Why data scientists are vital for increasing customer loyalty

The importance of big data is increasing across all industries — as are the jobs required to tap into the insights within the data. So it’s no surprise that the McKinsey Global Institute recently predicted that the US will see 4 million to 5 million new data analysis jobs by 2018.

NB This is a viewpoint by Deren Baker, CEO of JumpShot.

The travel industry is no exception. In fact, 67 percent of travel brand representatives at an EyeforTravel show recently indicated that customer loyalty could be improved by investing more in data and analytics.

Clean up with data scientists

Travel companies spend big on advertising and often often rely on travel aggregators, online travel agents, and affiliates to promote, convert, and re-engage customers. As a result, these companies are awash with insights, which can be a good thing if this flood of information is in a usable form.

To get a comprehensive view of the customer across various channels and time periods, data sets – such as clicks, returns, visits, transactions, views – need to be grouped together. The more external sources there are, the more critical this process is.

Once data is clean and consistent, the company can get a clear picture of the customer journey. And familiarity with this journey allows travel marketers to tailor offers and outreach to customers with an eye towards improving the overall shopping and booking experience and increasing loyalty.

The data is in the details

Companies such as AccorHotels are leading the way. Data scientists report spending more than 70 percent of their hours cleaning data and filling in the blanks so it can be merged, developed, and tested. According to the company, its efforts have so far been successful in revealing value.

In 2015, three major airlines — American, Delta, and United — interpreted customer data to optimise their loyalty efforts, selling almost $8 billion in miles. Not only does data drive revenue to the airlines by showing customers the right messages when they’re most receptive, but it also results in a very loyal member following.

Putting data to work

The vast amount of data available to travel companies means they can use it numerous ways to improve operations, drive innovation, and bolster customer relationships. If travel companies engage data scientists to provide clean data for efforts across the organisation, here’s what they can expect to see:

  • A broader reach for incentive programs

Improving company-wide understanding of customers will lead to a more nuanced view of the perks customers actually want. This can also help travel organisations begin offering more mid-tier incentives, instead of saving all their rewards for the most loyal frequent flyers, for example.

Odds are that a customer who is firmly planted in the top tier of a loyalty program isn’t going anywhere. But to gain market share, it’s important to win over the travelers who bounce between airlines, credit cards, and hotel brands. A lot can be gained by focusing on customers who travel often enough to make an impact but aren’t currently loyal to a single brand.

  • An improved miles redemption rate across loyalty programs

Encouraging customers to enjoy the fruits of their spending by redeeming their miles or other rewards incentivises them to accrue more mileage with your brand in the future. It may even spur more frequent use of their credit cards linked with those programs.

There has been debate in the travel industry over the value of clients who purchase tickets outright versus those who gain miles through credit card usage. Delta’s SkyMiles program director Mike Hecht said at a loyalty event that for Delta, at least, the distinction is irrelevant. A loyal customer is a loyal customer — and should be rewarded accordingly.

And it is the analysis of clean, relevant data which can help determine which customers are most loyal and ensure that their miles are being redeemed, no matter how they were acquired.

  • A deeper understanding of customer behavior both on and offline

When data scientists can examine and connect behavior across touchpoints, they can better understand customers’ motivations. But clean data with a long shelf life is needed to achieve this deep understanding.

Ideally, companies should know their segmented customers’ behaviours for the past several years, allowing them to understand long-term trends and avoid being distracted by short-term events. And when a company understands the behaviour of valuable customers, it can find like-minded prospects through content and advertising partnerships.

Customer loyalty is vital for any business to thrive, but it can truly make or break those in the travel industry. Use data scientists to ensure that your company is making informed decisions to optimize its loyalty efforts.

NB1: This is a viewpoint by Deren Baker, CEO of JumpShot.

NB2: Image by BigStock

 

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Viewpoints

About the Writer :: Viewpoints

A founding principle of tnooz was a diversity of viewpoints from across the spectrum. Viewpoints are articles by guest contributors from around the travel and hospitality industries. The views expressed are the views and opinions of the author and do not reflect or represent the views of his employer, tnooz, its writers, or partners.

 

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