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This blog discusses the experiences of a consulting professional currently working at EmPower Research, a firm that provides decision support services to clients through offices in NYC, San Francisco and Bangalore, India.

Sunday, April 22, 2012

How to Use Big Data in Loyalty Programs?


On a recent trip, I realized that while some companies that helped me in reaching my destinations (hotels, airline operators, tour operators, travel agents, rental agencies, restaurants, etc.) asked me to join their loyalty program, it did not make sense, given the frequency of my travel activity.

However, when I reflected on their intent and why people like me were reluctant to join, it dawned on me that this can be dealt in an efficient manner, if they look at the big picture and collaborate across borders and currencies and time zones.

How is this possible? Every traveler whether frequent or infrequent has a travel footprint that can be mapped to a large database. The identifier that pulls the data together in this database can be:

a. For local travel: there is no overarching identifier that exists in this case. However, when you read bullet point b., you will realize, this can be managed

b. For international travel: the passport can be a powerful footprint and can be mapped through airline travel, hotel stay, domestic travel today. If there is a need to expand this idea for local travel, this can be a powerful way to collate traveler information across the entire journey

Today, all players in the travel value chain think about only their customers – I know that there is some collaboration through alliances but I am pitching an even bigger angle here.

Imagine a case of travel for the following cases:

a. Austin to New York

b. Mumbai to Delhi

c. Bangalore to Paris

d. Singapore to London

In each of the following cases, a Big Data database maps their consumption of all aspects of the journey (home to airport, airport food and other purchases, airline travel, airport to hotel at destination or airport to home at destination, food and lodging at destination, car rentals at destination, telecom services, etc.) using their Passport Number as the primary key. The big point here is that these service experiences should be mapped regardless of travel within or outside countries and continents and across currencies.

For every such consumption of product or service, the customer gets points. This is now a UNIFIED INTEGRATED LOYALTY system and transcends borders, services and products. Hence, the loyalty point base accrued is much higher than in existence across multiple standalone systems for a select base of customers.

Benefits of this system:

a. Allows a larger base of loyalty points available for all corporate entities to pitch additional services. In fact, the system can collect and assign points to every customer irrespective of their sign-up and then ask them to enroll.

b. With schemes that allow for 10-20% of price to be paid with these points, companies across this value chain and even outside this value chain, can trigger additional consumption of products and services and manage their capacities better.

c. The stickiness of customer base becomes better because of the potential to use these points, which were not being given to nearly 80-90% of traveler base currently because of stand-alone systems

d. Database can be opened up for all service providers to run advanced analytics around holistic traveler experience to design new routes, products and services basis past experience

e. Useful for global security agencies to map individuals that can be security threats to nations

f. The database creation activity brings best-in-class storage, networking and analytics vendors to do something innovative for the planet

Challenges:

a. The creation of the database itself as this involves permissions across countries by governments and their security mechanisms

b. The mapping of individual points across currencies, time zones and varying price points for similar services across countries

c. Managing the database as this involves multiple stakeholders

I know this is a wild idea but this is exactly how efficiencies can be created by thinking big and out of the box. I read somewhere that at any point in time, there are 0.5 million people in the air. That itself should give one a sense of the immense potential for this PLANETARY database to help the travel industry pitch their products and services better. I firmly believe that this will improve the state of the industry.

What will it take for decision makers to say, “Yes, we can risk this idea!”?

1 comment:

S.C.G said...

Wont there be legal issues about privacy? Also, google's location reporting does something similar. It doesn't track which airline you use or how you travel, but it does give a travel footprint. If they can integrate that with information airlines have, i guess they can do something like what you suggested. Interesting.