CRM as a Strategy for Competitive Advantage in the Airline Industry

Introduction

The airline industry is one of the challenging business industry because of the vast resources needed in order to deliver the quality services and to compete. Various problems create a great impact in the performance of the industry and affected the businesses economic and viability. Across the globe, every airline is struggling to improve the level the profitability through the continuous standardization of the operations and technological orientations. Part of their strategies is to focus on retaining their customers that can help the competitiveness and profitability in the long term.

Background and Problem Statement

The ongoing changes in airline industry are an evidence of the management to have the ability to react according to the factors that affects their environment. The changes appeared in the management are based from the pressures of globalization, financial instability, competitiveness, and quality customer services (SAP, 2005). Customers are the most essential element of any kind of business to remain profitable; therefore, the customer relationships are the main focus of both service and product centered organizations. Because of the focus of the industry, there is a great indication on the efficiency of their operations (Boland, Morrison, & O’Neill, 2002). However, the action of the airlines often fails to manage the customer relationships because of the lack of customer relationship management strategy.

Research Aim and Objectives

The main aim of the study is to recognize the CRM strategy in order to gain competitive advantage in the airline industry. Customer relationship management (CRM) suggests that sellers can identify the customers’ needs and wants and deliver it well. And in order to satisfy this idea, there are three objectives. First is to identify the strategy that can build the sense of commitment of the firm towards the customers. Second is to create the impression regarding the retention strategies. And third is to determine the effective CRM strategy.

Literature Review

CRM in the airline industry can be the model in competitive marketplace. An effective CRM leads the road of the airlines towards the profitability because of the promise of profitable business in the long term. One great factor that can be addressed in the CRM is it eliminates the customer churn through the creation of retention strategies that can attract and maintain customers (Syam & Hess, 2006). Because of the competing brands and companies, customers’ find difficulties in differentiation the service providers. With the help of the solid CRM, the business airline can provide the high quality service that can effectively targets the market segment, can specialize promotional campaigns and can develop the appropriate marketing initiatives. In order to facilitate the effectiveness in CRM, it is advised that businesses should collect the information regarding the target customers and provide them accurately. Furthermore, it is more effective if the business managed to keep the information updated to provide the powerful CRM that will function according to the organization’s goals and objectives. In addition, CRM is a great opportunity that can be easily mixed or matched with the existing system of the organization and provides efficiency in profit generation (SAP, 2005). In order to manage the CRM effectively, airlines must firstly change their business approach into various ways. The airline needs to recognize the customer segmentation which can provide the needs and preferences of the customers. This too can guide the business in placing the investment and creating valuable decisions. The airlines should be aware of the risks that may involve in the CRM strategy but is willing to take it because of their capability to develop the appropriate initiative. At some point, the organizational design and management is also important to empower the employees’ complete view regarding the CRM strategy. The implementation of the strategy is also important to effectively position the CRM approach favorable for the airline. CRM enable the airline to drive their success with the partnership or support coming from their customers (Boland, Morrison, & O’Neill, 2002).

Methodology

The suggested method in the study is the use of comparative case studies. The study can have an advantage in utilizing the method because of the case-to-case basis of the airlines. Through the comparative case study, the various strategies and problems can be cited, particularly on the CRM strategy.

Conclusion

With the steps of CRM approach, the airline industry can recover from the past years’ downfall such as the effects of recession. The key to the success is through integrating the organization’s system with the customer relations programs to achieve the operation efficiency. In the long term, competitiveness will soar into the airline industry.

References:

Boland, D., Morrison, D., & O’Neill, S., (2002) The Future of CRM in the Airline Industry: A New Paradigm for Customer Management [Online] Available at: http://www-05.ibm.com/innovation/fi/pdf/highlights/integration/crm_airline.pdf [Accessed 16 July 2010]

SAP, (2005) Powerful Solutions for Enterprise-Wide Airline Management [Online] Available at: http://www.sap.com/uk/industries/aero-defense/PDF/BWP_SB_A_D_Airline_Management.pdf [Accessed 16 July 2010].

Syam, N.B., & Hess, J.D., (2006) Acquisition versus Retention: Competitive Customer Relationship Management, [Online] Available at: http://groups.haas.berkeley.edu/marketing/sics/SICS%202006%20Papers/Competitive%20CRM%20March%2021%202006.pdf [Accessed 16 July 2010]