With the pandemic accelerating digital adoption and raising consumers' expectations of their travel providers, Lufthansa Group decided to turn its dream of establishing a unit focused on customer experience into a reality.
Following a few months of analysis at the beginning of 2022, Digital Hangar was born in the summer and now has a goal of recruiting around 300 people to resource it in the next 12 months.
The launch of the initiative raises a number of questions, not only why now and what will it do, but also how will it work and be measured?
For Oliver Schmitt, managing director of Digital Hangar, now is the right time because of heightened customer expectations as well as a feeling that the company “has the power to go into tech mode” after more than two years of the pandemic.
“We saw in the crisis how much the customer demand for digital products accelerated. I think we were leading on digital, but even we felt sometimes we were running too slow. Now, we see more bookings on the dot-com than ever before, there’s a lot of direct bookings, a lot of online bookings. We have even seen days where we had more self-service transactions on our chatbots than our call-centers.”
He adds that it’s about improving the digital experience for passengers in a way that reaps results quickly.
Schmitt, who is also senior vice president of digital delivery, says people from across the business will be allocated to work on what it calls “value streams” that cover the various customer digital touch points.
He describes it as “almost a movement,” with more and more areas of the customer journey brought in over time.
Establishing a separate unit to do this is about having employees at the heart of the process and working in an agile way without disrupting the day-to-day operations.
“If you look at digital in general, you see which players are successful and which are not. You can do two things, take your full company into agile - and that doesn’t work with an airline because it has a lot of processes which need to be repetitive and operational. Or, you can take parts of the operation into agile, but give it some borders because otherwise it will not interact with the rest of the organization,” Schmitt says.
“You have to give it a frame so, yes we have a company [Digital Hangar], but not all people will work in that company. It's an ecosystem, people from the group will work in it, people from systems will work in it. The most important thing is to give it a framing. If you don't you cannot give it a mission, a working mode, and you cannot change the minds of the people and that at the end is the most successful piece of digital transformation.”
The company also decided not to build the unit within its existing Lufthansa Innovation Hub (LIH), because according to Schmitt, “They are more different than similar in reality.”
He adds that LIH is about innovation beyond flying, while Digital Hangar is about the core business and covers the websites, apps, call centers and more.
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Currently Digital Hangar has teams looking at a number of areas including customer booking and servicing and the self-service experience.
Schmitt says most of the calls airlines receive can be avoided using digital self-servicing.
“It doesn’t mean we will force people to self-service, but we will give them the option next to our call centers.”
A second team is looking at the airport experience and ways to make it more seamless even in times of disruption.
“This will be very important for next summer. It is about the app delivering your hotel voucher if your flight is disrupted or telling you how much time you need to be there before your flight and queue times at security lanes so the travel experience will be revolutionized.”
Knowing your customers
Lufthansa Group is not the only company implementing significant projects to improve the customer experience, as well as the bottom line.
At the recent Amadeus Altitude 22 airline executive event, carriers including Finnair and American Airlines discussed the importance of investment in digital solutions - as well as the wider move to a modern retailing environment through offer and order management.
During a session on moving away from current processes including fare filing and PNRs to offers and orders, Rogier Van Enk, senior vice president for customer engagement at Finnair, touches on investing in its app.
“We have invested quite a lot of money and we’re going to continue accelerating investment. We want to transform our app from a travel companion to a self-service and loyalty platform. We have the status stuff and we want to double down on self-service. We also want to focus on continuous customer engagement and building retention,” he says.
Marcial Lapp, managing director, revenue management, American Airlines, says one of the biggest challenges facing carriers is not really knowing enough about customers.
“We push offers out to the marketplace, our inventory, pricing and have someone assemble it on our behalf which means we don't get to interact with our customers nearly as well as any other digital platform so the question is how we change that.”
He adds that customers have to sign in to most digital platforms but not airline platforms.
“What other apps do you have, things you interact with where you do not create an account, log in and by doing that action you have shared a lot of information. Why is our business different? It shouldn't be. In the past we have been concerned about the risk of customer loss, we just don't want it touch it, it's too risky,” Lapp says.
“So, the way I think about it is that it's not just about offer-order management. There’s a lot of buzzword bingo going on but there’s also a lot of truth in that what we’re trying to do is just be more customer centric. It starts by us challenging our own beliefs around things we have always believed to be true.”
Airlines gathered at the event were asked to rank the challenges they face by order of importance, with customer-centricity and seamless servicing emerging as the top two.
Lapp says he’s not surprised by the findings, citing simple things such as customers being unable to check in online and not given any information as to why.
“When we have any sort of disruption in service, a lot of our customers don’t have the digital touchpoint - they may have the app, they may not, they may have given us their contact details, they may not,” he says.
“All we need is a storm system to come through one of our hubs and we will have massive disruption, and we will not have tools that go ahead and re-accommodate passengers and get them on the next flight - except the customers standing in the service line that is 100 people deep, and they don’t know they've been re-accommodated on a new flight and have now missed the flight they were rebooked on because they did not have the tech. So, what I'm advocating for is really the digital touch point that also includes the education of the customer.”
*Reporter's attendance at Altitude22 was supported by Amadeus.