Along with the imminent opening of its upgraded and expanded international terminal, Sydney Airport now has a new business analysis system, one that allows its management to understand much more than just the comings and goings of passengers. The new system has given the business a better understanding of customer needs and preferences and will help to grow revenue not just for the corporation, but for the 500 other businesses operating at the airport.
The ultimate aim, Sydney Airport Corporation chief financial officer Simon Bligh says, is to be able to harness data that will enable the organisation to respond to passengers' individual preferences.
The new approach is streets ahead of SAC's previous customer-segmentation methods.
"Our customer segmentation used to be quite crude," says Bligh, who comes from a telecommunications background, an industry in which complex segmentation is the norm.
"We knew whether international passengers were from Australia or overseas and whether domestic customers were flying inter or intra-state," Bligh says.
"[This] information was sufficient for some purposes, but wasn't really sophisticated enough to understand revenue and profits by market segment."
Before the new business analysis model was implemented, SAC management was able to divine where people were flying and who they were flying with, who was duty-free shopping and who was parking at the airport; but there was no way to bring all this information together.
"So the idea was to create a Rubik's cube of data to understand end-to-end revenue from each customer segment," says Bligh.
"The real challenge in doing this was to get clean data housed in the one place. It was [as if] we had the ingredients but we hadn't baked the cake."
SAC engaged management consulting company LEK Consulting to develop a methodology to bring this information together and to figure out which market segments to focus on.
"This is not about tracking an individual - it is not Big Brother at the airport," Bligh says.
"It is about analysing and understanding in detail the complex needs of all the different populations that use the airport so that we can better meet different market demands."
Working with airlines
SAC used LEK, he says, because SAC didn't have the "analytical power" required. Once the reporting infrastructure was in place, it used Altis Consulting to help plumb its new data warehouse.
"We now have operational data we didn't previously have, which is regularly reported, reconciled and reviewed," Bligh says.
"We think of this process as a journey. "The minute you think you can describe customer segments the information becomes historical because customer preferences change. So you need to be dynamic in the way you look at customer data."
An example of the ways in which SAC is using the data it now has access to is how it works with two airlines that now have landing rights at Sydney, Delta and V Australia.
"We understand profitability by route and can ask the airlines to initiate promotions to help stimulate profits, for example by giving customers specific offers," Bligh says.
SAC is also about to launch a trial of time-of-day duty-free shopping, an initiative prompted by its access to new data, with special kiosks in its new international terminal devoted to time-of-day offers.
"We know that no one buys whisky before 8am, so we might have a half-price offer for whisky when you buy perfume if you go through the airport in the early morning," Bligh explains.
He says this is a strategy other retailers like Coles and Woolworths are unable to use because the same customers can shop at any time of the day or night and such an approach could cannibalise their revenue.
"The idea is to do things to appeal to specific customer segments, recognising the preferences of different nationalities, that these nationalities like to fly at different times and then meeting the needs of those preferences," he says. "It's also about understanding that business customers have different spending patterns to holidaymakers."
This is an approach that appears to be working with four of the airlines - V Australia, Delta, Tiger and Air Austral - that became new customers of SAC last year.
Bligh says, "The key to Sydney winning these airlines' business was understanding the entire ecosystem, and thanks to our improved business analysis model we now have this understanding, which will ultimately benefit us, the airlines and our tenants." MIS Australia
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