Innovative Revenue Strategies – An Airport Guide (2015) / Chapter Skim
Currently Skimming:
Pages 31-58
The Chapter Skim interface presents what we've algorithmically identified as the most significant single chunk of text within every page in the chapter.
Select key terms on the right to highlight them within pages of the chapter.
From page 31... ...
3 1 Chapter 3 Customer Focus 3.1 Star ng Point – The Indianapolis Concession Program Ini a ve 3.2 Scope of the Customer Focus Strategy 3.3 Related Strategies 3.4 Overview of Techniques to Implement the Strategy 3.5 Techniques by Element 3.6 Qualita ve Evalua on 3.7 Wrap up 3.8 Addi onal References As air passengers have begun to spend more me in airport terminals, airport sponsors have stepped up ini a ves to improve a customer's experience and increase spending at the airport. This chapter examines the different customer segments at an airport, ways to s mulate customer spending, and what tools are available to track the effec veness of new customer ini a ves.
|
From page 32... ...
INNOVATIVE REVENUE STRATEGIES – AN AIRPORT GUIDE 3 2 3.6 million; even so, concession revenue to the airport grew to $6 million.1 On a per enplanement basis, concession revenue grew by 50% ($1.05 in 2007 versus $1.67 in 2013)
|
From page 33... ...
CHAPTER 3 – CUSTOMER FOCUS 3 3 What do these customers want? Suits on the Fly Experience Seekers Sufferers Gate Potatoes Open minded Chillers Employees – Oliver Wyman Many U.S.
|
From page 34... ...
INNOVATIVE REVENUE STRATEGIES – AN AIRPORT GUIDE 3 4 Each customer reflects a combinaon of these characteriscs. In pracce, the airlines target their most profitable and loyal customers with recognion and appreciaon for business.
|
From page 35... ...
CHAPTER 3 – CUSTOMER FOCUS 3 5 This element of the strategy focuses on ways that airports can beer understand the needs and wants of all their customers and on ways to analyze the profitability of specific products and services offered. Understanding the profitability of individual products and services offered may result in surprises, but it will also help airports make beer decisions about investments in services, facili
es, and technology.
|
From page 36... ...
INNOVATIVE REVENUE STRATEGIES – AN AIRPORT GUIDE 3-6 Use of survey research and analycs to opmize product and service mix are the foundaon of this element. However, achievement of beer market penetraon also comes by building relaonships with different customer groups through direct communicaons via the Internet, mail, and social technology.
|
From page 37... ...
CHAPTER 3 – CUSTOMER FOCUS 3 7 3.4 OVERVIEW OF TECHNIQUES TO IMPLEMENT THE STRATEGY A wide range of techniques may be used to implement this strategy, and new ideas are emerging rapidly. This secon highlights some of the more effecve techniques and organizes them by funconal area.
|
From page 38... ...
INNOVATIVE REVENUE STRATEGIES – AN AIRPORT GUIDE 3 8 Strategy Effecveness Code Innovave Techniques and Improvements Higher Priority Cost Commercial Airports General Aviaon Airports Service Quality – SQ SQ 1 Quality Assurance $ $$ SQ 2 Customer Assistance $ $$ SQ 3 Special Assistance $ $$ SQ 4 Loyalty Programs $ $$ Terminal Operaons – TO TO 1 Passenger Processing $ $$$ TO 2 Way finding $ $$$ TO 3 Airport Cleanliness $ $$ Key Higher Priority Costs $ $$$$ Strategy Effecveness Divided Opinion Source: KRAMER aerotek inc., 2014 3.5 TECHNIQUES BY ELEMENT This secon describes techniques that apply to each element of the customer focus strategy. 3.5.1 Element #1: Customer Segmentation To recap, Element #1 concentrates on idenfying the different customer groups, their needs and wants, and analyzing the profitability of products and services offered at the airport.
|
From page 39... ...
CHAPTER 3 – CUSTOMER FOCUS 3 9 possible to adjust product mix and test the effecveness of certain promoons or adversing based on actual demand and experience. Many POS systems are now web based and include summary dashboards to monitor results connuously.5 Revenue management systems are implemented primarily at medium or large hub airports.
|
From page 40... ...
INNOVATIVE REVENUE STRATEGIES – AN AIRPORT GUIDE 3 10 Crowd sourcing is a relavely low cost technique to engage customers in a conversaon about different aspects of the airport experience. It is an opon for airports of all sizes to consider as a technique for understanding their customers' needs and wants.
|
From page 41... ...
CHAPTER 3 – CUSTOMER FOCUS 3-11 Figure 3-4: Elements and Process of Customer Service Improvements Source: ACRP Synthesis 48: How Airports Measure Customer Service Performance, 2013 3.5.2 Element #2: Better Market Penetration The focus of customer segmentaon (Element #1) is greater knowledge about the airport's customers: who spends money at the airport and for what products and services.
|
From page 42... ...
INNOVATIVE REVENUE STRATEGIES – AN AIRPORT GUIDE 3 12 Concessions (with iPad ordering) at Toronto Pearson Internaonal Airport TECHNIQUES TO BETTERMATCH AND STIMULATE CUSTOMER DEMAND CN 1: CONCESSION MIX Strategy Effec veness – Priority Cost Commercial Airports General Avia on Airports $$ $$$$ It is rare for an airport to redesign its concession program completely, as done by the Indianapolis Airport Authority.
|
From page 43... ...
CHAPTER 3 – CUSTOMER FOCUS 3 13 Many commercial airports have cell phone waing lots. These lots can include vending machines, adversing, gas staons, and/or retail and food and beverage establishments.
|
From page 44... ...
INNOVATIVE REVENUE STRATEGIES – AN AIRPORT GUIDE 3 14 For commercial airports of all sizes in the United States, parking and ground transportaon are the largest non aeronaucal revenue generator, represenng 41% of total non aeronaucal revenues in 2013 for the 467 airports reporng.6 Analyzing use of an airport's parking products is crical to incremental improvements. A parking analysis would include: Exisng parking products – capacity, proximity to terminal, ownership (airport or others)
|
From page 45... ...
CHAPTER 3 – CUSTOMER FOCUS 3 15 Airports also are installing automac pay systems that include E Z Pass® electronic collecon systems (first implemented on toll roads) , credit card readers, and automac vehicle idenficaon (AVI)
|
From page 46... ...
INNOVATIVE REVENUE STRATEGIES – AN AIRPORT GUIDE 3 16 The frequent parking programs require enrollment (with or without a fee) and can offer reserved parking, automated credit card payments, free parking with earned points and, o
en, fast access in or out of parking lots or garages.
|
From page 47... ...
CHAPTER 3 – CUSTOMER FOCUS 3 17 Specialty Chef Restaurants at Minneapolis St. Paul Internaonal Airport OTG Management, an airport concession firm, is deploying 7,000 iPads in post security waing areas at Minneapolis St.
|
From page 48... ...
INNOVATIVE REVENUE STRATEGIES – AN AIRPORT GUIDE 3 18 Because digital adversing is a revenue stream for airports and its partners, this technique is useful for airports of all sizes. SERVICES TO IMPROVE OVERALL CUSTOMER EXPERIENCE AND SATISFACTION Thus far, techniques to achieve beer market penetraon involved ways to communicate with airport customers and provide products and services that link demand with specific customer groups that spend money at the airport.
|
From page 49... ...
CHAPTER 3 – CUSTOMER FOCUS 3 19 BD 3: LEISURE SERVICES Strategy Effec veness Cost Commercial Airports General Avia on Airports $ $$$ In 2011, the average dwell me at 58 reporng U.S. and Canadian airports was 86.5 minutes [Airport Revenue News Fact Book]
|
From page 50... ...
INNOVATIVE REVENUE STRATEGIES – AN AIRPORT GUIDE 3 20 BD 4: OTHER SERVICES Strategy Effec veness Cost Commercial Airports General Avia on Airports $ $$ Airports are also developing non aeronaucal service enterprises in the terminal or on the airport for travelers and employees. These service enterprises include health clinics, convenience stores, gas staons, auto service centers, banks, day care providers, dry cleaners, and pet boarders.
|
From page 51... ...
CHAPTER 3 – CUSTOMER FOCUS 3 21 service members, and elderly persons. Somemes airports experience extraordinary events and irregular operaons such as accidents, disasters, power outages, weather delays, diverted emergency flights, and construcon projects.
|
From page 52... ...
INNOVATIVE REVENUE STRATEGIES – AN AIRPORT GUIDE 3-22 Figure 3-6: Example of Customer Sasfacon Priority Analysis Source: ACI, 2012 via ACRP Synthesis 48 3.5.3 Element #3: Performance Measurement Performance measurement (Element #3) tracks customer sasfacon and improvements.
|
From page 53... ...
CHAPTER 3 – CUSTOMER FOCUS 3 23 Service Quality o Percepon measures of customer sasfacon o Percepon surveys for airport cleanliness, staff courtesy, baggage retrieval, way finding o Wait mes at cket counters, security, and CBP staons o Percent of arriving flights delayed o Percent of deparng flights delayed Social Technologies o Website adversing views o POS revenues near adversed promoons o Customer comments by subject area per month o Key word analyses of comments o Number of parcipants in idea collaboraons 3.6 QUALITATIVE EVALUATION The customer focus strategy involves an applicaon of techniques throughout the airport enterprise. Some techniques will directly influence customer sasfacon and market penetraon; others will have an indirect but contribung effect on net revenues to the airport sponsor.
|
From page 54... ...
Table 3 4: Evalua on Matrix of Techniques to Implement Customer Focus Strategy Code Innova ve Techniques and Improvements Strategy Elements Examples Applicability Revenue Impact Airport Sponsor Financial Risk Airport Cost to Implement Results Measurable Business Development – BD BD 1 Passenger Services Target Customer Groups & Build Customer Rela onships Fast Track Security, Baggage Wrap, In transit Hotel, Lounges, Clubrooms, Worksta ons, & Device Charging Sta ons Medium & Large Low/Indirect Low Variable Yes BD 2 Business Services Generate New Revenue Conference & Mee ng Rooms All Airports Low Low Low Yes BD 3 Leisure Services Build Customer Rela onships & Generate New Revenue Airport Tours, Athle c Facili es, Visitor Terraces, Spas, Movie Theaters, Golf Courses, Performances, Children's Ac vity Centers, Ska ng Rinks All Airports, especially Interna onal Gateways & Connec ng Hubs Low/Indirect Low Variable Yes BD 4 Other Services Generate New Revenue Health Clinic, Convenience Store, Gas Sta on, Banks, Day Care, Dry Cleaners, Auto Services, Pet Boarding Medium & Large Low/Moderate Moderate Primarily Third Par es Yes Concessions – CN CN 1 Concession Mix Time, Price, Concept, and Brand Target Customer Groups & Generate New Revenue Time Sensi ve Food, Food Delivered to Gate, Seasonal Offerings, Price Points, Na onal/Local mix All Commercial Service Airports Moderate/High Low Concession Program Refresh Yes CN 2 Conversion of Non Revenue Space Generate New Revenue Roof top antennas, carts & kiosks, concessions in cell phone lots, terminal corners All Commercial Service Airports Moderate/Low Low Low/Moderate Yes CN 3 Incubator/Assistance Programs Generate New Revenue New concepts proposed and implemented to increase revenue, concession advisory services offered, in airport adver sing offered to concessionaires All Commercial Service Airports Moderate Low Low Yes CN 4 Point of Sale (POS) Data Collec on Know the Airport's Customers, Target Specific Customers, & Increase Revenues Integrated concession or parking management, billing and customer informa on systems Medium & Large Moderate/High Low Moderate to High/IT Integra on Yes (con nued on next page)
|
From page 55... ...
Code Innova ve Techniques and Improvements Strategy Elements Examples Applicability Revenue Impact Airport Sponsor Financial Risk Airport Cost to Implement Results Measurable Informa on Technology – IT IT 1 Mobile Applica ons Target Customer Groups Brand Awareness, Airport Informa on, Pre purchase F&B, Targeted Adver sing All Commercial Service Airports Indirect Low Low Yes IT 2 Free Wi Fi Target Customer Groups & Build Customer Rela onships Access, commerce, services All Airports Indirect Low Low/Moderate Yes IT 3 Digital Adver sing Target Customer Groups & Generate Incremental Revenue Signage/FIDS/Video Walls and Displays, Recharge Centers, Mobile Devices Small, Medium, & Large Moderate on Ad Revenue Low Low Yes IT 4 Social Technologies Target Customer Groups & Build Customer Rela onships Web Page, Facebook, Twi er, Pinterest, Idea Collabora on Pla orms All Airports Indirect Low Low Yes Parking – PK PK 1 Parking Product Mix Target Customer Groups & Generate Incremental Revenue Premium, Short Term, Economy, Trunk to Trunk, Electrical Hookups Small, Medium, & Large High Low Variable Yes PK 2 Parking Reserva on and Payment Systems Target Customer Groups & Generate Incremental Revenue Online Reserva ons, EZ Pass Pay, Automa c Vehicle Iden fica on (AVI) Small, Medium, & Large High Moderate/Low Moderate Yes PK 3 Parking Guidance Systems Target Customer Groups & Generate Incremental Revenue Garages Large & Medium High Moderate High Yes PK 4 Loyalty Programs Target Customer Groups & Build Customer Rela onships Earned free parking or spending at the airport, discounts, reserved spaces Medium & Large Low/Indirect Low Moderate/Low Yes Service Quality – SQ SQ 1 Quality Assurance Know the Airport's Customers & Track Customer Sa sfac on Audits, Mystery Shoppers, Intercept and Web based Surveys, Feedback Small, Medium, & Large Moderate Low Moderate/Low Yes SQ 2 Customer Assistance Build Customer Rela onships Concierge Services, Ambassadors, Help Desks Medium & Large Indirect Low Low Yes SQ 3 Special Assistance Build Customer Rela onships Carts, wheel chairs, porters, translators, emergency responders Small, Medium, & Large Indirect Low Low No (con nued on next page)
|
From page 56... ...
Table 3 4 (Con nued)
|
From page 57... ...
CHAPTER 3 – CUSTOMER FOCUS 3 27 3.7 WRAP UP The customer's experience of an airport begins upon arrival at the airport and con nues across many func onal areas of the airport. This chapter highlighted ways that airport operators can beer serve different customer segments, con nuously capture informa on about customers and track performance, engage in dialogue with airport users, create an environment of innova on, and deploy changes that meet customer demands and result in new net revenues to the airport sponsor.
|
From page 58... ...
INNOVATIVE REVENUE STRATEGIES – AN AIRPORT GUIDE 3 28 Thompson, B., The Loyalty Connecon: Secrets to Customer Retenon and Increased Profits, Right Now Technologies, 2005. Retrieved April 16, 2012, from hp://www.rightnow.com/briefcase files/PDFs/The_Loyalty_Connecon__Secrets_to_Customer_Retenon_and_Increased_Profits.pdf
|
Key Terms
This material may be derived from roughly machine-read images, and so is provided only to facilitate research.
More
information on Chapter Skim is available.