Landing the right data

A top-flight CRM program ensures the customer is king at Continental Airlines.

by Keith Ferrell

Few industries are as volatile or competitive, yet as customer-centered, as the airline industry. The sheer number of passengers is matched by the sheer number of variables that affect a customer's experience, including everything from fluctuating oil prices that increase ticket prices to unexpected thunderstorms that result in a delayed arrival.

In such an environment, the ability to differentiate your company from the competition is paramount. Differentiating your customers in terms of their value to the company is equally important. Continental Airlines shows that 30 million passengers' information flowing into and out of a Teradata Warehouse at real-time and near real-time speeds can be the most effective differentiator of all.

As Kelly Cook, director of CRM for Continental Airlines, points out in a conversation with Teradata Magazine, the combination of customer information and employee engagement with customers provides opportunities for the airline to leverage its Teradata Warehouse investment to create more effective business practices. Even more important, she stresses, is the opportunity to transform warehoused data into human interaction with the airline's customers. Through marketing campaigns tailored to customers' travel patterns and value levels and by providing employees with up-to-the-minute passenger profiles, Continental continues to deliver superior customer service through innovative CRM solutions.

Q: What sort of business and data environment did Continental face when it began considering a data warehouse solution?
A: In 1998, when we started the process, we faced several main problems. We didn't have a clear idea of who our customers were: Where do they fly most frequently? What travel agents do they use and which travel agents do the most business with Continental? What corporations do they work for?

Q: And those questions led Continental to pursue a data warehouse solution?
A: Actually, it all flowed from one crucial question posed by Larry Kellner, who in 1998 was our chief financial officer and now is our president and chief operating officer. He asked how we might best go about understanding everything about our customers—not just who they were and who they worked for. What sort of experience do they have when they fly Continental? Who are the highest-value customers? What were those customers' histories of receiving airline compensation for inconvenience? What was the customer defection rate? And so on.

Q: When Mr. Kellner raised that crucial question, could Continental provide the answer?
A: Internally, we had multiple definitions of "customer" and multiple definitions of "value"—and no data to define each. We couldn't differentiate the levels of customers within our customer base. We were running 45 databases locally, with another 20 running offshore. The result was that we were often duplicating compensation among customers. And too often our highest-value customers were not only not clearly identified, but they frequently received lower compensation in the form of airline rewards, even as their value to the company grew higher.

Q: What was the CRM situation like in 1998?
A: Unacceptable. We had limited, bureaucratic and lengthy means of reacting to industry and market changes, no way of differentiating our product based on who the customer was or on how market factors or recent experiences with Continental affected customer expectations. Our data was not integrated. And if you don't have your company's data integrated, you simply cannot react to changes effectively and efficiently.

Q: How were you managing your marketing data?
A: At the time, our marketing data mart was outsourced. When we wanted to do a marketing promotion, we would have to fill out forms, prepare sample files, send them all to the agency—with all data mining and analytics done there, outside Continental. Everything (was done there)—not only housing but also data scrubbing and cleaning, the data management—and all at rates much higher than if we were producing internally.

Q: Were the primary business objectives for your Teradata analytical solution centered around CRM?
A: Initially, our primary objective was a CRM solution built around establishing one central place for all our data with all of the benefits and efficiencies that it would allow. We did maintain an operational data store (ODS) for fast transactions, but everything else went to the Teradata Warehouse.

Some of the business and financial objectives are obvious. Clearly we realized savings by bringing our data and analysis in-house.

But it was also clear that we were on a growth track, and there were benefits here as well. In traditional data environments, growth is a start/stop game. You have to stop occasionally, figure out where you are, where you need to grow, whether you need to re-platform or move to another database.

You don't have those issues with Teradata—its scalability was one of the things that attracted us. We could grow without interruption.

Q: The ODS served as a transitional platform, then—but the data warehouse was the core of the strategy?
A: Knowing everything we could about our customers, and leveraging that knowledge to the fullest, was the core of our strategy—and still is. But you're only going to accomplish that with a data warehouse.

It's also important to bear in mind that, for the first couple of years (of warehouse operation), ROI is really key—a data warehouse represents a large cash outlay, so even while we were putting together our long-term strategy, we saw some low-hanging fruit we could grab, and we did.

For example, we saw an immediate change in the dilution of our marketing campaigns. In addition to the savings we realized by bringing the data and data management in-house, we were able to do some fine-tuning that, in retrospect, looks self-evident but that hadn't been done before.

Q: Such as?
A: Well, we started collecting PNRs (passenger name records) for already-booked flights as well as for segments flown. That way, when we did a campaign for a specific flight segment, we were able to eliminate mailings to customers who'd already booked that segment. Our marketing campaigns no longer included anyone already booked.

Q: Which produced savings in the cost of the campaign, correct?
A: Sure—but there's a far more important benefit. We started almost immediately to see how the data warehouse would let us not only minimize dilution in campaigns, as I've described. But more crucially, we began to be able to communicate with our passengers the way they wanted to be communicated with—to provide them with only the information and offers that were relevant to them.

And this has just grown and grown. Flown data was joined with booked and ticketed data, which was ultimately joined to everything that happened to the customer operationally. The result has been to get better and better at communicating with our customers.

Here's a good example. There's a lot of open real estate on our OnePass (mileage club) statements. We use that for marketing materials—reminding our customers, for example, that Continental has had the best on-time record for any airline over the past decade.

Thanks to the data warehouse, we're able to exclude that information from statements going to anyone who's had a significant flight delay recently. That sort of thing—it seems like a softer benefit, but it's really at the heart of what makes our customers so loyal.

Q: How long did it take to begin realizing financial results from the transition?
A: It was immediate. During the first year of our Teradata Warehouse operations, we saved $1 million on the marketing data mart alone. Plus, we realized another $5 million in cost-savings benefits due to database systems consolidation. But more importantly, we became a far better provider of services for our customers, which ultimately delivers far more in terms of yield and revenue management.

Q: Did Continental deploy Teradata CRM tools with the data warehouse?
A: Yes. We purchased the Teradata Campaign Management module, which provided a way for people within the organization who might not be SQL-savvy to perform their own marketing and data mining and to acquire the analytics they needed.

We also developed several applications ourselves, building them internally. Our goal was to achieve the right balance between tools and deliverables, between internally developed solutions and out-of-the-box solutions, all depending on the business objectives we wanted.

Q: Can you give us an example of the sort of programs the data warehouse and its mix of tools enabled?
A: Sure. To pick just one, we put together a proactive goodwill letter campaign: a comprehensive plan with multiple components, in which every high-value customer got a letter. Customers got letters within 48 hours of experiencing a late arrival, for instance.

The customers who received the letters ended up spending 8% more with Continental, while 30% of customers who received the letter along with a complimentary Presidents Club pass actually joined the Club, an additional revenue bonus.

The campaign's success absolutely beat all of our expectations. Nothing had changed except the letter—but our ability to tailor the letter campaign to specific customers really showed us how effective these tools can be. The result wasn't simply a better experience for the customer, but a better ongoing relationship for that customer with Continental. They spent more with us, and we also found that our compensation costs dropped by nearly $100 per customer.

There was another bonus for us as well. The increase in Presidents Club memberships was not in our original business case model; it was gravy on top of the 8% increase in spending.

But it taught us something. We began almost immediately to look for ways to extend what we'd learned to other programs. Things like including targeted messages and upgrades for passengers with high-yield tickets, providing them with upgrades when possible upon check-in, adding other premium services, that sort of thing.

It's been rewarding to watch the lessons learned from our initial experiences spread throughout the organization.

Q: So the data warehouse helped you identify and better serve your best and most profitable customers.
A: Oh, the warehouse did pretty well in identifying our worst customers as well.

Q: How?
A: The first year in operation we saved $5 million in security and fraud detection. For example, we found one customer who had gotten more than 20 bereavement fares in 12 months due to the same dead grandfather!

Q: The data warehouse proved itself in terms of CRM and marketing efficiency from the very beginning?
A: Yes, but...I think we all need to understand that the letters "CRM" really only mean something inside the marketing department. What really matters and what really makes a difference is what the warehouse makes possible in the business environment and in the real world where we and our employees do business. And in that environment, the warehouse lets our employees give our customers a piece of ourselves.

Q: Meaning?
A: In the real world, our employees—the ones who meet the customers and deal with them—aren't thinking about CRM or data mining or analytics. They're thinking about Continental's culture and about how that culture affects the customer experience. They don't think, "CRM." They think, "How can I be a hero to my customers today?"

Q: And how does Continental's data warehouse operation enhance that front-line employee's chance of being a hero?
A: Any number of ways. Done right, data can make the customer even more real than just the customer's physical presence alone. For example, our flight attendants all receive a final passenger report before departure. The report identifies the highest-value customers, who made the platinum rewards level yesterday, and whose flight to Chicago was late or delayed.

All of this lets the flight attendants personalize the experience for the highest-value customers. The result is a better experience for the customer, of course, but also a better and richer experience for employees and their ability to communicate and deliver Continental's culture to our passengers.

Q: As a result of the data warehouse, would you say that you not only have a better sense of who your customers are, but also a better sense of how to make sure they know who Continental is?
A: Yes. We've been able to build a compensation history and a standardized compensation matrix, which really provide a way of putting into action the sorts of things that increase customer satisfaction and loyalty. If this level of customer experiences this type of service event, then they should receive this type of compensation.

It also identifies for us exactly where customers are on the value chain. Look at two customers who spend the same amount a year with us: Customer A lives in Houston and flies out of our hub, buying 265 segments a year; Customer B doesn't live in a hub city and flies only 18 segments a year, but those segments are all business or first-class round-trips to Europe. Both customers are valuable to Continental—all of our customers are valuable to us. But Customer B is the more profitable customer. That's the sort of thing we now know.

Q: And you know it quickly and completely, correct? You're moving to a fully active data warehouse?
A: About a year ago we made the transition to having all tickets come to the data warehouse in real time, with Continental.com updates following in near real time.

What this gives us is further ability to move that data and what it tells us about our customers, not only into the data warehouse for mining and analytics. But just as critically, we're able to move very current information and insights downline to the workforce where the information can be implemented in ways that improve the customer's experience. And of course it gives our customers access through Continental.com to their reservation information as well.

In other words, the warehouse helps ensure the immediate delivery of Continental's culture and values no matter (at) what point the customer touches the company or at what point a Continental employee encounters a customer.

Q: So the active data warehouse will provide even more opportunities for you to know more about your customers.
A: And to reach them in the ways they want to be reached. We're constantly drilling down deeper and deeper, asking not just "what" but also "how" and "when." And it applies to every one of our customers. Some of them, for example, have employer restrictions on their tickets, or are blocked from receiving marketing e-mails, or their tickets are purchased by a corporate entity. So we stay alert for them when they check in on Continental.com if we can't reach them any other way.

To be frank, the challenge we face as we approach a real-time environment, with every PNR updated in real time, is to pick and choose what (things) we want done, and set priorities for accomplishing them. We keep raising the bar, and we will continue to raise the bar—but even in real time there are only 24 hours in the day.

But every one of those hours offers opportunities to enhance our customers' experiences. And we're making (the) most of those opportunities.

Q: Speaking of customer experiences, what was it that led you to select Teradata for your data warehouse?
A: There were a couple of reasons. We felt that Teradata had the best product on the market, and we still feel that way. It's not necessarily the cheapest but it's clearly the best in terms of performance, scalability, adaptability to the needs of our business and ability to accommodate changing business conditions and needs.

Q: And the other reason?
A: The people and the culture.

Continental is a relationship-driven company. I think that shows in what we've discussed today regarding how we feel about our customers and our employees. But it's also true of what we look for with our suppliers. When we're buying a (data) warehouse or dealing with any high-capital-cost supplier, people are a key element in the decision-making process.

And Teradata's employees, the sales teams and Professional Services teams, really worked with us, really came to understand our business and what our business goals and objectives were and are. They didn't try to sell us a bunch of stuff we didn't need, and we appreciate that. Their product, people and culture were all focused on helping us achieve our goals.

That, I'd say, was—and is—the key driver in our business relationship with Teradata. They have a superior product and are represented by superior people. We feel the same way about ourselves.

Q: Looking back at Larry Kellner's initial question, "How can we understand everything about our customers?," do you feel that the past few years' events have answered his question well?
A: Beyond our expectations, and more clearly every day. It has definitely been a hard road getting here, to come to this point from the point we started at, but it's also been terrifically valuable, both in terms of business and in terms of our company's culture.

We knew what we wanted to do—what sorts of things could flow from finding the right way to answer that initial question. Teradata has helped us do that and more.

We've learned a lot, and one of the key lessons is this: If you couple a tremendous business strategy with a great data warehouse platform and an engaged workforce, it's unbelievable what you can do. T

Behind the solution

Teradata Warehouse powered by: Teradata Database v2R5, 10-node 5380 NCR Server Data Model: 3rd Normal Form (1,500 production tables; 270 automated processes; averages 550 unique ad hoc user queries per day) Users: 1,292 Storage: Total disk: 8,958GB User disk: 4,098GB Operating System: UNIX MP-RAS Teradata Utilities: BTEQ, Fastload, MultiLoad, Tpump and Teradata Database Query Manager Tools/Apps.: Teradata CRM, Teradata Warehouse Miner and products from Cognos, Hyperion and Microsoft

On the front lines: Continental employees talk about using CRM

Marvin Castro — CRM Analyst "A few years ago, Airport Services was trying to modify station staffing models based on the number of unaccompanied minors who travel (with) us annually. Not only were we able to provide them this data within minutes, we provided them data by station, by time of day and by applicable frequencies." Jeff Parnell — Information Technology Specialist "One of our corporate objectives in 2004 was to realize 25% Continental.com online check-in. We immediately began data mining in our warehouse to determine which customers were not checking in online and then we implemented specific messages to solicit check-in. We reached our goal." Robbin Brown-Dennis — CRM Analyst "Every passenger record that is flown, ticketed or booked is updated in our warehouse within seconds. Subsequently, we are able to differentiate marketing messages and offers."

About the team

It should come as no surprise that Continental's relentless focus on understanding its customers and meeting their needs extends to the company's internal customers as well. "To prepare our first database implementation when we created our customer information systems steering committee (in the 1990s), we included representatives from every department: revenue management, flight operations, marketing, technology, all of them," says Kelly Cook, director of CRM for Continental. "This not only let us set the right priorities for the business—revenue management, for example, was our first priority—but it also allowed everybody to hear and understand what other departments wanted to do, to see the cross-utilization benefits of the data warehouse." She continues, "The fusion of business and technical strategies has been key to our success. Our technology resources understand the business processes and the benefit realized with each component of the program. And in concert, the business units have an understanding of the technical obstacles associated with the processes we are trying to change. This unity accelerates our ability and willingness to implement by anticipating issues before they happen." In early 2002, Continental further extended its cross-utilization efforts by creating the Costar Ambassador Group. The 74-person board includes one member from each airline department and reviews the company's focus monthly. Cook's own 23-person team remains focused on internal customers as well as passengers. The group is divided into four units: Data warehouse marketing liaison: creates reports, handles ad hoc queries and campaign management tools, and oversees data integration and data migration Technology & infrastructure: responsible for ensuring that technology is available to support business needs Operational messaging: oversees and implements proactive interfaces with customers, including reminders and updates Strategic marketing & tactical planning: ensures that customers are reached in a dynamic, personalized or mass-customized manner Continental's internal customers seem as pleased with the results as the airline's passengers. "It is always rewarding for technology people to see a direct positive impact on customers, and this team has really made that happen at Continental," says Anne Marie Reynolds, the airline's managing director of technology. Continental's CRM team and technology directors keep an eye on customers. Standing, from left: John Brinker, Misty Alvarado, J.B. Weissert. Seated, from left: Luisa Chong, Stacy Warren, Matt Aldrich, Anne Marie Reynolds.

Keith Ferrell, former editor of OMNI magazine, has written, spoken and consulted on governance and Web-enabled corporations.