RUPERT BLACKLEY

PRESENT AND PAST
Campaigns consultant, joined British Airways 16 years ago

EXTRACURRICULAR ACTIVITIES
Film studies, soccer, cricket, American baseball, travel

KNOWLEDGE BASE
Studied engineering at England's Loughborough University

WHAT WOULD YOU DO IN ANOTHER LIFE?
"I'd love to run a cinema."

We've started servicing our customers as opposed to just marketing to them.

We get queries back a lot quicker-within minutes. Before Teradata, you'd have these queries that would take hours. You'd set them up, go away, have a cup of coffee and come back.

BY THE NUMBERS

YEAR FOUNDED
1919

SIZE OF FLEET
270 aircraft

NUMBER OF PASSENGERS IN 2002
40 million

NUMBER OF DESTINATIONS
216

SHORTEST FLIGHT
Between two islands in Scotland, 2 minutes

LONGEST FLIGHT
Between London and Buenos Aires, 13 hours

OUTBOUND E-MAIL MESSAGES SENT PER WEEK
700,000 to 1 million

NUMBER OF BRITISH AIRWAYS CUSTOMERS IN THE DATABASE
7.2 million Executive Club members, plus 1 million online customers

Search for simplicity

Teradata streamlines British Airways' CRM

by Debra Aho Williamson

Rupert Blackley, campaigns consultant, British Airways

unning an airline in the early part of the 21st century hasn't been easy. The market is characterized by overcapacity, slim margins (if any), government regulation, geopolitical influences and intense competition.

For British Airways, the venerable U.K. carrier founded in 1919, the past few years have been particularly challenging. After the events of September 11, 2001, and the travel industry's subsequent freefall, the company began a corporate overhaul in 2002 dubbed "Future Size and Shape," with the goal of removing complexity and restoring the airline to profitability.

British Airways' corporate mandate requires a 10% total operating margin by March 2004. To meet that goal, a leaner workforce and restructured routes are enabling the airline to better compete with low-cost carriers. British Airways also reduced the number and types of aircraft in its fleet and made online booking easier.

As the company embarked on these changes, executives realized that another way to save costs and improve efficiency was to overhaul the data warehouse and customer relationship management system. British Airways, a Teradata user since the early 1990s, launched an initiative to consolidate information from across the organization into what it refers to as an Integrated Commercial Warehouse (ICW), a Teradata Warehouse that combines various business units into one. The idea was to simplify decision-making by streamlining the IT infrastructure and improving decision support.

In August 2002, the air carrier began using Teradata CRM Version 4.0 to better manage its relationships with online customers and members of its frequent flyer program. Since then, the airline has been able to shift nearly all of its communications with these groups to e-mail, saving on postage and processing costs. In addition, it has been able to produce more marketing campaigns in less time with fewer resources and more precision to ensure campaigns are being targeted toward the correct customer or potential customer. The Teradata solution allows British Airways to avoid sending a promotion meant for potential customers to those who already have a booking.

British Airways' Rupert Blackley, a 16-year veteran of the company, spoke with Teradata Magazine about Teradata CRM, the ICW and the drive to return British Airways to profitability.

Q. What kinds of data management challenges does British Airways face when it comes to keeping track of its customers?
A: We get customer data coming in from all angles. We get data related to flight bookings and our loyalty scheme. We have customer data coming in from our Web site, from our partners and from our operational systems-when somebody checks in, where they check in, whether they use one of our lounges, whether they use any of our other facilities, how many bags they've checked and whether they have a canceled or delayed flight.

Another issue is servicing customers. If they've contacted us about bad service, that's got to be related back to whether they are a loyal customer or whether they are just a one-off customer.

Q. What objectives of the Future Size and Shape program made you want to consider a CRM solution from Teradata?
A: We've got a whole program called Customer-Enabled British Airways. The aim is to make dealing with British Airways so easy that customers choose to do it themselves. We have made a strategic shift from offline to online communications with our customers. Two years ago, we were trying to [send statements and customer transactions via] e-mail, but the process was very clunky and slow and we handled it manually. Where we can, we want to talk to customers by e-mail. So now we [are able to] send information by e-mail instead of regular mail.

Q. And all of that is handled through Teradata CRM?
A: That's right. That was one of the things we achieved massive gains in over the past year. We've started servicing our customers as opposed to just marketing to them. We can send out servicing e-mails via Teradata CRM and Teradata. Whereas before that would have been a challenge, now it's not. The challenge now is whom we want to target and how we manage that outbound communication as opposed to managing the list.

Q. What was appealing about Teradata CRM compared to other solutions?
A: It's essentially an end-to-end product. We can build a campaign communication and do the audience selection and send the e-mail in one place. It's easy to use in terms of audience selection. You don't have to know SAS or SQL to build up quite a sophisticated selection.

Q. So a marketing person could use it without having to involve an IT expert?
A: Definitely. We've still got analytical people and IT people, but they are highly skilled analysts and SAS-skilled modelers. We've been able to outsource straightforward communications to people who are not analytical people. That's enabled the campaign operations team to focus on more-involved communications or test out new theories. We've had new people join the team, and within two weeks they were turning around communications. Before, there would have been a steep learning curve, because it was quite a complex process using sophisticated programming language.

Q. What were some of the issues you had with your previous CRM system?
A: We implemented a customer data warehouse based on Oracle, but it took two years for the analytical team to be able to use the information for campaigns and reporting. There were a number of issues with the CDW: It was very complex to use, queries were slow and complicated and required advanced programming skills, and we had many questions regarding the data quality: Could it scale? Could it house all of the information that needed to be accessed?

After September 2001, British Airways had to make drastic cost reductions. One of the things we looked at was reducing campaign execution costs in North America, where we paid for every e-mail sent through our outside agency's e-mail engine. E-mail campaigns were charged at a rate of 3 cents per e-mail, which given the size of the audience was a considerable expense. With ICW and Teradata CRM, we were able to go out to them and say, 'Here's our database, this is the front end where you do all your selections, and here's how you do your e-mails. Now you can't charge us for the IT costs.' We were able to realize major cost savings.

Q. Whom did you benchmark against when you were shopping for a new CRM solution?
A: The SAS product. We had some consultants that looked at about 10 products, and they came up with the two front-runners. We went and saw on-site demos of the products.

Q. What were the objectives of the benchmarking?
A: To ensure it had the capabilities that we required. And that's what came out; we realized that the SAS product didn't do all the things we were hoping it would do.

Q. How does Teradata CRM interact with your ICW?
A: ICW is a massive step for British Airways because we're bringing together three big sets of information. Currently, ICW is an 8-node Teradata Warehouse, which houses data from a number of areas of the business, including customers, marketing, sales, accounts receivable, operations and other financials. Teradata CRM also allows the business to leverage the large breadth of information held in ICW. Business users are able to get rapid insight into customer behavior and use this to drive proactive, two-way communications. As a result, Teradata CRM enables the business users to adapt and act quickly on newly identified customer insights. Customer information is also connected to the commercial data on ICW (such as flight, ticketing and operational data), which allows rapid campaign response to operational events.

Q. What are some of the things that Teradata CRM allows you to do?
A: All marketing communications to Executive Club and online customers are now conducted using Teradata CRM. There have been over 600 campaigns to date using Teradata CRM, addressing 4,000­5,000 customer segments.

In July 2003, a staff issue disrupted British Airways service for a time. Within four days of the disruption, all e-mailable U.K. customers received three separate communications, the initial one being an apology and/or reassurance. The changing circumstances created the need to keep in touch with all affected passengers and communicate with them in real time. In total, 800,000 e-mails were sent with a relevant and targeted message. These communications were rapidly turned around by non-operational members of the team, which minimized the impact on the ongoing operation for outbound communications.

We also made proactive calls to customers who were directly affected by the disruption. Within four days, 25,000 prioritized telephone contact files were generated from Teradata CRM for use by service centers and other support staff. We then made calls to apologize for the disruption and compensate affected customers.

Because the team had access to detailed data, we were able to segment the affected passengers by customer value, journey type and departure airport, and customers who had already been e-mailed were identified on the contact lists. As a result, the service centers could prioritize their activities and award customers with the appropriate level of compensation.

Another Teradata-added benefit is that the data warehouse allows us to do targeted marketing campaigns based on someone's past and future bookings, something we couldn't do very easily without the data warehouse. Teradata enables us to target potential customers with different e-mail communications than we would send current customers who have already booked.

Q. How many people currently use Teradata CRM?
A: There are three IT support staff; eight or nine super users who can build and run communications from end to end; nine operational users who report to the super users; and four or five casual users.

Q. What efficiencies and cost savings have you achieved?
A: We get queries back a lot quicker-[within] minutes. Before, you'd have these queries that would take hours. You'd set them up, go away, have a cup of coffee and come back. As a result, it has been possible to reduce the team of analysts from eight to three full-time equivalents, freeing up resources for other purposes.

The volume of analysis has also increased. The analysts are producing more and more sophisticated reports in response to requests from marketing. Comparing July­September 2002 and July­September 2003-that is, before and after the Teradata CRM implementation-the volume of requests has gone up by 150%.

With the Teradata CRM solution, British Airways is able to re-allocate personnel to create, run and manage customer communications based on different required skill sets. Rather than using highly skilled SQL and SAS programmers to run and reconcile list pulls, the automated campaigns are set up by analysts and supported on a day-to-day basis by the outsourced operational team. The automation facilitated by the Teradata CRM solution also allows us to run the campaigns more frequently and to keep in touch with customers on a timelier basis.

Q. How are you measuring your return on investment? How much have you saved or generated in revenue as a result of using Teradata CRM or a Teradata Warehouse?
A: We currently haven't got a specific figure. But in 2004, we will be reviewing the benefits of Teradata CRM and ICW, hopefully by identifying productivity gains and return on investment on recurring communications [that] we would not have been able to commit resources to support before.

We do know that we are now able to produce more e-mails than we were a year ago, with a smaller base of analysts. We are able to turn around e-mails in double-quick time. Before, we were maxing out sending two e-mails a day with one person managing the process, but now it's much more than that.

Q. Are there intangible benefits as well?
A: Yes. In terms of customer servicing, it's very important to send out the right e-mails to the right people. We had lots of issues before with our audience selection. Was it based on the right audience selection and their marketing preferences or their mailing preferences?

We've got very strict data protection rules here, so if we were making poor audience selection we were putting the company at risk.

Now we have one place with this information, and we have a tool which is distinctly defined. If you select this marketing preference with this e-mail preference you will get everyone that is marketable by e-mail. And that means anyone can go and do that as opposed to people that know the data.

Q. Has Teradata CRM helped you improve the response rate to your e-mail campaigns?
A: We have shown up to threefold savings in mileage liability costs for promotional campaigns using a pre- registration policy. Essentially this is where customers have to register before they can qualify for an offer such as double or bonus miles. Before we implemented Teradata CRM at British Airways, registration campaigns were not viable, as e-mails were not the normal mailing channel. E-mails allow customers to link straight onto the online registration page. Thus, on average we get 15­20% registration rates for e-mail-based audiences as opposed to 3­4% for direct-mail ones.

Q. You recently upgraded to Teradata CRM 4.2. Are there plans to migrate to Teradata CRM 5.0?
A: The business wants it, but our IT department wants to wait a while to make another upgrade. Teradata CRM 5.0's functionality will enable us to create more complex mappings against the ICW database, plus give us the ability to test new segmentation ideas with the customer SQL feature. We'd like to be able to segment by when the person flew but also by when he booked. At the moment we can't do that very easily.

Q. How do you plan to use Teradata CRM in the future?
A: The next big challenge is the leisure side of things, pulling data on leisure travelers into the ICW. By mid-March we hope to have pulled the data into the ICW and have communications up and running. But the leisure data is separate from the current data, so they're going to sit side by side. The next stage is to merge those two sets of information together. You have one customer, but you have a leisure relationship with him as well as the loyalty-based one.

Q. British Airways is working hard to reduce operating costs. How is Teradata CRM helping you achieve that goal?
A: We're moving away from one-off communications. Now we can set up a series of outbound communications to our customer base, determined by where they are in their life cycle with us-whether they are new members, if they have just made their first flight or if they haven't flown in one of our new airline cabins. By being able to consolidate campaigns and not do the one-off communications, we're saving money, but we're also generating revenue by being able to entice people to fly more with British Airways. T