Application of e-CRM to the Airline Industry

Hongwei Jiang, PhD Candidate, School of Aerospace, Mechanical, and Manufacture Engineering, RMIT University, Melbourne, 3001. Email: george.jiang@rmit.edu.au

Louis Doukas, Associate Professor, School of Aerospace, Mechanical, and Manufacture Engineering, RMIT University, Melbourne, 3001. Email: ldoukas@rmit.edu.au

Xiangzhong Liu, Master Student in Business Computing, School of Information Systems, Victoria University, Melbourne, MC 8001. Email: xiangzhong.liu@students.vu.edu.au

Keywords

Customer Relationship Management (CRM), Airline e-CRM, e-Business System, Airline e-Commerce.

Abstract

The objective of this paper is using system engineering methodology to develop and implement e-CRM strategy for airline industry to create better customer relationship.

CRM (Customer Relationship Management), sometimes it is called customer management, customer value management, customer centricity, and customer-centric management. CRM has long been the buzzword for airlines aspiring to 'one-to-one' relationships with all customers, all of the time. Its underlying principles are well established too - those airlines that can effectively attract, serve and retain the best customers will see significant positive effects on their bottom line profitability. The deeper the relationship the airline holds with these customers, the more opportunities there will be for selling additional products and services. However, with the emergence of e-business and the 'new economy', the challenges of building strong customer relationships have become even greater.

The need to attract, acquire, leverage, and retain customers is still of primary concern to most businesses. Revenue growth through customer acquisition and retention remains a major requirement for competing successfully. Several studies document that the average company loses half its customers every 5 years and that it costs five to ten times as much to obtain a new customer as to keep an existing one (Kalakota et al, 2001).

Over the last few years numerous airlines have felt the chilling effects of increased 'customer power', as greater customer choice and lower barriers to defection have turned keeping customers into a battle that must be fought anew each day. Customer relationships are the key to airline business growth. Airlines must take absolute responsibility for a customer's satisfaction throughout the "want-it-buy-it-and-use-it" experience. This requires learning and tracking customers' needs, behaviors, and lifestyles and using this information to create a specific value proposition. This strategy is the path to consumer loyalty