"My immediate thought was that it was either a promotion or a generic airfare sale email." That was the posting by one frequent flyer on a FlyerTalk message board, but, on closer examination, the email turned out to be more than a slice of spam.
Rather, it extended to the American Airlines customer an offer for an itinerary previously searched on aa.com, but never booked. "Still looking for great prices from Chicago O'Hare, IL, to Los Angeles, CA?" the email asked.
AA confirmed emails like that are examples of its efforts to "personalize" air travel by offering tailored, relevant fares and services based on such customer attributes as previous itinerary searches, a traveler's flight history, frequent-flyer status and even the corporation for which the traveler works — though the last of those still isn't quite ready, according to Derek DeCross, AA's vice president of global sales.
Hardly new in the world of e-commerce, the concept of personalization remains greenfield for the commercial U.S. aviation industry.
Delta and United also have discussed tailored deals and relevant offers, highlighting work underway to upgrade customer relationship management systems to mine traveler data and e-commerce platforms to extend offers. US Airways decidedly is not as far along.
"We've collected masses of customer data over the years," DeCross told The Beat. "Now, we're rapidly trying to operationalize that data so we can improve the experience throughout the travel lifecycle."
To do that, AA is using an availability engine from ITA Software to "provide inventory, pricing and shopping visibility" and to "manage the various product and service choices customers want to consider as they customize their travel experience," according to a January 2011 AA statement.
"Over the past several years," DeCross said, "we've kicked off the largest IT project in our company's history to replace our customer service system, which is really the backbone in many ways of that customer experience. We've invested heavily in mobile apps and I believe we still lead the industry in the platforms we offer.
"We've enriched our CRM platforms to really operationalize all that data we've been collecting and we've invested to develop a state of the art availability, pricing and merchandizing engine in conjunction with ITA, which of course powers AA.com and our direct connect."
DeCross said AA's moves toward personalization started with the unbundling of its product, through which customers can purchase the goods and services throughout a trip's lifecycle that they value.
Other live examples of personalization are "based on customer attributes or voluntary information that they've given us, say in a profile," DeCross explained.
He noted that such personalization is evident in the "high-touch end-to-end travel services for the select groups of extremely valuable customers to which we grant Concierge Key status," or in the way American "equips some frontline employees with guidelines on how they fix customer problems based upon a complete view of that customer's historical relationship with American. That could be their profitability, their service history or any other number of variables that we've collected over the years in our CRM systems."
American also is tailoring deals and services based on "observed" and "inferred" preferences, DeCross said.
On the former, "We have things such as targeted discounts or AAdvantage promotions to customers in certain cities and/or who have had a travel history that would indicate that incremental travel would be stimulated." The email received by the frequent flyer would be one such example.
More complicated still are personalized experiences based on "inferred" preferences.
"That's really around looking at itineraries, and saying, 'Well here's a family of six traveling from Dallas to Orlando for a week's stay,' then identifying that that customer is probably a leisure customer and offering up perhaps things such as Disney tickets or other products that would apply to a family, as opposed to a customer taking a day trip for a night stay between Chicago and LaGuardia. You're going to offer that customer very different products."
There are other ideas the carrier is exploring regarding personalization. For example, AA is examining ways of "putting profile information in the hands of more frontline employees," DeCross continued. He gave a nod to a program developed by joint venture partner British Airways, through which it arms cabin service directors with iPads to personalize the inflight experience and understand individual customer preferences.
Meanwhile, AA plans to expand "into new types of profiles for the corporate customer," which would "determine which optional services are available to a corporate customers' travelers and at what price," he said.
AA has eyed such corporate bundles for as long it has been promoting direct connect, but DeCross would not disclose how soon AA would act on those plans, citing "competitive reasons."
He added, "We're definitely actively working on it and we certainly realize the benefits for all involved."
"Where we really want to get to is supplementing that reactive personalization techniques with predictive techniques," said DeCross. "This concept is similar to what companies in other industries are already doing.
"I talked at the [Association of Corporate Travel Executives] conference about Amazon, Dell, eBay and Google all using sophisticated technology really to reorient their product offerings according to the individual customer. There's a great future in personalization."
Indirect channels, impersonal channels
The focus on personalization is yet another sticking point in how airlines are represented in indirect channels.
AA's promotion of its direct connect and a public feud with GDSs have focused in part on how a la carte goods and services are handled through GDSs, but personalization adds yet another wrinkle.
"People have a tendency to oversimplify the debate about how you price one product, how you sell one product," said AA's managing director of distribution strategy, Cory Garner.
"The problem here is: How do you deliver a customized experience to the travelers that includes these things and other things as well? That level of personalization is what a shopping engine like ITA can do for American because it's tightly integrated with our customer information. We want to put out high quality content and high quality personalized offers into every channel that we can."
That thinking goes back some time. Garner in a 2010 blog post envisioned shifting to "a 'pull model' where traveler identification information is sent to the airline for use in compiling and presenting an offer, as opposed to the traditional 'push model.' "
Garner added that the ITA shopping engine is ultimately "where the customized offers come from, where that high quality content comes from. We've been working in our discussion with GDSs and other third-party distribution companies over the past almost three years now explaining the benefits of having access to that infrastructure and attempting to negotiate deals that provide that access. We're hopeful that one day that will become a possibility."
Garner said that AA's direct connect is the vehicle best suited to bring such customization into traditional corporate channels, but given the program's lagging adoption, that could be some time off.
Source: The Beat