IATA’s New Distribution Capability (NDC) and One Order initiative aims to modernize booking systems and help airlines deliver a personalized customer experience. Airlines that choose to take advantage of it will need to navigate the expansion of products and service offerings in a highly fragmented market of tour operators, event organizers, and other niche players. The change will require airlines to ensure that these partners can deliver the same customer experience and avoid damage to the brand.
Customer experience management will play a significant role in enabling airlines to proactively manage the traveler’s experience at each stage in the journey. Successful airlines will leverage this experience data into vendor relationship management and payment systems to award, develop, and compensate third-party service providers based on the customer experience – not just the delivery of service.
The experience economy
In mid-1998, Joseph Pine and James Gilmore published their first research on how companies can go beyond traditional products and services to engage individual customers in a way that creates a memorable event and often attracts a higher price or premium than competitors. This is commonly referred to today as the “experience economy.”
The experience economy has reshaped how CEOs run their business. Feedback coming from various channels brings tremendous potential to leverage these insights to drive business model innovation and process optimization and reimagine how work is done.
Experience management helps airlines understand the end-to-end customer journey, from marketing and commerce to the various service interactions along the way. These insights are geared toward not just improving the quality of products and levels of service, but to engage the customer at every touchpoint and create a memorable experience.
Benefits for airlines
As airlines begin the transformation of their legacy systems to a more retail-oriented, personalized passenger commerce platform, they will need to consider their customer experience management capabilities and systems to assess all customer interactions across the various digital and non-digital customer touchpoints.
Alignment of these two key capabilities enables airlines to deliver an end-to-end customer experience and gain the insights necessary to continuously improve customer satisfaction, loyalty, and advocacy. This can yield significant benefits to the airlines and their partners across three dimensions:
1. Revenue growth
- Reduce the time to market new products and services
- Sell a wider variety of products and services
- Enhance customer data quality and analytics to improve up-sell and cross-sell opportunities
2. Cost reduction
- Lower the cost of finance operations through simplified and automated revenue allocation and settlement processes
- “De-specialize” airline terms and processes, enabling airlines to adopt more cost-effective and market-standard retail offers and order management systems
- Decrease the need for two different offer and order management platforms (i.e., one for direct and one for indirect)
3. Improved customer experience
- Provide a wider variety of relevant and personalized products and services
- Enable a single order number per journey across all travel providers
- Gain insights and feedback from customers to continuously improve on the customer experience across digital and human touchpoints
The need for experience management in a One Order World
Realizing these benefits, especially revenue growth from new product and services, will require airlines to broaden their partner ecosystem to provide passengers with more choice. In this highly fragmented travel ecosystem, airlines will need to manage and develop their partners to ensure that they deliver on the same customer service promise to avoid damage to the airline’s brand.
Airlines can leverage customer experience management to gather customer service interaction insights at various touchpoints along the passenger journey. This information can help them understand the customer’s delight – or dissatisfaction – with the service delivered.
The obvious approach is to leverage these insights to better evaluate and manage partners as part of the traditional vendor lifecycle management processes. Another method is to reward and settle partners based on the quality of the customer experience they deliver. This moves away from the traditional fixed-percentage, commission-based method and toward leveraging the customer satisfaction score, loyalty index, and other experience KPIs to influence the settlement.
The momentum created by One Order and NDC creates the perfect transformation opportunity for airlines to rethink their approach to customer experience and how they manage their partner ecosystem. Airlines can use this opportunity to develop or reshape existing processes, leveraging customer experience insights and KPIs to manage and incentivize all internal employees and partners to deliver the best customer experience.
For more insight on optimizing the customer experience, see “Business Strategy Model For Experience Management.”