Finding the right Application for your Frequent Flyer Program - Whitepaper
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This white paper discusses the essential parameters for selecting IT applications that support frequent flyer programs (FFP) amidst changing loyalty dynamics. It emphasizes the importance of a structured approach in evaluating IT solutions based on critical functionality and alignment with business strategies. Additionally, it highlights key features of member and partner management, program structure, and the trade-offs between tailor-made and readymade IT solutions.
Finding the right Application for your Frequent Flyer Program - Whitepaper
- 1. www.niit-tech.com Finding the right application for your Frequent Flyer Program (FFP) Amogh Joshi & Syed Masood NIIT Technologies White Paper
- 2. CONTENTS Introduction 3 The Functionality Report Card 3 Tailormade vs. Readymade Solution 4 Licence vs. Service 5 Conclusion 6
- 3. TRANSPORTATION TRAVEL CARGO PACKAGING TRANSPORTATION TOUR TRAVEL GUIDE TRAVEL TRANSPORTATION CARGO CARGO LOGISTICS TRAVEL JOURNEY GUIDE TRANSPORTATION CARGO JOURNEY CARGO GUIDE LOGISTICS TRAVEL With changing dynamics of loyalty, it is very important that the IT This white paper intends to explore some key parametersfor application used for supporting the FFP is implemented or assessing an IT application deemed suitable for your FFP scheme. enhanced to accommodate the futuristic vision. This white paper intends to highlight key parameters, based on which an IT The Functionality Report Card application can be assessed for efficacy and long term relevance. An ideal IT solution should always be structured around clearly defined The parameters, if observed carefully, can lead the loyalty business requirements. All business requirements should be prioritized managers to an IT solution best suited for the strategically and have a defined weight. An exhaustive list of frequent flyer features designed FFP scheme. grouped into different functional categories can be helpful in identifying the features you would like to include in FFP scheme. Introduction In today’s economic volatility the perception about loyalty program has changed considerably from being luxury to necessity. In fact 95% of the British consumers believe that rewards make more sense during economic down turns. The number of consumers voluntarily joining one or the other program is at all-time high and so is the number of operational Frequent Flyer Programs. The shortlisted functionalities can further be compared for efficacy and availability, with different products.A FFP application should have loosely coupled yet tightly integrated modules incorporating the desired features. Some of the important elements of an FFP application are below. Member Management The objective of loyalty is to understand guests and offer better US Canada service leading to repeat business. Half the job is done if the South America member information, as highlighted below, is managed well in Europe application. Middle East i. Profile Details: A detailed profile is not only essential to understand member preferences (including – Meal, Seat, Inflight, lounge, Communication etc.), but also helpful to segment Frequent Flyer Programs have become an obvious component of customers based on personal, geographical and other attributes the aviation business. The success of the loyalty initiative is based captured in profile. on 3 key factors: a. Well-crafted product to delight the customers b. Intelligently designed Loyalty program to gratify customer interaction c. Formidable IT application to support the FFP scheme. ii. Activity Details: A trail log of all member activities, including accrual and redemption, with the sponsoring enterprise or associated partners. iii. Account Details: An account of all credits and debits of points as a result of awards, purchase, redemption, expiry, donation or other qualified activities. With the changing dynamics of loyalty, it is very important that the IT application should be enhanced to support the FFP to accommodate the futuristic vision. 3
- 4. Partner Management awareness about the brand, offers and specialties but also the FFP has now become a profit center and the major source of customer informed and motivated. Following key features are revenue is trading of miles with partners. Partners, in terms of essential to manage communication well. revenue, are now considered comparable to passengers and i. Target: Ability to create segments so as to target right audience therefore should be handled with the equivalent finesse. For efficacy, following partner related features should be sought after by loyalty managers: i. Partner Profile: Ability to maintain profile details, including partner category, contact details, geography and services. ii. Partner Contract: Ability to record contract details and automatically translate the inputs to operational business rules. for the proposed communication ii. Template: Flexibility to design templates according to segment, mode of communication and event. iii. Timing: Ability to schedule communication and control over communication based on frequency or recensy rules. iv. Track: Ability to track campaign response and evaluate success or failure Contract details include – Open and end date, billing rates (with cash and credit ceilings), settlement SLAs, Penalties and IBE Loyalty Website Mobile Website Mobile Apps Social Media Management applicable fees iii. Partner Portal and other interfaces - Portal is much required to empower partners to maintain their own profile and request trades and offers in a self-service fashion. Ability to directly interface with partner system brings desired ease to share Communication Management Customer Service Campaign Management Access Management Guest Management Partner Management Program Management Reservation Ticketing Check-in Lounge Access Baggage Control FFP MIS / GUEST Insight member and activity details. FFP / CRM / NPSD / IBE and Other Databases and Ware Houses Program Management The other aspect of loyalty is to have a concept in place to appreciate the customers and motivate them for their continued patronage. Program, as the concept is known, is a framework offering immediate gratification with each business transaction and a promise to offer value which multiplies with every forthcoming business transaction. It comprises of 4 key postulates – Objective, Tier, Points, and Qualification. The needed features are: Tailormade vs. Readymade Solution In a quest to retain frequent flyers the CRM systems evolved to Frequent Flyer Loyalty Programs. These programs were designed to give a sense of recognition to frequent flyers, intending them to continue giving business and keep them out of reach from competitors. i. Program Objective: Ability to design multiple programs based on business objectives, timelines and enrollment conditions. ii. Tiers: Ability to define multiple tiers linked with timelines (if desired) and member activities. Airlines like American Airlines, Lufthansa, Air Canada, and Virgin Atlantic are some of the airlines which developed an IT application catering to the loyalty product they offered. Gradually a need in the market was felt and GDS like Sabre and Amadeus developed the iii. Points: Ability to define different point types (bonus, FFP application to compete there airlines solution offerings. redeemable, status etc.), set up point expiry and top up rates. iv. Qualification: Ability to define rules for upgrade and downgrade between tiers. As the loyalty programs were launched for retail, hotels, credit card and other domains, the leading ERP/CRM solution providers like SAP, Oracle Seibel etc. also enhanced their CRM solution to Communication and Campaign accommodate the need of a Frequent Flyer program. However Communication is another key factor in loyalty which ensures that these solutions failed to attract many customers in airline industry target customer understands the business proposition as much as due to lack in domain expertise and various integration functions a the enterprise understands the customer. It not only creates FFP application requirefor covering all guest touch points. 4
- 5. Over the time, IT vendors have come up with specialized designed Strategic Planning – Ancillary components do offer competitive FFP application like CRIS by Emirates Group IT and Crane by HITIT edge, however to maximize the benefits, timing and expertise are (taken over by Amadeus). These FFP applications have a clear critical. For best results, a strategic timeline forprioritized advantage over the general CRM and retail loyalty product. introduction of ancillary components is advisable and the decision to buy such components as part of full application or independent components later on should be left to other listed guidelines. GDS Companies Loyalty Specialists Cost Benefits – Ancillaries packaged with a product are cost In House effective as compared to unpacked independent components. Others Hence, if the budget allows, it is better having all components as a single wholesome product.Products are usually parceled with a price which usually is not discounted, at least in terms of unwanted features. So there is no point in losing, features while paying for the complete product. Ready Made Licence vs. Service Tailormade According to McKinsey, the model of offering IT as a service (or technically Software as Service) is perceived as a game winner which has brought real benefits to business in a very cost effective fashion. The service model has enabled enterprises to focus on strategy and outsource the business IT to experts. Readymade loyalty applications are parceled with necessary core Licensing, which is often structured as Application Service Provider components and good to have ancillary components. Loyalty (ASP) or locally hosted model, has its own advantage of autonomy, managers, in any case, cannot compromise with core which authority and better alignment to business strategy. The following constitutes the loyalty framework. Ancillary components, whichare table is intended to develop a contrast of such benefits so as to help instrumental inoffering competitive buoyancy, can at times be you reach at the right model for your FFP. negotiated based on following maxim. Type of Venture - For startup loyalty ventures it is beneficial to keep it lean and take off with the essential core components. Nevertheless, the good to have features can be added over the time with yielded expertise. 5
- 6. Parameters License Software as Service Startup Cost Huge set up cost because of hefty licensing fees, installation charges, hardware and other infrastructure cost. Remarkably cost effective because of lesser contract fees and relatively nominal investment in hardware or installations. Customization/ Upgrade/ Maintenance Licensee has to pay for customization, planned upgrades and maintenance As application is owned and operated by vendor, the onus of customization, upgrade and maintenance lies with vendor only. Ease of Operation Infrastructure and human resource is required to operate. Cost of operation is fixed irrespective of the size of member base or transactions. Operation is offered as a service and the cost of operation is usually variable, depending on the size of member base or number of transactions. Strategically agile, customization can be called on by the licensee. Strategically stiff and licensee has to rely on the offered services only Agility Professional Services Cost Training Fees Consultation Charges Travel and Per-diem Cost Other Professional Services Cost Infrastructure Set up Cost Facility Setup Cost Cost of Hardware Cost of Software Licenses Database Cost Network / Bandwidth Cost Hosting Fees Resourcing Cost Other Onetime costs Periodic Reoccurring Cost Conclusion: A Loyalty scheme is as competent as the underlying IT application. However, it is often complicated and a real daunting task to find the right application for your loyalty strategy. To simplify the process of sorting, it is required to have some benchmarks in place. A series of Factors like security of data, reliability, ease of operation, product fit case studies and extensive literature review finally lead to the much and strategic alignment are considered relatively influential than the needed list of criteria associated with following problem statements: cost alone. However, considering the budgeted allocation, loyalty i. Functional Sorting managers should take care for minimization of costs without compro- ii. Tailor-made or Readymade mising with strategic objectives. If the factors like functional fit, iii. Licensed or Service security etc. are considered as constant, the cost can only be optimized by careful evaluation and adoption of IT service model. The matrix evaluates the ‘Cost Head’ associated with different model. Though, none of the criteria individually answers the big question of choice; yet an optimum combination of all leads to a reliable and competitively advanced loyalty application. COST HEAD Usage/Licensing Fees SaaS LICENSE Locally Hosted ASP Base Product Cost Additional Component Cost Branding Cost Customization Cost Principal Usage Fees (Fixed @ Contract ) Usage Charges (Variable @ Contract ) Support and Maintenance Cost Periodic Base Charges Billable Extra Charges (@ contract) One time Maintenance Charge (% of license) Annual Variable Fees (@ Contract) 6
- 7. About the Author Amogh Joshi Amogh is a Business Solution Specialist with a decade of experience in enhancing, designing and development of IT systems for loyalty programs. His passion is to provide creative CRM strategy that positively impacts on customer service, cost reductions and profit realization. Tel +91 - 98447786364 amogh.joshi@niit-tech.com Syed Masood Syed is a Business Analyst with one of the largest IT service providers to Airlines. He has been instrumental in implementing mission critical IT solutions for global airlines, and has published several artifacts airline strategies and associated processes. Tel +91 – 9582404557syed.masood@outlook.com About NIIT Technologies NIIT Technologies is a leading IT solutions organization, servicing customers in North America, Europe, Asia and Australia. It offers services in Application Development and Maintenance, Enterprise Solutions including Managed Services and Business Process Outsourcing to India organizations in the Financial Services, Travel & Transportation, Manufacturing/Distribution, and NIIT Technologies Ltd. Corporate Heights (Tapasya) Plot No. 5, EFGH, Sector 126 Noida-Greater Noida Expressway Noida – 201301, U.P., India Ph: + 91 120 7119100 Fax: + 91 120 7119150 Government sectors. With employees over 8,000 professionals, NIIT Technologies follows global standards of software development processes. Over the years the Company has forged extremely rewarding relationships with global majors, a testimony to mutual commitment and its ability to retain marquee clients, drawing repeat Americas business from them. NIIT Technologies has been able to scale its interactions with marquee NIIT Technologies Inc., 1050 Crown Pointe Parkway 5th Floor, Atlanta, GA 30338, USA Ph: +1 770 551 9494 Toll Free: +1 888 454 NIIT Fax: +1 770 551 9229 clients in the BFSI sector, the Travel Transport & Logistics and Manufacturing & Distribution, into Europe Certification, assessment at Level 5 for SEI-CMMi version 1.2 and ISO 27001 information NIIT Technologies Limited 2nd Floor, 47 Mark Lane London - EC3R 7QQ, U.K. Ph: +44 20 70020700 Fax: +44 20 70020701 security management certification. Its data center operations are assessed at the international extremely meaningful, multi-year "collaborations. NIIT Technologies follows global standards of development, which include ISO 9001:2000 ISO 20000 IT management standards. Singapore NIIT Technologies Pte. Limited 31 Kaki Bukit Road 3 #05-13 Techlink Singapore 417818 Ph: +65 68488300 Fax: +65 68488322 Write to us at marketing@niit-tech.com www.niit-tech.com D_48_091213 A leading IT solutions organization | 21 locations and 16 countries | 8000 professionals | Level 5 of SEI-CMMi, ver1.2 ISO 27001 certified | Level 5 of People CMM Framework