British Airways

CRM Analysis

Group 5:
Ishaan Baxi
Panchalee Bhaumik
Diksha Saini
Prithvi Singh
Tanvi Prakash
Anjali Sharma
Why is CRM important to BA?
Peter Blundell, knowledge strategy manager at BA, : “It is important that we
are much more focused on our most valuable customers. The CRM software
will allow us to roll out intensive marketing campaigns to capitalize on their
interest.”

The airline industry has many distinct challenges, and uncontrollable external
pressures such as competition, carbon emission regulation, and fluctuating
fuel prices. Many of these variables have the potential to impact the passenger
experience.

British Airways that flies over 36 million people to more than 200
destinations. Customer service is at the heart of their business operations.
CLV

 Formula: ave. lifetime X annual profit - ave.acquisition cost

 Acquisition cost: To drive direct sales via their own websites they
need to replicate the advertising and reach of the. This is expensive
and is not effective for all markets and the European major LCCs,
EasyJet and Ryanair, are now distributed via travel agencies.
 Churn Rate and Retention Rate: Will vary between consumer
segments. Price defectors will have a higher churn rate as compared
to clients preferring a specific set of services and quality.
 Costs and Benefits

 6.5mn Euros  145,000 customers flying

 New Aircrafts everyday
 New Routes  More than 200
destinations and 75
 First
countries across the world
 Club World
 Fleet of more than 290
 Dining aircrafts
 Lounges  Industry leading
 Technology Executive Club
 Family Travel  Operating for 100 years
Relationship Marketing Mix

 Product: fleet size of more than 290 which include Boeing 747s, 777s and 787s.
 Service: fresh meals, drinks, entertainment screens, magazines, executive
lounges, transport
 Price: pricing on the basis of value provided by BA: economy pricing, mid-value
pricing and premium pricing
 Place: head office in Waterside near London Heathrow airport, around 40%
slots at Heathrow airport, tie ups with other airport authorities,
 Promotion: “Christmas gift vouchers”, off-season discounts, promotion through
electronic and print media, television, internet, mobile application, magazine,
billboards, sponsoring events, partners for the London Paralympic and Olympic
games in 2012
 Customer Sensitivity and Customer Convenience
Customer Retention – Lost Customers

Few common problems faced by flyers were:

 Failure of IT systems
 cancellation
 No hotel stays for technical failure passengers
 lost baggage
 Food and cabin staff service not up to the mark
 Not honouring prepaid seat upgrades
 Broken seats, vents, lights & footrests – Lacking maintenance
 Extremely high response times
Customer Reviews
Loyalty Program
• BA’s CRM is the driving force behind
their customer loyalty scheme - The
British Airways Executive Club:
 Free for everyone to join and has no
ongoing charges.
 Contains all of the benefits of
standard registration (special
offers, user details are saved for
easy booking on future flights and
travel).
 Users earn Avios points (currency
that equates to BA miles) which can
be used to redeem flights, upgrades,
book hotels and pay for car hire.
Loyalty Program
 Avios can be used with BA's partner
group, the oneworld and the
International Airlines Group(IAG),
which includes Iberia and American
Airlines, thus making it easier for
members to use one 'currency' across
different frequent flyer and collecting
programs.
 Enables members to save their seat
and meal preferences.
 Points earned enable members to
progress through from the bottom
'blue' tier to the 'silver', 'gold', and
'premier' (platinum levels).
 Members receive personalised and
targeted communication.
 B2B and Key Account Management

 B2B transactions/Cargo Movements of British Airways is handled

by it’s parent company.
 Only 6% of their revenue is derived from these cargo shipments.
 British Airways targets different customer segments for its four
levels of services: economy, premium economy, executive and first
class.
 British Airways follows single-segment concentration marketing
strategy by offering four different service packages to different
customer segments.
ServQual Analysis

 Reliability – 4/5
 Responsiveness – 4/5
 Tangibility – 2/5
 Assurance – 1/5
 Empathy – 5/5
Service Recovery

• Compensation worth $50m during IT failure

• Mixed reviews. Indian customers complain of untimely responses.
• Prompt action: Low on promptness and has a less than efficient
system of processing complaints
• BA makes significant investments in employee training (multi
million pound investment for Heathrow employee trainings)
• Although BA guarantees premium and dependable customer
services, off late there have been complaints about their luggage and
communication services
Data Mining

 Where has BA used Data mining?

Area Method
Customer Value Prediction (PCV) Decision Trees
Executive Flyer Data (Lost Sales) Attrition models/Segmentation
In Flight Retail Association/MBA
Patterns of Travel (long Haul, short Cluster analysis
haul..)