In the airlines industry every ounce, every dollar, every mile means so much. That’s because the line between deficit and profitability is razor thin.
NB This is a viewpoint by Mendel Senf, CEO of Yieldr.
Airliners are so busy trying to stay afloat that there is little time to innovate.
And when it comes to innovation, a lot has been made of data, especially that of the first-party variety.
All the talk has been about leveraging customer and revenue data to create more relevant communications channels, which is a very effective strategy in its own right and something they should absolutely be doing,
But the real saviour lies within a different approach to data.
In the very near future, airlines will begin to build their own audience marketplaces and sell their valuable first-party data to open up new revenue streams.
Taking a page out of the telecommunications playbook
We’re already seeing this business strategy implemented within the telecommunications industry. According to Ad Age, this has already blossomed into a $24 billion business. Mobile carriers such as Verizon, Sprint and Telefonica have partnered with data-management companies to collect, segment and sell different portions of data.
This alternate revenue has counteracted diminishing subscriber growth and purchases of smaller mobile bundles.
Marketers are starved of the type of data the telcos posses, which on the surface includes behavioural data from mobile web use, text messaging and phone calls as well as insights from location and customer information.
Furthermore, such data sheds light on a lot of blind spots during the customer journey. Businesses can learn whether or not consumers are shopping on competitors websites and can link together offline and online data points.
For instance, it can tell a retailer the age range and gender of customers that frequent a store at a certain period of time and link that demographic data along with location data to a shopper’s web browsing history.
If the shop has a loyalty program, it can even be taken a step further and integrated with CRM data collected both online and in the shop.
Spread Your Data & Fly
Similar insights can be collected from the reams of data airlines are sitting on. The data can then be sold to generate additional revenue for an industry that badly needs it.
As it stands now, the majority of airlines are entrusting out-of-house solutions with their valuable data. Not only does this limit their ability to build their own audience marketplace, it’s also very likely others are taking advantage of airlines and monetizing their owned data.
Like that of telecoms, airlines data is very lucrative for marketers, especially when it comes to targeting and connecting with the always-on-the-move consumer.
For instance, knowing where a consumer has been, where the consumer is and most importantly, where the consumer is going is extremely important. Below are some of the many data points that airlines are sitting on.
Beyond the obvious parties, such as car rental services, hotels and other travel related products and services, this information is valuable to the likes of consumer packaged goods, app developers, telecoms and outfitter brands, to name a few.
Maybe you’re a mobile provider and want to upsell a special roaming package or maybe you’re a fashion label who wants to feature clothing applicable to the climate of the traveler’s destination.
Location-based information is just one use.
For another example, you can also look at customer relationship management (CRM) data to access the customer value and financial value of a consumer. Maybe a luxury car brand wants to target consumers who are platinum fliers and big spenders or maybe a realtor wants to target those consumers with premium condos.
The opportunities are nearly endless.
While airliners are currently focused on boosting ancillary revenue, upselling and cross-selling to remain or become profitable, these revenue streams are highly volatile because of external variables at play. Fuel costs, travel patterns, weather and even airplane production costs all influence profitability and drastically cut into margins.
Building an audience marketplace on the other hand has high profit margins, is a more stable revenue stream and is much easier to forecast.
The way forward for airlines is through data activation. Not just within their own channels, but also by syndicating it to third parties. With this new alternate revenue stream, an unforeseen level of profitability can be achieved, allowing airlines to focus on innovating within other areas of aviation.
Get ready for take off!
NB1 This is a viewpoint by By Mendel Senf, CEO of Yieldr.
NB2Image by Shutterstock