“Big data costs money. Big analytics earns money.” Have you ever heard a more true statement? That profound little nugget came from Heiko Merten, Head of Global Sales Business Intelligence Applications at Lufthansa Group. Heiko knows what he is talking about – last year Lufthansa Group maintained critical profit margins and used that “big data and big analytics” to achieve three corporate KPI’s – maximize revenue, minimize costs, and maintain customer satisfaction. No easy feat operating multiple airlines and more than 18 companies that provide services to those airlines (think food, cleaning, and maintenance just to start.)
“That’s our KPI set which is supported by performance drivers. It means those factors that influence and affect those KPIs. From a point of view, our top management should steer the company just via the top level KPIs and only if there are questions, uncertainties or need for clarification, will they drill down to have a look on the performance drivers together with middle management.” – Heiko Merten, Head of Global Sales Business Intelligence Applications
So, what are they doing and how are they doing it?
In order to measure those KPI’s, Lufthansa had to create a common data language from the multiple airline acquisitions and then integrate the data, from many internal and external sources, including revenue, reservation, marketing information, schedule, and market share while also bringing in competitive information to remain in tune with the competition. Lufthansa integrated their data with the Teradata Unified Data Architecture™ to break down the many different brand silos for crew scheduling, destinations, airplane schedules, jet fuel, and crew efficiency. They have the ability to understand cross-functional performances of the different Lufthansa Group airlines, establishing a monetary evaluation of the carriers’ bookings.
Within this highly competitive market, Lufthansa uses analytics to measure ‘fare share.’ Using pricing, route, airplane model and even customer segment data to determine if travel agents are giving Lufthansa group their fair share within a growing or shrinking market.
“How did the Lufthansa Group’s market share develop in comparison to the overall market development? Or who gained new share of the market? And to be more concrete, if Lufthansa grows by three percent in the market that overall grows thirty percent, that’s not a good sign. And vice versa. If a market shrinks by ten percent and Lufthansa shrinks just by five, that’s a good sign for Lufthansa…We are currently modeling or introducing a KPI called ‘fair share’ to evaluate the performance of agents or corporate customers reflecting exactly the fair market share of an agent. That Lufthansa share that is sought thru an agent.”- Heiko Merten, Head of Global Sales Business Intelligence Applications
The integration of that data quickly led to another outcome or purpose for the analytical ecosystem which was to enable customer-specific offers and better service, establishing an overarching analysis among the multiple brands/carriers and business units. That same integrated data also;
- Helps better steer sales and sales performances within Lufthansa Group airlines;
- Gets the full picture of their customer’s performance and rewards loyalty; and
- Fulfills the sales strategy and commercial targets on customer levels with optimal attribution of incentives.
With the right analytics, Lufthansa can overcome economic, competitive, and quality challenges to achieve unprecedented levels of excellence leading. All coming back to…
“…Big data costs money. Big analytics earns money. And that means, in my eyes, that additional revenue cannot be generated by data, it must be generated from the analytics that are based on the data. This is an important point. Have a good data set available and have powerful, high-performance reporting on top.” – Heiko Merten, Global Sales BI Applications
Congratulations to Lufthansa Group for all your success!