important consideration for businesses?
Without question. Your closest competitor is a click or two away, so as more and more business moves to the Internet — or “smarter commerce” as we refer to it — it's going to be more important than ever to leverage big data. Clearly, consumers are in control. They have access to a lot more data. They have real-time access to how your prices compare to your competitors'. As a result, it’s critical for companies in travel and other industries to have access to at least that much information or more. If companies are going to be successful, they really have to get on top of this.

ALSO SEE: Part 2 of the interview with Michael Schroeck, Big Data: Bupkiss or Business Booster?
Navigating big data image provided by Shutterstock.


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