​Qantas' transformation from airline to data hub

Since Qantas began taking an interest in customer behaviour, the company has reaped the rewards, including changing the way its Frequent Flyer programs work and expanding its own business.

Qantas is a 94-year-old company, and for the first 20 years, its marketing department was only a subset of the overall airline business. Fast forward to 2015, and Qantas Loyalty is now a stand-alone business that provides services to the airline as well as to external companies.

Speaking at the ADMA Data Day 2015 event in Sydney on Tuesday, Vaughan Chandler, executive manager of Red Planet and Loyalty Services for Qantas Loyalty, said the company has transformed from knowing very little about its customers to having a 360-degree view about who they are, where they fly, and what they are doing outside of travelling.

The company began building data sets of its customers in 2007, a time when the company wanted to understand more about its customers' behaviour. This led to the creation of Qantas Loyalty.

"Since then, we have a far more descriptive view of customer behaviour. The knowledge we have built has allowed us to fundamentally change our Frequent Flyer program. For example, decisions such as to allow points to be redeemed outside of airline seats; the ability to take the program to the banking industry; opening up earning points outside of the business such as Woolworths and other general spend areas," Chandler said.

"These sound pretty standard because they are now in action, but back then, it directly opposed the conventional wisdom of airline loyalty programs."

According to Chandler, Qantas Loyalty now generates AU$1.3 billion in revenue, and captures 800,000 unique member opinions annually.

As a result, the company is able to develop 600 campaigns annually, and each campaign is custom targeted using specific algorithms, rather than having a generic marketing approach, Chandler said. For example, on average, each member receives 50 emails each year. However, no one person would ever receive the same communication set as another person, as each monthly e-newsletter has 150,000 variations.

In turn, the company's financial results have improved, increasing earnings before interest and tax by AU$154 million per annum from AU$128 million in 2008 to AU$282 million in 2015.

Off the back of the success of Qantas Loyalty, the airline giant has also been able to broaden its business offering, including developing solutions to help other businesses design their own loyalty program; provide data and marketing services; and diversify its own loyalty services program.

Chandler added that the company has developed a metric framework to discover where all the data that has been collected can be used across the whole business.

"Today, we're now using the insights across the whole business, and it's fundamental from a strategy formulation, product design, where do the planes fly, what are the capital allocations, pricing yield, customer interaction management; all of these areas are driving off the same knowledge so we have a centralised view of our customers," he said.

According to Chandler, the next opportunity and challenge for the company will be to reduce the fragmentation that has resulted from the increasingly digital age through its recently launched business, Red Planet.

He said the aim of Red Planet is to help clients with media, particularly digital media; analytics; and draw a more direct link between research and outcome using the data Qantas Loyalty has collected.

Corrected at 4.28pm AEST, 25 March 2015: Changed age of company from 28 to 94.

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