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How can you determine if your airline's customer segmentation is accurate?

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Customer segmentation is a key strategy for any airline that wants to offer personalized and relevant services to its passengers. By dividing your customer base into smaller groups based on their characteristics, preferences, and behaviors, you can tailor your marketing, pricing, and product offerings to meet their needs and expectations. But how can you tell if your customer segmentation is accurate and effective? Here are some tips to help you evaluate and improve your airline's customer segmentation.

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Puneet Sachdev

Principal Solutions Architect @ Amazon | Digital, Cloud, GenAI | Sustainability Evangelist

1 Identify your segmentation criteria

The first step to determine if your customer segmentation is accurate is to identify the criteria you use to segment your customers. These can be based on various factors, such as demographics, psychographics, geography, loyalty, travel purpose, booking behavior, or value. You should choose the criteria that are most relevant to your airline's goals, target markets, and competitive advantage. For example, if you want to increase your market share in a specific region, you might segment your customers by geography and travel purpose. If you want to boost your revenue per passenger, you might segment your customers by value and loyalty.

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Eduardo Belmiro do Rosário

Gerente Executivo - Banco Bradesco S/A
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Definir pontos estratégicos comparável com sua concorrência estabelecendo um market share do seu posicionamento também é algo muito relevante para o mercado da avia??o. Exemplo: quantidade de aeronaves no trajeto; horários de voos feito pela concorrência entre outros.

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2 Collect and analyze data

The next step is to collect and analyze data from various sources to validate and refine your customer segments. You can use data from your own systems, such as reservation, loyalty, or customer relationship management (CRM) systems, as well as external sources, such as surveys, social media, or market research. You should look for patterns, trends, and insights that reveal how your customers differ in their needs, preferences, and behaviors. For example, you might find that your business travelers are more sensitive to price and convenience, while your leisure travelers are more interested in comfort and amenities.

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Eduardo Belmiro do Rosário

Gerente Executivo - Banco Bradesco S/A
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Um ponto bem estratégico é querer saber porque determinados Clientes preferem escolher outra companhia aérea, pois, talvez possuem algum diferencial n?o observado por vocês. Assim como o comportamento de seus colaboradores, já que o chamariz de determinados clientes é potencialmente verificado na conduta ou posicionamento de sua equipe.

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3 Evaluate your segmentation performance

The third step is to evaluate how well your customer segmentation performs in terms of achieving your airline's objectives. You can use various metrics, such as customer satisfaction, retention, loyalty, conversion, revenue, or profitability, to measure the effectiveness of your segmentation strategy. You should compare the results of your different segments and see how they respond to your marketing, pricing, and product offerings. For example, you might find that your loyal customers have a higher satisfaction and retention rate than your occasional customers, or that your high-value customers generate more revenue and profitability than your low-value customers.

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4 Test and optimize your segmentation strategy

The final step is to test and optimize your customer segmentation strategy based on the data and feedback you collect. You can use techniques such as A/B testing, multivariate testing, or experimentation to try out different variations of your segmentation criteria, marketing messages, pricing models, or product features. You should monitor the impact of your tests on your key performance indicators (KPIs) and see what works best for your different segments. For example, you might find that offering a flexible cancellation policy increases the conversion rate of your business travelers, or that adding a premium service option enhances the satisfaction of your high-value travelers.

Customer segmentation is not a one-time process, but a continuous cycle of learning and improvement. By following these steps, you can determine if your customer segmentation is accurate and effective, and make adjustments as needed to meet your customers' changing needs and expectations.

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5 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

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Puneet Sachdev

Principal Solutions Architect @ Amazon | Digital, Cloud, GenAI | Sustainability Evangelist
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Customer segmentation enables an airline to provide a personalised experience to its customers on its digital channels. Some of the key business indicators (not proxy metrics) whether this is working or not are: 1. Look to Book ratio on the digital channels trending upwards 2. Increasing registrations into the loyalty program of the airline 3. Increased ancillary revenue through upsell / cross-sell through digital and customer service channels

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How can you determine if your airline's customer segmentation is accurate?

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3

4

5

1 Identify your segmentation criteria

2 Collect and analyze data

3 Evaluate your segmentation performance

4 Test and optimize your segmentation strategy

5 Here’s what else to consider

Airline Management

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How can you determine if your airline's customer segmentation is accurate?

1

2

3

4

5

1 Identify your segmentation criteria

2 Collect and analyze data

3 Evaluate your segmentation performance

4 Test and optimize your segmentation strategy

5 Here’s what else to consider

Airline Management

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