Q

Mining customer data through airline mileage programs

How do airlines use customer data mining? Most airlines now have "airmile" cards (for example, Emirates airlines

has a Skywards air mile card). What customer information can be gathered, and how? Are there advantages to customer data mining?

It is the detailed flight data by customer that has high utility to an airline. The mileage programs are but one major use of the data. And yes, customer data mining has advantages. Detailed flight data is instrumental in determining the flight network, pricing, supplier requirements and just about every other major decision an airline faces.

Mileage programs are crafted based upon, among other things, the flying profiles of their customers. The levels of mileage and the perceived incentive of the benefits offered are periodically in play. For example, airlines have target levels, both as an overall percentage of the customer base and an absolute number, for the higher levels of their airmile programs. Customer data mining in a forward-facing fashion allows the airlines to set the mileage requirements appropriately.

As a frequent flyer myself, I know the benefits do not accrue to me of being part of these programs unless I establish some volume to the point of actually being able to exchange miles for a reward and get to the advanced levels where my standbys are easier and my seat selection is better. Customer data mining allows airlines to profile my behavior leading up to and following being awarded the higher level to determine if it has improved my loyalty or volume. Of course, the actual program factors that lead to the satisfaction should be examined as a follow-up through interviews and focus groups.


This was first published in May 2005

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