AlvaroSostin Frankfurt v2

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By: benjap (112 month(s) ago)

excelente trabajo..slds

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Turning customers online in Latin America: 

Turning customers online in Latin America Alvaro Sostin VP e-Commerce & Loyalty LAN Airlines

Agenda: 

Agenda Lan Airlines Lan.com within Lan’s distribution and services strategy Lan.com: sales and services evolution Lessons we can share

What is LAN?: 

What is LAN? Latin America’s Leading Passenger and Cargo Airline One of the region’s leading passenger airlines with passenger revenues exceeding US$1.1 billion Latin America’s leading cargo airline with close to US$800 million in freight revenues Passenger Companies Cargo Companies

Network: 

Network Madrid Easter Island Auckland Papeete Sydney Frankfurt LanChile New York Miami Los Angeles Mexico City Caracas Sao Paulo Buenos Aires Montevideo Cancun LanChile LanPeru LanEcuador Bariloche Concepcion Pta. Arenas Arica La Paz Pto. Montt Cordova Cuzco Lima Bogota Santiago Rio de Janeiro Rosario Quito Guayaquil Pta. Cana Passenger

Network: 

Network LanPeru New York Miami Los Angeles Mexico City Caracas Buenos Aires LanChile LanPeru LanEcuador Cuzco Lima Bogota Quito Pta. Cana Santiago Guayaquil Passenger

Network: 

Network Madrid LanEcuador New York Miami Buenos Aires LanChile LanPeru LanEcuador Lima Bogota Santiago Quito Guayaquil Passenger

Network: 

Network Madrid Easter Island Auckland Papeete Sydney Frankfurt LAN New York Miami Los Angeles Mexico City Caracas Sao Paulo Buenos Aires Montevideo Cancun Bariloche Concepcion Pta. Arenas Arica La Paz Pto. Montt Cordova Cuzco Lima Bogota Santiago Rio de Janeiro Rosario Quito Pta. Cana Guayaquil Passenger

Network: 

Network Madrid Easter Island Auckland Papeete Sydney Frankfurt LAN New York Los Angeles Mexico City Caracas Sao Paulo Buenos Aires Montevideo Cancun Bariloche Pta. Arenas Arica La Paz Cordova Cuzco Lima Bogota Santiago Rio de Janeiro Rosario Pta. Cana Guayaquil Cargo Salvador de Bahia Ushuaia Salta Mendoza Concepcion Pto. Montt Antofagasta Calama Iquitos Chiclayo Quito Salvador Vitoria Belo Horizonte Porto Alegre Panama San Jose Houston Guadalajara Asuncion Manaus Chicago Paris Miami Alliance Partner

A Growth Story: 

A Growth Story 1993 2004 13 Aircraft 63 2,227 Personnel 13,000 1,041,000 Passenger 6,576,000 48,000 Cargo Tons 506,356

Strong Revenue Growth: 

Strong Revenue Growth Operating Revenues, 1993 - 2004 Unique Business Model

Consistent and Improving Profitability: 

Consistent and Improving Profitability Operating and Net Income, 1993 - 2004

Lan.com and Lan distribution and services strategy : 

Lan.com and Lan distribution and services strategy Source: Salomon Smith Barney 2000 Airline Distribution Costs (USA)

Lan.com and Lan distribution and services strategy : 

Lan.com and Lan distribution and services strategy Lan.com as an enabler of cost distribution reduction In Chile and Perú: To reduce domestic routes distribution costs, strongly affected by GDS fees The approach was non-confrontational Started with Last Minute Offers and followed with structural discount (3%) to attract price sensitive individual customers No efforts to gain corporate accounts and no price advantages to corporations In the US and Europe Focus on Latin American communities and reduce dependency on large consolidators Followed the rules of the market: web fares, promotions, etc

Lan.com and Lan distribution and services strategy (cont.): 

Lan.com and Lan distribution and services strategy (cont.) Lan.com as an enabler of service cost reduction Large % of front line staff time dedicated to non revenue generating activities Develop and promote online services like web check-in and frequent flyer prize redemption Plus schedules, flight status, most other frequent flyer services, destination guides, etc

Lan.com and Lan distribution and services strategy (cont.) : 

Lan.com and Lan distribution and services strategy (cont.) Lan.com as a high impact, immediate, cost effective marketing channel Develop a large data base of customers willing to receive promotions via e-mail Develop new “media” Last minute offers weekly newsletter LanPass monthly balance statement

Some frequent objections... : 

Some frequent objections... Internet penetration in Latin American countries is so low People will not use their credit cards online Corporations are never going to buy online Why would someone in the US or Europe buy at LAN.com?

Only 10% of Latin Americans are internet users: 

Only 10% of Latin Americans are internet users Source: InternetWorldStats.com

Family income distribution: Lima: 

E 1,709.3 20.8% 150 US$ Inhabitants (thousands) 8,217.7 Source: APOYO Opinión y Mercado S.A. A1 0.9% 74 > 5.000 US$ A2 189 2.3% 2.700 US$ B1 501.3 6.1% 1.200 US$ C1 1,002.6 12.2% 420 US$ B2 706.7 8.6% 600 US$ 300 US$ C2 1,216.2 14.8% D 2,818.7 34.3% 200 US$ Family income % Population Family income distribution: Lima

Family income distribution: Santiago: 

Family income distribution: Santiago > 3.100 US$ > 8.000 US$ # Inhabitants (thousands) 6,061.2 > 1.300 US$ > 600 US$ 300 US$ E 10% 606.1 AB 4% 242.4 C1 8% 484.9 C2 21% 1272.8 C3 22% 1333.5 D 2121.4 35% 150 US$ Family income % Population Source: CORPA Estudios de Mercado

Customers use an average of 2.5 sites when purchasing air travel: 

Customers use an average of 2.5 sites when purchasing air travel Air Question: Where did you research the flight portion of your most recent trip? (Select all that apply.) Note: †Vendors include online agencies, online supplier sites, off-line agencies, and off-line suppliers by telephone. Source: JupiterResearch/Ipsos-Insight Travel Consumer Survey (2/04), n = 838 (air researchers, US only) © 2004 JupiterResearch, a division of Jupitermedia Corporation

If airfares are the same, consumers will prefer the airline website: 

If airfares are the same, consumers will prefer the airline website Question: If you find the same airfare on two different sites, how do you decide where to purchase the ticket? (Select all that apply.) Source: JupiterResearch/Ipsos-Insight Travel Consumer Survey (2/04), n = 1,027 (infrequent leisure travelers), n = 285 (frequent leisure travelers) (US only) © 2004 JupiterResearch, a division of Jupitermedia Corporation

A special team was formed in early 2000...: 

A special team was formed in early 2000... Away from the corporate building... Start-up spirit: strong commitment, informal and flexible, cost-conscious, independent First tasks: Formulate e-business strategy Develop new lanchile.com

The Lan.com 2001 team: 

The Lan.com 2001 team

We developed a new website and booking engine...: 

We developed a new website and booking engine... In about five months, a small team of 9 people, fully dedicated, developed a new website and booking engine After extensive benchmarking Using Amadeus API We launched the new site by the end of October 2000 US$ 100.000 marketing budget Multiplied sales by 5

“Executives” don’t know much about IT...: 

“Executives” don’t know much about IT...

“IT guys” don’t know much about the business: 

“IT guys” don’t know much about the business

And that’s not a very strong combination... : 

And that’s not a very strong combination...

If you break the “user/IT paradigm”, then you: 

If you break the “user/IT paradigm”, then you Make 80/20 decisions possible You know what you are doing and what for Make development cycles shorter Simplify developments Spend less money Get more results and have a better time...

We did that at lan.com...: 

We did that at lan.com... And that allowed us to develop a wide range of services in a relatively short period of time and at very reasonable costs FFP services Enrollment Account balance Retros Redemption E-Newsletter Web check-in Booking engine Travel agencies portal Corporate portal

We now offer a large variety of online services: 

We now offer a large variety of online services Schedules Destination guides Last minute offers Corporate services website Hotels Car rentals Special interface for domestic routes Limited packaged offers Web Check-in e-ticket print outs Flight status e-mail if schedule changes LanPass Inscription Account balance E-mail account Prize redemption Miles + $ promotions Retros Buying miles Lan.com Refunds Invoices

Service example screen 1: Domestic route interface...: 

Service example screen 1: Domestic route interface...

Slide33: 

NUEVO SITIO

Our marketing approach took advantage of Lan strengths: 

Our marketing approach took advantage of Lan strengths The Lan brand Frequent Flyer Program (LanPass) Contact points On board, the airport, the city ticket offices Unconventional media and innovative revenue sharing alliances Example: buses in Santiago, several websites ...plus “Ofertas de Ultimo Minuto” that helped us develop own new data base and media

Offline campaigns...: 

Offline campaigns...

Slide38: 

Lunetas

Slide39: 

Lunetas

Slide40: 

Lunetas

¿En qué estamos?: 

¿En qué estamos?

On board video or TV: 

On board video or TV Ofertas de Ultimo Minuto- Perro Ofertas de Ultimo Minuto- Vaso Taxi Señoras Ceguera Infarto Lampara Terremoto

And the results...: 

And the results... High growth in sales, both in Chile and abroad High adoption rates of online services Total investment payback in 2002 and increasing contribution to Lan margins since then

Evolution of Lan.com sales: 

Evolution of Lan.com sales Lan.com Sales, 1999-2005

What has worked for us... : 

What has worked for us... Excellent team, who learned the sales & services processes and systems (Amadeus, Resiber, Amadeus API´s) and applied that knowledge into the development of services that attracted customers to the web Reasonable IT investment Pragmatic approach to projects Reasonable marketing budgets and extensive use of Lan contact points, direct marketing and revenue sharing schemes As a result, as a business unit, we reached breakeven in 9 months, full investment payback in 18 months ... and continued growing ever after...

Slide46: 

Questions?

Slide47: 

Thanks!

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