Maximizing Ancillary Returns with Better Analytics

With increasing competition, reduced profit margins on transporting cargo and passengers, airlines around the world are focusing on ancillary revenue streams to boost their bottom lines while optimizing costs and providing their customers a better travel experience.

Ancillary services can include various entertainment options, in-flight shopping, food and beverage sales, and a range of other a la carte services that can help carriers differentiate from normal carriers. A recent study conducted by Ideaworks reveals that certain airlines have increased their revenues from ancillary services to over 40 percent of their overall revenues in the last few years. The study found out that `no frills’ airlines are relying more on ancillary revenues than on airfare or cargo charges to boost their revenues and profits.

While ancillary services provide a lucrative new revenue stream to airlines, the major challenge they face lies in getting deep insights into customer preferences and trends that impact the consumption of ancillary services. In order to overcome this challenge, airlines need to digitally engage their customers and mine big data available on social media and other public domain resources. Analytics will help them gain actionable insights that will allow them to offer meaningful ancillary services customized to the requirement of air travelers. Here’s how airlines can tap into the lucrative ancillary services market.

#1 Mine top-quality customer data: Do not merely rely on customer data available within your data center. Mine social media and external resources for richer and more current data.

#2 Personalize marketing campaigns: Use real-time data to deliver highly personalized messages to customers in the right context. Such a level of personalization will require you to deliver the most relevant messages to the customers at the right time.

#3 Use analytics to plug revenue leakages: Get analytical insights into customer preferences, route profitability, and loyalty point usage. Use these insights to frame optimal customer offerings guaranteed to maximize your revenues.

#4 Get customer demographics right: Trying to bracket customers into economy class, business class or first class is not enough. Can you categorize them into frequent leisure travelers aka passengers with enough money to spend on travel for the sake of traveling? Or travelers who travel due to an emergency? Or business travelers who have their own specific needs? Or budget travelers who avail discounts and offers to save money? Unless you have these granular details on your passengers, you’ll not be able to put together those lucrative custom offers.

The answer to ensuring you maximize on ancillary revenues lies in how you follow, research, and obtain deep customer insights. And, how you will use those insights to deliver highly personalized marketing campaigns that are powered by real-time data.

Here are three steps you can adopt to make the most out of your ancillary services.

Match customer attributes: You can accurately predict the chances of a customer buying an ancillary product or a service. The prediction results are recorded in the form of scores against each customer profile and updated every time you run the model.

Integrate internal customer demographic data with passenger transactional data: Merging your data with externally available data will help you take a holistic view of customers and provide you insights you need to deliver highly personalized deals.

Target customers in real-time: Real-time data will help you make highly personalized and contextual pitches at the right time, providing you higher chances of conversion.

And last, but not the least, you will need a solution-centric approach to implement the right analytics strategy to achieve your business goals as far as ancillary services go. Find the right partner who has a proven track record in delivering analytics driven solutions and brings a deep knowledge of the airline industry and the typical challenges you face.