Lufthansa is Germany’s aviation flagship company and also one of the major airlines operating on a global scale. Established in 1926, Lufthansa currently is one of the biggest members and also founders of the Star Alliance, the world’s most important airline cooperation. Divided into five strategic business segments (passenger business, logistics, Maintenance Repair Overhaul, catering and IT services), the following report will focus on the passenger business segment and Lufthansa’s activities in terms of customer relationship management (CRM) in this division. Being one of the first airlines to have established a customer loyalty program, Lufthansa successfully runs its frequent flyer concept Miles & More (Lufthansa, 2007).
In a competitive environment like the aviation business, relying on a loyal customer base which generates a major part of the company’s revenue is one of the key drivers for success. Due to cost pressure in the late 1990´s and the crisis in the aviation business after the terror attacks in 2001, airlines more than ever before recognized and appreciated the value of a relationship to its important profitable customer segments. Thus CRM strategies have become increasingly relevant for Lufthansa and other airlines.
Lufthansa’s CRM strategy in the passenger business segment is concentrated within the Miles & More program. Different statuses of memberships are designed to attend to customers throughout the stages of customer’s lifetime and therefore represent the value of the customer for the company. Beneath the Miles & More surface, an accurate value chain is required. The value chain contains Lufthansa´s Customer Portfolio Analysis, IT and Database Integration, Value Proposition Development and Customer Lifecycle Management. These factors combined enable Lufthansa to create a state of the art CRM system.
Table of Contents
1. Introduction
2. Overview: Current situation
2.1 Lufthansa’s current CRM strategy
2.2 Level of importance of Lufthansa’s CRM strategy
2.2.1 Strategic CRM
2.2.2 Operational CRM
2.2.3 Analytical CRM
3. Analysing Lufthansa’s CRM Value Chain
3.1 Lufthansa’s CPA
3.1.1 Market segmentation
3.1.2 Data mining
3.1.3 Tools & models
3.1.4 Life-time value
3.2 Customer Intimacy
3.2.1 Use of database
3.2.2 Database integration
3.2.3 Evolution of IT
3.2.4 Database architecture
3.2.5 Single view of the customer
3.3 Lufthansa’s Network (Development)
3.4 Value Proposition Development
3.4.1 Cost perception
3.4.2 Source of customer value
3.4.3 The customer experience
3.5 Customer Lifecycle
3.5.1 Identify new customers
3.5.2 Acquire new customers
3.5.3 Transacting with customers
3.5.4 Retaining existing customers
4. Financial Factors
5. Market Watch
6. Evaluation
6.1 Strengths
6.2 Weaknesses
6.3 Opportunities
6.4 Threats
7. Recommendation and Conclusion
Objectives and Core Themes
This document examines the Customer Relationship Management (CRM) strategies of Lufthansa, specifically focusing on its passenger business segment and the Miles & More loyalty program. The primary research goal is to evaluate the effectiveness of Lufthansa’s CRM value chain and identify potential areas for improvement to enhance customer satisfaction, retention, and profitability.
- Analysis of Lufthansa’s CRM value chain components (CPA, IT integration, Value Proposition).
- Evaluation of the Miles & More frequent flyer program structure and challenges.
- SWOT analysis of Lufthansa’s CRM activities, including strategic strengths and weaknesses.
- Assessment of financial factors and market competitive positioning.
- Recommendations for streamlining loyalty processes and enhancing customer value.
Excerpt from the Book
3.2.1 USE OF DATABASE
CRM always requires databases where to store the enormous amounts of information gathered through various avenues, be it while customers are buying tickets or giving the organisation personal details.
Lufthansa must capture as much and useful information about their customers as possible. This includes contact details, personal or business details, services purchased and other important aspects that can be used subsequently for analysis.
A key issue is to keep personal data up-to-date. This is a colossal and important step to any sales, marketing or customer services action as it represents the very first piece of information that will be analysed or used before interacting with the customers. False information could lead to customers being disappointed.
Lufthansa hires specialized companies such as Siebel to increase the reliability to its databases. It is also these companies’ responsibility to regularly update personal data of Lufthansa’s customers.
Chapter Summaries
1. Introduction: Outlines Lufthansa’s position as a major airline and introduces the focus on its CRM strategies and the Miles & More program within the passenger segment.
2. Overview: Current situation: Analyzes Lufthansa’s CRM strategy, emphasizing the importance of satisfying all customer segments from Economy to First Class and the role of the loyalty program.
3. Analysing Lufthansa’s CRM Value Chain: Breaks down the core components of the CRM model, including portfolio analysis, customer intimacy, and network management.
4. Financial Factors: Discusses the costs and revenues associated with CRM activities, drawing comparisons with industry practices and detailing operational and communication expenses.
5. Market Watch: Examines the competitive landscape of airline loyalty programs and Lufthansa's cooperation within the Star Alliance.
6. Evaluation: Presents a SWOT analysis assessing the strengths, weaknesses, opportunities, and threats inherent in Lufthansa's current CRM approach.
7. Recommendation and Conclusion: Provides strategic suggestions for simplifying the loyalty system and improving service quality to ensure long-term customer retention.
Keywords
Customer Relationship Management, CRM, Lufthansa, Miles & More, Airline Industry, Loyalty Program, Customer Portfolio Analysis, Data Mining, Customer Lifecycle, Value Proposition, Strategic CRM, Operational CRM, Analytical CRM, Star Alliance, Customer Intimacy.
Frequently Asked Questions
What is the primary focus of this publication?
The publication focuses on the Customer Relationship Management (CRM) strategies implemented by Lufthansa, specifically within its passenger business division.
What are the central thematic areas covered?
The key themes include the structure of the Miles & More loyalty program, the CRM value chain, database management, cost-benefit analysis of loyalty schemes, and a strategic SWOT evaluation.
What is the main objective of Lufthansa's CRM?
The goal is to maximize customer lifetime value, retain profitable customer segments, and improve service consistency to differentiate the brand from competitors.
Which scientific or analytical methods were used?
The authors utilize the CRM Value Chain Model, the Fiocca Model for customer classification, and a comprehensive SWOT analysis to evaluate Lufthansa’s CRM performance.
What is primarily discussed in the main body?
The main body details how Lufthansa manages customer data, segments its market, utilizes IT infrastructure, and develops value propositions to manage the customer lifecycle.
Which keywords best characterize this work?
Key terms include CRM, Miles & More, Lufthansa, Loyalty Program, Customer Lifecycle, and Strategic Analysis.
Why does the author consider the Miles & More program "confusing"?
The report argues that the system is overly complicated due to the high number of status tiers and the three different types of miles, which hinders customer understanding and satisfaction.
How does the report suggest improving the loyalty program?
The recommendations include reducing the number of status tiers to three, simplifying the mile-counting process, and expanding credit card services to emerging international markets.
What is the significance of the "Fiocca Model" in this study?
The Fiocca Model is used to develop a matrix approach to classify Lufthansa’s customer portfolios based on strategic importance and the difficulty of relationship management.
- Quote paper
- P. Schulz et al. (Author), 2007, Customer Relationship Management: Lufthansa, Munich, GRIN Verlag, https://www.grin.com/document/113709
