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					                             Case Study




The airline business demands quick decisions and swift turnarounds. James Lawson finds out
how British Airways’ state-of-the-art multi-channel direct marketing and e-service operations
cope.




Reach For The Sky
I
    s it your favourite airline? British Airways   £25m a year earlier, and its biggest third-      campaign consultant at BA. “We’ve always
    (BA) is the world’s fifth largest carrier and   quarter profit in 12 years. But as well as cut-   been very good about having good informa-
    can trace its origins back to 1919. With       ting costs, worldwide ticket sales have risen    tion on customers. We now have much more
45,000 employees in 100 countries around           by 1.8 per cent to £1.89bn. With chief execu-    of an online relationship too.”
the globe, it flew more than 40 million pas-        tive Rod Eddington currently receiving plau-        Though transactional data has been used
sengers to their final destinations last year       dits for his performance, perhaps BA’s global    to help segment Club members for almost a
and is one of the world’s most recognised          marketing and systems staff should also take     decade and BA has become ever more ambi-
brands. But, like all other carriers today, BA     a bow?                                           tious in its use of customer data, the compa-
operates in a market plagued by over-capaci-                                                        ny has had a torrid time with its marketing
ty, slim margins, government regulation,           Building the base                                systems over that period. In the mid-90s,
volatile geopolitical influences – not least the    British Airways has been something of a          campaign selections and Executive Club data
disruption in the travel industry caused by        trailblazer in customer management, partic-      analysis were initially performed by analysts
September 11 and last year’s SARS virus –          ularly with its flagship Executive Club loyal-    in the relationship marketing department
and tough competition, particularly from           ty scheme. Relaunched last year with even        using SAS and Business Objects. BA then
low-cost carriers.                                 more emphasis on online services for mem-        decided to implement its Customer Data
   In response to these pressures and others,      bers, the Cxclub’s data has underpinned          Warehouse (CDW), based on Oracle, but
the company is pushing through a top-to-           much of the company’s understanding of its       two years went by before the analytical
bottom restructuring which involves cutting        customers since the early 90s.                   teams could use the CDW information for
thousands of jobs – with notable recent suc-         “We’ve been doing direct marketing for         campaigns and reporting.
cess. BA posted pre-tax profits of £125m for        over ten years with various forms of the            As the CDW was also used for operational
the final three months of 2003, up from             Executive Club,” says Rupert Blackley, senior    purposes, query response was slow, while


Database Marketing March 2004                                                                                                 www.dmarket.co.uk
data quality was patchy and the data structure com-      tions at our site at ba.com,” says Blackley. “We’re also
plex, making SQL query writing a laborious process.      now bringing leisure customer information into the
“It was a labour intensive, clunky process, heavy in     ICW, that’s those who buy through travel shops,
processing and support and not cost-effective,” says     request a brochure or buy tickets by mail or through
Blackley. “We moved to Vantage to front our cus-         direct bookings by phone. These will be treated in
tomer data warehouse but it soon became antiquat-        the same way as the registered customers.”
ed.”                                                        Historically the most sophisticated database mar-
   The Vantage tool was used for simple campaigns        keting work has been done with Club members,
while more sophisticated activity was managed sepa-      reflecting their higher value as well as the greater
rately by analysts who used SAS to build models on       amount of data that has been available on them. No
local sample database extracts. It would often take
two to three days to build scheduled bi-weekly
queries. Vantage operation was outsourced to
Carlson Marketing Group in both the US and UK;
following the slump in airline travel triggered by
September 11, the UK end was shut down at short
notice to cut costs.
   A completely new solution was needed and anoth-
er of BA’s ongoing projects helped provide the
answer. Since 2001, information on customers, mar-
keting, sales, operations and finance from across the
organisation had been consolidated in the Integrated
Commercial Warehouse (ICW), running on a
Teradata database platform. “This is a one-stop shop
for commercial information from across the busi-
ness,” explains Blackley.
   By choosing to run Teradata’s own CRM applica-
tion (TCRM) on top of the ICW, the company was
able to centrally manage its global marketing com-
munications and had simple access to all relevant
data required for analysis. Another interim SAS-         transactional data is yet used to analyse the other          The Customer-Enabled
                                                                                                                      BA programme helps
based system held the fort in the meantime and, after    customer groups, though this will happen in the near
                                                                                                                      the company
a straightforward four month switchover, the new         future. Depending on criteria such as distance flown          differentiate itself from
marketing system (employing the Communication            and the type of ticket bought, Club members qualify          its bargain basement
                                                                                                                      competitors through
Manager and Segmentation modules) went live in           for the blue, silver or gold tiers and the increasing
                                                                                                                      excellent service – and
August 2002.                                             level of rewards that go with them.                          also cuts costs
                                                            “We have a record of flights and mileage and               considerably.
Managing customers                                       points gathered,” explains Blackley. “There is a
Only a small amount of training was needed to bring      sophisticated engine that calculates all the miles and
staff up to speed on the new centralised system, while   points awarded. Cabin type, mileage and frequency
response times to complex queries have fallen by an      all influence the tier that you are in.”
order of magnitude. As TCRM supports email, direct          A number of segmentations help target different
mail, call centre and web channels from one inter-       offers to Club members as well as indicating the level
face, BA’s marketers and analysts at four locations in   of rewards they might receive, with SAS Enterprise
the UK and USA can now manage customer commu-            Miner used for modelling. For example, a value seg-
nications and combine both operational and analyti-      mentation is used to predict how much a new booker
cal customer management much more efficiently            might be worth in future and to make sure that the
than hitherto.                                           most valuable ones are contacted rapidly. “This lets
   BA has two main customer groups for customer          us target new members that will potentially be ‘silver’
management purposes: members of the Executive            very quickly,” says Blackley. “We can make a judge-
Club and BARCs (BA Online Registered Customers –         ment and it will affect the treatments selected by the
taken from online registrations and ticket buyers.)      marketers.”
   “Registered customer data is taken from registra-        Target groups for tactical campaigns, for example,


www.dmarket.co.uk                                                                                                   Database Marketing March 2004
                                to increase demand for London to Paris flights, are         drives the on- and offline self-service initiatives and
                                selected using variables such as length of Club mem-       both receives data from and passes data to the ICW
                                bership, date of last flight or which affiliate airlines    for marketing and service use. For example, it con-
                                have previously been used. By monitoring transac-          tains customer histories and segmentation codes
                                tional indicators using the TCRM system, analysts          written back from the ICW and accessible by agents
                                can also pinpoint potential defectors from the loyalty     in the call centre. Data entered by the agent will in
                                programme. “We can identify those who are slowing          turn end up back at the ICW, referenced to the cor-
                                down or who have stopped flying at all,” says               rect record, thus closing the feedback loop – though
                                Blackley.                                                  all this is for Executive Club data only at the
                                   A reactivation programme is underway to target          moment, though communications based on analysis
                                lapsers too. “We might get in touch to say that we         of leisure customers’ transactions are being tested
                                want to talk to them about the mileage they have           and will go live in a month’s time.
                                accumulated as it is about to expire,” adds Blackley.         “If they phone about an offer, there will be a set of
                                So far, the programme has elicited a four per cent         information that the agent can look at,” confirms
                                response.                                                  Blackley. “We don’t really do any live cross-sell in the
                                   With immediate access through the ICW to                call centre though there is upsell on the leisure side.
                                flight, ticketing and other operational data allowing       If they phone up to book a flight then we might offer
                                rapid campaign response to operational events, the         a hire car from an affiliate.”
                                TCRM system is a natural fit with another corpo-               With email the mainstay of both service and
                                rate project named CEBA (Customer-enabled BA),             marketing communications, the central system has
                                which aims to make flying as convenient and trou-           already proven to be of huge benefit. Last summer’s
                                ble-free as possible. Encouraging automated self-          Executive Club relaunch included a huge exercise
                                service also helps to slash costs and keeps queues         to record all channel preferences, for example.
                                down at the airport. As current flights to America          “Customers were able to opt in or out of the types
                                require a good deal of extra passenger information         of communications they received,” says Blackley,
                                to be recorded, doing this online in advance is par-       “and logging them didn’t affect any other market-
                                ticularly useful for all concerned – including BA’s        ing activity at all as it would have done five years
                                marketers.                                                 ago.”
                                                                                              The ability to manage a vastly increased number
                                Service and marketing                                      of email campaigns has been the most obvious out-
                                “CEBA is about allowing customers to interact with         come. The company has more than doubled the
                                us in the way that they prefer,” says Blackley. “ They     number of its email campaigns over the course of
                                can manage their bookings and check in online, they        2003 – while cutting the number of direct mail-
                                can check in at self-service desks at the airport and      shots.
                                use e-tickets. It has been a massive change and a             Email addresses are merged with the appropriate
                                massive enhancement to our service, with definite           creative treatments and sent immediately through a
                                cost savings, and it’s not just for Executive customers,   gateway on the ICW. In North America, Carlson
                                it’s for everyone. We also get that data and use it to     Marketing Group used to manage the local execution
                                target offers more specifically. There is a marketing       of emails using their own email engine, charging 3
                                and a service side to it and we have to get the balance    cents per email which, given the size of the audience,
                                right.”                                                    was a considerable expense. This cost has now been
                                   “Most of our communications with higher value           significantly reduced with direct execution via
                                customers are now by email and that’s the way they         TCRM.
                                want to get their information,” he continues. “By             “There might be a particular offer that’s best by
                                entering a PIN, they can look at the state of their        direct mail but for outbound, we will talk to you by
                                Executive Club account on our website and check the        email if possible,” states Blackley. “We used to pull
                                number of miles they have. They can still write or         off email lists and send them separately using
                                call if they want to.”                                     Listserv [a basic email “blast” engine]. Now it’s all
                                   This personalised service requires much the same        in one place.”
                                data as targeted marketing and, in best integrated            The combination of analytical and operational
                                CRM fashion, there is some commonality between             marketing use of the TCRM system extends to per-
                                the analytic and operational systems that support          sonalising the website “landing pages” that email
                                delivery. A separate operational customer database         respondents click through to. “It’s all managed by the


Database Marketing March 2004                                                                                                   www.dmarket.co.uk
same group,” says Blackley. “The people that build        with minimal training.
the email campaign are in the same place as the ones         Future plans involve making ever greater use of the
that build the pages for the site.”                       rich data and potential for automation that the mar-
   Formal processes exist to keep data as clean as pos-   keting team now has at its fingertips through the
sible. Customers can also update their own records        TCRM system. One priority is to start using the
online, extending the self-service theme to data veri-    transactional data on registered and leisure cus-
fication. PAF verification takes care of postcodes but      tomers to improve targeting, while differentiating
no other automated cleansing work takes place on          between flying for work and flying for pleasure is
the warehouse. “When I compare it with other com-         another goal. “With Executive Club members, our
panies, BA has a very clean and accurate database         longer term aim is to have a relationship for both
indeed,” says Blackley.                                   personal and business travel,” says Blackley.
                                                             With email now such a winner for BA, adding tex-
Over the horizon                                          ting is next on the agenda. “We’ve trialled SMS, have
By taking advantage of low cost channels and close-       gathered permissions and we have it all set up on the
ly aligning its marketing applications with all its       database to use as part of the CEBA programme.
customer-related data, BA has both saved consider-        We’re just not exploiting it at the moment,” reveals
able amounts of money and greatly enhanced mar-           Blackley.
keting and service performance. While the number             Though the sophisticated technical infrastructure
of complex reports required by marketing has              now available for customer management is impres-
jumped by 150 per cent since the new system’s             sive, the real highlight for marketers is its ease of use.
implementation, there has been a significant reduc-        As well as the range of tools and the short learning
tion in the number of analysts required to do the         curve, campaigns no longer take days, weeks or even
work – down from eight to three. With no need to          months to construct.
write SQL queries or use SAS tools for much selec-           “We can turn around single communications very
tion work, the team is also less reliant on specific       quickly,” says Blackley. “We did one in an afternoon
programming skills; simpler selections for initia-        last year and you could get a simple one out in an
tives such as Club World offers to online customers       hour. The only thing that’s going to hold you up is
can now be made by communications managers                sign-off of the copy.”

Campaigns in action
 There have been over 600 campaigns using the new system so far, addressing 4000-5000 or more customer segments, and BA has
 been able to automate a number of ongoing campaigns and customer communications which are run by the marketing team
 without the aid of more highly skilled analysts. These regular events often combine marketing and service objectives, for example,
 notifying Executive Club members that they will miss tier qualification for the following year, keeping them in the picture and also
 hopefully stimulating buying activity on their part. Similarly, Executive Club members who receive e-statements are directed to
 www.britishairways.com to review their current mileage levels, reinforcing the brand as well as promoting use of the website.
    One intricate marketing campaign, offering full-fare Club World passengers two free Club Europe tickets if they booked another
 flight in Club World within a specified timeframe, has particularly benefited from the new system. The complex selection
 requirements involve mapping to flight and ticketing data in ICW for each individual customer to ensure that the flight was actually
 ticketed and flown at full-fare. It is also necessary to crosscheck with the corporate deals database to see whether the ticket was
 discounted on the back end, in which case the customer would not qualify for the campaign.
    Previously this one-off campaign required specialised IT resources to write SQL statements along with a dedicated SAS analyst
 for daily processing and validation of contact files. This was not only labour-intensive, but also prone to failure and error. In 2003,
 after only one week to set it up, one analyst managed the entire campaign working only half a day per week.
    The flexibility of the company’s communications is perhaps demonstrated by its response to the industrial action by check-in
 staff at Heathrow last July. Within four days, all emailable UK customers received three separate communications segmented by
 route, date and customer value. Four groups were identified: affected passengers, forward bookings, Executive Club members and
 BARCs. In total 800,000 emails were sent with a relevant and targeted message offering either reassurance, an apology or both.
    Within the same period, 25,000 prioritised telephone contact files were generated for use by service centres and other support
 staff. Calls were then made to apologise for the disruption and to compensate affected customers. As the service team had
 access to detailed data, they were able to segment the affected passengers by customer value, journey type and departure airport,
 and allowed customers who had already been emailed to be identified on the contact lists. As a result, the service centres could
 prioritise their activities and award customers with the appropriate level of compensation.



www.dmarket.co.uk                                                                                                      Database Marketing March 2004
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