Uniting a customer loyalty program using data

How do you use data to visible improve customer experience and boost bottom line results when you’re merging two of the world’s largest corporate companies and their loyalty programs?

This was a key question United Airlines’ MD of marketing and product development, United Airlines, Mark Krolick, set out to answer after being tasked with integrating and improving United and Continental Airlines’ customer management programs following their 2010 merger. Krolick spoke on the challenges of customer loyalty and big data at the Association for Data-driven Marketing and Advertising’s (ADMA) Data Day conference in Melbourne and Sydney in May.

The merger of United and Continental created the largest airline group globally, as well as a MileagePlus program with more than 90 million members.

“We also had to integrate United and Continental’s programs together and this presented a data challenge, because both of us had pretty bad data,” Krolick explained. In the lead-up to its post-merger CRM project, United had also been losing its competitive advantage because banks were attacking its loyalty program and shifting customers to their own bank card offers, rather than joint initiatives.

At the same time, senior management was calling for better use of data to change the customer experience as well as improve revenue.

United Airlines' Mark Krolick

Krolick’s first step was to define United’s CRM efforts under the principle of “smart customer interactions”. He then identified four tasks: To secure financial commitment from the executive team; get additional staff; establish external partnerships with key technology, creative and data analyst experts including Axciom, Teradata, SAS and Wunderman; and to agree on the project definition.

Although he failed to get any additional staff in the first year, and only had $1 million and not the desired $50m to spend, United consolidated its databases by the end of the first year, conducted a pilot customer recognition project with three airports, segmented some customer data and initiated a few predictive models to better communicate with those members, set-up a non-member prototype database, and finalised a five-year strategic roadmap linked to revenue streams.

Krolick said his team ran a series of small parallel customer projects to understand what would and wouldn’t work and achieved a few quick wins.

“Your first priority is your database – it’s the foundation for everything you do moving forward,” Krolick told attendees. “Despite having done what we set out to achieve in our first year however, it wasn’t enough for the CEO. So in our second year, we didn’t just define what CRM was, we also defined what CRM success looked like.”

Having now secured $8m and three incremental staff, Krolick had four key objectives in his second year of CRM transformation: To build out the non-member database; use its 30-year transaction history to expand customer recognition programs with airports; improve the customer’s experience on the day of departure; and to ensure that already established data-driven marketing practices were recognised by the CEO and board.

“We had a list of pilots, some of which were successful and some not, and which required significant IT budget and resources. We needed to balance CRM projects between financial results and noticeable changes to the customer experience,” he said.

One of the bigger successes proved to be the non-member database, which allows United to target passengers who would otherwise be unknown with incremental offers and promotions.

“More and more of the revenue today is made after the ticket purchase on ancillary streams,” Krolick said. “Yet just half of passengers on a flight are members of a frequent flyer program on average. By building out a non-member database, we saw a significant revenue stream grow, helping our bottom line.

“By pushing customer information out of the data warehouse and to employees, we’ve also been able to shift the paradigm of what they do on a day-to-day basis. They now can see in real-time if it’s the loyalty member’s birthday, if they’ve achieved their first million miles or a prestigious frequent flyer. It sends a good rather than bad message and we are actually starting to notably change the customer experience.”

Krolick cited better customer satisfaction scores as a result. Other important initiatives include smarter contact information collection as well as advanced more data-driven marketing activity.

“We hadn’t previously collected good contact information and just making sure this was done properly has driven significant improvements to the business,” he added.

While plenty of lessons have been along the way, the first of which is fighting for the right investment upfront, Krolick said any CRM project team must focus on articulating their objectives to the rest of the business if they’re to succeed.

“Half your success is about defining how you manage things internally and how you market the project you are working on so executives see it as matching the objectives of the business,” he said. “So much also comes down to what project you choose and how you’re using customer data.”

Follow CMO on Twitter: @CMOAustralia or take part in the CMO Australia conversation on LinkedIn: CMO Australia.