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• Cognizant 20-20 Insights




Social Loyalty: A Way Forward for Airlines
   Executive Summary                                     on consumption of a particular service, such as
                                                         purchasing an airline ticket, buying miles using a
   For most airlines, social media engagement is a
                                                         branded credit card or partaking of a service via
   given. Any airline that is not yet participating in
                                                         a channel partner. But none of these incentives
   social media is missing out on a major business
                                                         account for a customer’s social interactions.
   opportunity to connect with customers.
                                                         Airlines have typically awarded miles based on
   Most airlines have a Twitter or Facebook account.     customer transactions with any of the aforemen-
   Twitter is the primary channel for customer com-      tioned services; given the torrent of social media
   munication and, in some cases, for delivering         activity, it’s essential that airlines now integrate
   customer service. Facebook is predominantly           their customers’ social interactions with their
   used for creating brand awareness, and some           loyalty programs.
   airlines have created apps for booking tickets
   or choosing seats. Outside of these company-
                                                         State of the State
   controlled accounts, review sites such as Trip        With advances in smartphones and high-speed
   Advisor provide a way for consumers to share          data networks, consumers can always be
   their travel experiences and offer feedback to        connected to social networks. They look at their
   airlines.                                             social networks as an important source of advice,
                                                         solutions and a way to share their experiences.1
   It’s relatively easy for airlines to monitor their    Such constant connectivity was among the key
   brand mentions and engage with customers              factors in driving airlines to set up accounts
   on corporate accounts residing on Twitter             on Twitter or Facebook, thereby establishing a
   or Facebook. However, many users are also             presence where their customers are talking or
   discussing their experiences on thousands of          socializing.
   other platforms that need to be monitored and
   addressed with a proper engagement strategy.          Examining the Twitter accounts of some of the
                                                         front-runners in this space, it is clear that each
   For any social engagement to be successful, the       company has a huge number of customers
   first and most important step is to identify where    following them, and most are using Twitter to
   the conversation is happening. The next step is to    provide customer service (see Figure 1).
   engage with customers to create a positive brand
   image and, based on ongoing conversations,            The large number of followers shows the amount
   identify brand advocates and detractors.              of social capital that an airline can generate if it
                                                         engages with customers effectively. Today, many
   Traditionally, brand advocates are assumed to be      carriers are using Twitter in a siloed fashion
   customers in the top tier of the loyalty program.     to provide customers with a quick response to
   These traditional loyalty programs are based          one-off inquiries and, in some cases, to engage




    cognizant 20-20 insights | february 2012
Getting Social
                          Airline                        Twitter Handle            Followers                 Tweets
               Delta                                     @Delta                    283,677                    4,249
               Southwest Airlines                        @Southwestair             1,211,047                  8,225
               Air Asia                                  @AirAsia                  288,050                    8,938
               American Airlines                         @AmericanAir              316,406                    17,391

            Note: Twitter metrics as of Jan. 16, 2011.
            Source: Cognizant
            Figure 1


            in problem-solving. Additionally, many carriers               go unnoticed by the airline. Meanwhile, no matter
            use Facebook to introduce special offers and as               how — or whether — the airline responds, any
            an alternate channel to initiate the ticket-booking           commentary on social media can greatly impact
            process.                                                      the purchase decisions of the customer’s network
                                                                          of followers, since they would most likely trust the
        Delta2 and FinnAir3 both host blogs to share                      authenticity of the customer’s comments.
        behind-the-scenes activities, experiences, stories
        and ideas generated by employees, as well as                      Air travel is a commodity business, with punc-
                             to converse with customers                   tuality and price being the two most important
       There is no to better understand their                             factors impacting airline choice. However, 35%
                                                                          of the decision-making process is influenced by
   enticement for likes and dislikes. However,
                             engagement on both of these                  other perception factors, so brand image can play
     customers to blogs is exceptionally low. To                          a big role in shaping ticket purchase decisions.4
  share their good boost activity, these airlines                         By identifying influencers, and engaging with
                                                                          them on social channels, companies can nurture
   experiences on need to ask an would a
                             question: Why
                                                   essential
                                                                          these relationships, transforming the influencer
social media sites. customer come to the site,                            into a brand advocate. By sharing their particular
                             read the blog and comment?                   travel experiences and writing reviews, these
        What’s in it for him or her to share their thoughts               influencers can help promote the airline, resulting
        with the airline and their followers on Facebook                  in a superior brand image.
        or Twitter? Beyond customer service, it remains
                                                                          These social contributions need to be incorpo-
        unclear why consumers would feel compelled to
                                                                          rated as a key part of airline loyalty programs and
        discuss their experiences, good, bad or ugly.
                                                                          rewarded with miles or another valued reward.
            Social Loyalty                                                The challenge is that social media and loyalty ini-
                                                                          tiatives at most airlines are operated by different
            Challenge: Rewarding Social Behavior
                                                                          groups that do not work in conjunction with one
            Traditionally, loyalty programs have been                     another. This is a major reason why loyalty teams
            designed to reward users with points when they                fail to identify and reward social influencers.
            consume an eligible service. For example, by
            purchasing airline tickets or using a co-branded              Another major big challenge is that airlines can
            credit card, customers are awarded with miles.                be so focused on their Twitter and Facebook
                                                                          accounts that they neglect listening to customers
            Conversely, customers receive little value (and               conversing on other social platforms. They do not
            no remuneration) for sharing positive experi-                 have a strategy in place to identify the influenc-
            ences on social media. No airline, according to               ers, nor the social tools to enable the process.
            our research, offers to reward their customers’
            social engagement, whether in the form of loyalty             Solution: Overlapping Programs
            points or any other award. There is no enticement             Social loyalty is a program by which an airline
            for customers to share their good experiences                 offers loyalty rewards not only in return for the
            on social media sites. At most, the customer who              consumption of goods or services but also for
            submits a review might receive a response from                activities on social media. It requires airlines to
            the airline, provided the review was on an official           overlap their social media programs with their
            airline account; at worst, the customer’s efforts             large and well-established loyalty programs. It’s


                                       cognizant 20-20 insights           2
not just high-mileage customers who should be             be redefined to translate customer loyalty into
placed in the elite tier of the loyalty program;          brand advocacy. To accomplish this, the focus
airlines need to make sure their most influen-            needs to shift from one-time transactions, to
tial customers on social media — the customers            interactions and engagements. Rewards and
who can increase brand image by sharing their             incentive programs, there-
positive experiences — are also categorized in the        fore, need to be designed Social loyalty is a
top tier of the loyalty program and rewarded with         to act as catalysts for
                                                                                       program by which
preferential and differentiated treatment.                travelers to share more
                                                          and engage more with the an airline offers
To maximize the benefits of both their loyalty            brand.                       loyalty rewards not
programs and their social media initiatives,
                                                      •	 Technology:     By investing only in return for
airlines need to overlap the two so that customers
                                                          in technology enablers like the consumption of
can be rewarded for their social media activity
                                                          social media monitoring
                                                          and text analytics tools, goods or services but
(see Figure 2).

To enable social loyalty, successful organizations        airlines can identify who is also for activities on
need to focus on the following components:                talking about their brand social media.
                                                          and on which networks.
•	 Organizational   structure: Most social media
                                                          Also, by deploying a
  initiatives are undertaken by the sales and
                                                          location-based strategy, they can provide the
  marketing business unit, which operates in a
                                                          rewards within the right context and at the
  silo. A dedicated group needs to drive all social
                                                          right time. One enabler that should play a much
  initiatives, working in a hub-and-spoke model
                                                          bigger role going forward is gamification. By
  with other business units. This would ensure
                                                          applying game mechanics to the entire process
  that the loyalty programs are designed with
                                                          of rewarding social activities and building
  traditional loyalty rewards and incentives for
                                                          loyalty, airlines can take brand awareness
  social media initiatives from the get-go and
                                                          to the next level. With game techniques,
  that this strategy is embraced by each and
                                                          airlines can use extrinsic
  every business unit across the organization.
                                                          motivators      such       as With game techniques,
•	 Culture: When multiple groups need to work             miles or free tickets to
  across business units, it’s important to foster         influence customers to
                                                                                          airlines can use
  a collaborative culture. Each group needs easy          share more and more extrinsic motivators
  access to information, requisite support (both          about their experience such as miles or free
  monetary and technological) and the respon-             on social platforms. This
  sibility and incentives to work in collaboration        approach can also ensure
                                                                                          tickets to influence
  with others.                                            that the customer sees customers to share
•	 Loyalty programs: Traditional loyalty pro-             real value in the rewards, more and more about
  grams are designed to generate ever-increas-            which would motivate
  ing customer loyalty. However, this goal must           him to share his positive
                                                                                          their experience on
                                                          experience with his peer social platforms.
                                                          community,       potentially
Colliding Worlds                                          triggering a viral effect. To encourage this kind
                                                          of behavior, airlines need to embed catalysts
                                                          into their social loyalty programs.

                                                      A Two-Pronged Approach
                          Social Loyalty




                                                      Going forward, airlines need to structure their
           Social CRM                       Loyalty
                                                      social and traditional loyalty programs in a way
           Initiatives                     Programs   that maximizes the benefits of both initiatives.
                                                      Not only do they need to be able to identify the
                                                      high-fliers who consume their services; they also
                                                      need to engage with influencers who can become
                                                      brand ambassadors, enhancing the airline’s brand
                                                      image by sharing positive experiences with their
Figure 2                                              peers worldwide.




                         cognizant 20-20 insights     3
Footnotes
1	
     “Social Media Becoming Most Important Marketing Channel for Travel,” Tnooz, Nov. 7, 2011,
     http://www.tnooz.com/2011/11/07/news/social-media-becoming-most-important-marketing-channel-for-
     travel-ppc-in-fourth-place.
2	
     Delta blog, http://blog.delta.com.
3	
     Finnair blog, http://blogs.finnair.com.
4	
     Anant Rangaswami, “Kingfisher Airlines: The Brand That Never Was,” Firstpost, Nov. 14, 2011,
     http://www.firstpost.com/business/kingfisher-airlines-the-brand-that-never-was-130257.html.




About the Author
Amit Shah is a Manager with Cognizant’s Customer Solutions Practice, within the Digital and Social
sub-practice. He specializes in social CRM and gamification engagements for customers across vertical
industries. Amit can be reached at Amit.Shah4@cognizant.com.




About Cognizant
Cognizant (NASDAQ: CTSH) is a leading provider of information technology, consulting, and business process out-
sourcing services, dedicated to helping the world’s leading companies build stronger businesses. Headquartered in
Teaneck, New Jersey (U.S.), Cognizant combines a passion for client satisfaction, technology innovation, deep industry
and business process expertise, and a global, collaborative workforce that embodies the future of work. With over 50
delivery centers worldwide and approximately 137,700 employees as of December 31, 2011, Cognizant is a member of
the NASDAQ-100, the S&P 500, the Forbes Global 2000, and the Fortune 500 and is ranked among the top performing
and fastest growing companies in the world. Visit us online at www.cognizant.com or follow us on Twitter: Cognizant.



                                         World Headquarters                  European Headquarters                 India Operations Headquarters
                                         500 Frank W. Burr Blvd.             1 Kingdom Street                      #5/535, Old Mahabalipuram Road
                                         Teaneck, NJ 07666 USA               Paddington Central                    Okkiyam Pettai, Thoraipakkam
                                         Phone: +1 201 801 0233              London W2 6BD                         Chennai, 600 096 India
                                         Fax: +1 201 801 0243                Phone: +44 (0) 20 7297 7600           Phone: +91 (0) 44 4209 6000
                                         Toll Free: +1 888 937 3277          Fax: +44 (0) 20 7121 0102             Fax: +91 (0) 44 4209 6060
                                         Email: inquiry@cognizant.com        Email: infouk@cognizant.com           Email: inquiryindia@cognizant.com


©
­­ Copyright 2012, Cognizant. All rights reserved. No part of this document may be reproduced, stored in a retrieval system, transmitted in any form or by any
means, electronic, mechanical, photocopying, recording, or otherwise, without the express written permission from Cognizant. The information contained herein is
subject to change without notice. All other trademarks mentioned herein are the property of their respective owners.

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Social loyalty-a-way-forward-for-airlines

  • 1. • Cognizant 20-20 Insights Social Loyalty: A Way Forward for Airlines Executive Summary on consumption of a particular service, such as purchasing an airline ticket, buying miles using a For most airlines, social media engagement is a branded credit card or partaking of a service via given. Any airline that is not yet participating in a channel partner. But none of these incentives social media is missing out on a major business account for a customer’s social interactions. opportunity to connect with customers. Airlines have typically awarded miles based on Most airlines have a Twitter or Facebook account. customer transactions with any of the aforemen- Twitter is the primary channel for customer com- tioned services; given the torrent of social media munication and, in some cases, for delivering activity, it’s essential that airlines now integrate customer service. Facebook is predominantly their customers’ social interactions with their used for creating brand awareness, and some loyalty programs. airlines have created apps for booking tickets or choosing seats. Outside of these company- State of the State controlled accounts, review sites such as Trip With advances in smartphones and high-speed Advisor provide a way for consumers to share data networks, consumers can always be their travel experiences and offer feedback to connected to social networks. They look at their airlines. social networks as an important source of advice, solutions and a way to share their experiences.1 It’s relatively easy for airlines to monitor their Such constant connectivity was among the key brand mentions and engage with customers factors in driving airlines to set up accounts on corporate accounts residing on Twitter on Twitter or Facebook, thereby establishing a or Facebook. However, many users are also presence where their customers are talking or discussing their experiences on thousands of socializing. other platforms that need to be monitored and addressed with a proper engagement strategy. Examining the Twitter accounts of some of the front-runners in this space, it is clear that each For any social engagement to be successful, the company has a huge number of customers first and most important step is to identify where following them, and most are using Twitter to the conversation is happening. The next step is to provide customer service (see Figure 1). engage with customers to create a positive brand image and, based on ongoing conversations, The large number of followers shows the amount identify brand advocates and detractors. of social capital that an airline can generate if it engages with customers effectively. Today, many Traditionally, brand advocates are assumed to be carriers are using Twitter in a siloed fashion customers in the top tier of the loyalty program. to provide customers with a quick response to These traditional loyalty programs are based one-off inquiries and, in some cases, to engage cognizant 20-20 insights | february 2012
  • 2. Getting Social Airline Twitter Handle Followers Tweets Delta @Delta 283,677 4,249 Southwest Airlines @Southwestair 1,211,047 8,225 Air Asia @AirAsia 288,050 8,938 American Airlines @AmericanAir 316,406 17,391 Note: Twitter metrics as of Jan. 16, 2011. Source: Cognizant Figure 1 in problem-solving. Additionally, many carriers go unnoticed by the airline. Meanwhile, no matter use Facebook to introduce special offers and as how — or whether — the airline responds, any an alternate channel to initiate the ticket-booking commentary on social media can greatly impact process. the purchase decisions of the customer’s network of followers, since they would most likely trust the Delta2 and FinnAir3 both host blogs to share authenticity of the customer’s comments. behind-the-scenes activities, experiences, stories and ideas generated by employees, as well as Air travel is a commodity business, with punc- to converse with customers tuality and price being the two most important There is no to better understand their factors impacting airline choice. However, 35% of the decision-making process is influenced by enticement for likes and dislikes. However, engagement on both of these other perception factors, so brand image can play customers to blogs is exceptionally low. To a big role in shaping ticket purchase decisions.4 share their good boost activity, these airlines By identifying influencers, and engaging with them on social channels, companies can nurture experiences on need to ask an would a question: Why essential these relationships, transforming the influencer social media sites. customer come to the site, into a brand advocate. By sharing their particular read the blog and comment? travel experiences and writing reviews, these What’s in it for him or her to share their thoughts influencers can help promote the airline, resulting with the airline and their followers on Facebook in a superior brand image. or Twitter? Beyond customer service, it remains These social contributions need to be incorpo- unclear why consumers would feel compelled to rated as a key part of airline loyalty programs and discuss their experiences, good, bad or ugly. rewarded with miles or another valued reward. Social Loyalty The challenge is that social media and loyalty ini- tiatives at most airlines are operated by different Challenge: Rewarding Social Behavior groups that do not work in conjunction with one Traditionally, loyalty programs have been another. This is a major reason why loyalty teams designed to reward users with points when they fail to identify and reward social influencers. consume an eligible service. For example, by purchasing airline tickets or using a co-branded Another major big challenge is that airlines can credit card, customers are awarded with miles. be so focused on their Twitter and Facebook accounts that they neglect listening to customers Conversely, customers receive little value (and conversing on other social platforms. They do not no remuneration) for sharing positive experi- have a strategy in place to identify the influenc- ences on social media. No airline, according to ers, nor the social tools to enable the process. our research, offers to reward their customers’ social engagement, whether in the form of loyalty Solution: Overlapping Programs points or any other award. There is no enticement Social loyalty is a program by which an airline for customers to share their good experiences offers loyalty rewards not only in return for the on social media sites. At most, the customer who consumption of goods or services but also for submits a review might receive a response from activities on social media. It requires airlines to the airline, provided the review was on an official overlap their social media programs with their airline account; at worst, the customer’s efforts large and well-established loyalty programs. It’s cognizant 20-20 insights 2
  • 3. not just high-mileage customers who should be be redefined to translate customer loyalty into placed in the elite tier of the loyalty program; brand advocacy. To accomplish this, the focus airlines need to make sure their most influen- needs to shift from one-time transactions, to tial customers on social media — the customers interactions and engagements. Rewards and who can increase brand image by sharing their incentive programs, there- positive experiences — are also categorized in the fore, need to be designed Social loyalty is a top tier of the loyalty program and rewarded with to act as catalysts for program by which preferential and differentiated treatment. travelers to share more and engage more with the an airline offers To maximize the benefits of both their loyalty brand. loyalty rewards not programs and their social media initiatives, • Technology: By investing only in return for airlines need to overlap the two so that customers in technology enablers like the consumption of can be rewarded for their social media activity social media monitoring and text analytics tools, goods or services but (see Figure 2). To enable social loyalty, successful organizations airlines can identify who is also for activities on need to focus on the following components: talking about their brand social media. and on which networks. • Organizational structure: Most social media Also, by deploying a initiatives are undertaken by the sales and location-based strategy, they can provide the marketing business unit, which operates in a rewards within the right context and at the silo. A dedicated group needs to drive all social right time. One enabler that should play a much initiatives, working in a hub-and-spoke model bigger role going forward is gamification. By with other business units. This would ensure applying game mechanics to the entire process that the loyalty programs are designed with of rewarding social activities and building traditional loyalty rewards and incentives for loyalty, airlines can take brand awareness social media initiatives from the get-go and to the next level. With game techniques, that this strategy is embraced by each and airlines can use extrinsic every business unit across the organization. motivators such as With game techniques, • Culture: When multiple groups need to work miles or free tickets to across business units, it’s important to foster influence customers to airlines can use a collaborative culture. Each group needs easy share more and more extrinsic motivators access to information, requisite support (both about their experience such as miles or free monetary and technological) and the respon- on social platforms. This sibility and incentives to work in collaboration approach can also ensure tickets to influence with others. that the customer sees customers to share • Loyalty programs: Traditional loyalty pro- real value in the rewards, more and more about grams are designed to generate ever-increas- which would motivate ing customer loyalty. However, this goal must him to share his positive their experience on experience with his peer social platforms. community, potentially Colliding Worlds triggering a viral effect. To encourage this kind of behavior, airlines need to embed catalysts into their social loyalty programs. A Two-Pronged Approach Social Loyalty Going forward, airlines need to structure their Social CRM Loyalty social and traditional loyalty programs in a way Initiatives Programs that maximizes the benefits of both initiatives. Not only do they need to be able to identify the high-fliers who consume their services; they also need to engage with influencers who can become brand ambassadors, enhancing the airline’s brand image by sharing positive experiences with their Figure 2 peers worldwide. cognizant 20-20 insights 3
  • 4. Footnotes 1 “Social Media Becoming Most Important Marketing Channel for Travel,” Tnooz, Nov. 7, 2011, http://www.tnooz.com/2011/11/07/news/social-media-becoming-most-important-marketing-channel-for- travel-ppc-in-fourth-place. 2 Delta blog, http://blog.delta.com. 3 Finnair blog, http://blogs.finnair.com. 4 Anant Rangaswami, “Kingfisher Airlines: The Brand That Never Was,” Firstpost, Nov. 14, 2011, http://www.firstpost.com/business/kingfisher-airlines-the-brand-that-never-was-130257.html. About the Author Amit Shah is a Manager with Cognizant’s Customer Solutions Practice, within the Digital and Social sub-practice. He specializes in social CRM and gamification engagements for customers across vertical industries. Amit can be reached at Amit.Shah4@cognizant.com. About Cognizant Cognizant (NASDAQ: CTSH) is a leading provider of information technology, consulting, and business process out- sourcing services, dedicated to helping the world’s leading companies build stronger businesses. Headquartered in Teaneck, New Jersey (U.S.), Cognizant combines a passion for client satisfaction, technology innovation, deep industry and business process expertise, and a global, collaborative workforce that embodies the future of work. With over 50 delivery centers worldwide and approximately 137,700 employees as of December 31, 2011, Cognizant is a member of the NASDAQ-100, the S&P 500, the Forbes Global 2000, and the Fortune 500 and is ranked among the top performing and fastest growing companies in the world. Visit us online at www.cognizant.com or follow us on Twitter: Cognizant. World Headquarters European Headquarters India Operations Headquarters 500 Frank W. Burr Blvd. 1 Kingdom Street #5/535, Old Mahabalipuram Road Teaneck, NJ 07666 USA Paddington Central Okkiyam Pettai, Thoraipakkam Phone: +1 201 801 0233 London W2 6BD Chennai, 600 096 India Fax: +1 201 801 0243 Phone: +44 (0) 20 7297 7600 Phone: +91 (0) 44 4209 6000 Toll Free: +1 888 937 3277 Fax: +44 (0) 20 7121 0102 Fax: +91 (0) 44 4209 6060 Email: inquiry@cognizant.com Email: infouk@cognizant.com Email: inquiryindia@cognizant.com © ­­ Copyright 2012, Cognizant. All rights reserved. No part of this document may be reproduced, stored in a retrieval system, transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the express written permission from Cognizant. The information contained herein is subject to change without notice. All other trademarks mentioned herein are the property of their respective owners.