Context

A major airline belonging to one of the global alliances with more than 7 million members had a historically grown FFP, but without ever having developed a clear strategy, notably not for international customers. The program's performance was decreasing in many key areas, showing that its loyalty potential was not fully exploited. A fundamental redesign was judged necessary, whereby our mission was to apply a blank sheet approach without getting influenced by expected initial internal resistance to change the status quo.

Project phases

• Analysis of performance parameters to have a clear understanding about the status quo. Current performance parameters helped to identify weaknesses from a global benchmark perspective. The conclusions made from this data analysis corresponded largely to the experiences made by different management functions involved with the program.
• Development of a program strategy, which was achieved through a management workshop involving different functions and markets. Clear objectives were defined for specific customer target groups in different markets. A roadmap for required activities over the coming two years, including post-launch of the new program, was defined. The form of the management workshop helped to get a buy-in for the redesign project from all relevant stakeholders early in the process.

• Redesign of the program structure by taking into account the defined strategy and financial aspects. Concrete suggestions for the development of all different program elements (structure of points accrual/redemption, partner network, terms & conditions, elite program), also inspired by input from best global practices. Suggestions benchmarked in terms of competitiveness against key competitors (which included fellow alliance partners).

• Guidance to renegotiation of certain partnership contracts, which were underperforming in terms of activity and financial contribution.

• Accompanying marketing campaign for program re-launch in different markets

Challenges faced

• To align the team to one clear strategy as too much individual thinking prevailed
• To get the support for some more creative/out-of-the-box thinking and initiatives in a rather conservative environment

• Finding a compromise between the needs of the home market and those of local markets (accounting for 40% of all members)

• Getting the understanding that further reaching CRM activities were required in order to support the FFP re-launch

• To define the relevant performance parameters to measure the success of the changes

Results

The program was redesigned in the majority of the key areas within six months, reflecting for the first time a clear strategy and positioning.

Interest by members grew significantly, measured by new enrolments and activity of existing members.

Several key performance parameters also increased rapidly within six months of program re-launch, incl.

• yield per member

• revenue per member

• activities with non-air partners

Context

FFP fraud is a wide-spread issue in the industry, causing substantial financial damage to program operators. Fraud may occur at an internal level - by employees of the airline or of outsource partners - or at an external level, i.e. by customers/travel agents.

Our customer, a major airline member of one of the global alliances, had previously already done some internal work around fraud, but never conducted some outside audit to identify remaining weaknesses.

Project phases

• Definition of fraud types, internal cases (by employees and outsourced partners) and external cases (by customers)

• Review of internal framework (terms & conditions, working processes)

• Thorough on-site analysis of IT system and infrastructure from a fraud perspective

• Recommendations for changes and set-up of framework for standard sanctions upon detection of fraud cases

• Definition of sophisticated reporting system in order to flag suspicious accounts

• Definition of management and operational responsibilities, incl. hierarchical changes to empower the fraud prevention function

Challenges faced

• Initial conviction of management about value of external fraud audit
• FFP management not being aware about the used FFP IT solution in required depth of details

• Reluctance by third party call center agency to cooperate by fear that certain inappropriate actions would be revealed

• Agreement about required standard legal actions against fraudsters

Results

Although management was initially in the belief that the airline was basically safe in terms of fraud, the exercise was eye-opening for them as many holes in the system were detected, which they simply never looked into before.

Many of these holes were not of theoretical character as experience after implementing our recommendations have shown. Within six months of implementation, three major fraud cases at the level of a third party supplier were detected, causing an estimated damage of 100,000 USD a year between them.

Our recommendations aimed at preventing as many fraud cases as possible upfront and to detect the remaining ones through an intelligent reporting system. Also the program’s terms & conditions were updated as result of our work.

Finally, we conduct an annual fraud review with the client in order to monitor the issue on an ongoing basis and to identify further areas of improvement.

Context

An airline with 3 million passengers per year and operating mainly point-to-point services faced increased local competition, resulting in a continuous decrease of market share. We had previously already worked with the airline to launch its FFP and were now tasked to complete this by developing a CRM strategy adjusted to its size.

Project phases

• Customer segmentation: Identification of relevant customer segments: Given the simple business model of the airline, this was pretty straight forward as customer groups that can usually be found at other airlines (e.g. cargo forwarders) played no role here.

• Product/Communication: A cross-functional strategy was elaborated in order to deliver a tangible CRM experience to the final customer. This included three concrete CRM measures for each of the different customer segments, hardly any of them existing before.

• Delivery: Company-wide change management and coaching plan for front-line staff in order to ensure the appropriate delivery of the CRM strategy across all touchpoints; definition of role and responsibilities for CRM Manager set up as cross-functional role, as well as of line/product managers

• IT selection: Request for Proposal to nine qualified suppliers with CRM applications suited for the airline industry and assistance throughout the selection process

Challenges faced

• Reducing CRM to the basic and relevant elements in the minds of management
• Accepting that a realised 90% solution is better than an unrealised 100% theory

• Making the airline understand that CRM is much more about staff attitude than techniques or even IT

• Putting the FFP in the right CRM context without overrating its role

• Keeping a clear visionary focus in busy day-to-day operations

• Adaptation to a lean environment with limited resources - all CRM activities are now coordinated by one single person

Results

The ROI of CRM activities is never really measurable. However, the evolution of some key parameters and the measurement of results of some concrete campaigns let suggest that the activities had indeed a positive impact on parameters such as yields, load factor and customer satisfaction.

The airline estimates that it is well in the range of 0.5 to 2% of revenue owed to its CRM activities as often suggested by scientists.

The negative trend in terms of market share could also be reversed in parallel to implementing these CRM measures.