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The Lufthansa Group Hub Airlines (Lufthansa, Swiss, Austrian) have a huge number of corporate contracts, which account for over 30% of total revenues. While they achieve a yield premium of up to 90% compared to the non-contractual customer base, the corporate customer business experienced revenue reduction effects from upfront discounts, costs for incentives, and other sales programs.
As a digital strategic partner for nearly 10 years, Valtech was fortunate to work with Lufthansa on numerous projects and enjoyed a strong working relationship. When Lufthansa Group wanted to update the corporate loyalty program, Valtech was happy to help.
Customer Engagement, Products and Process
Initially, there was no central portal for managing B2B contracts and loyalty benefits. In addition to the lack of such a digital touchpoint, the original loyalty program relied mostly on discounts and rebates and did not take into consideration corporate clients' travel behaviors or routines to determine which benefits would be most enjoyed. The aim was to increase both customer satisfaction and retain value within the Lufthansa Group ecosystem instead of losing it via discounts and rebates.
Lufthansa Group aimed to meet the changing needs of B2B customers by making data, reporting and contract information accessible via self-service and to use advanced data models and analytical methods to enable dynamic, behavioral B2B segmentation for a more tailored loyalty offer.
Breaking Out of the Traditional Organization Design
To foster a new mindset, Lufthansa Group established a cross-functional product organization from existing colleagues with external impetus. The aim was to conceive digital solutions from scratch, focused on customer needs and to have an adaptability mindset at its core. The innovations would need to be balanced against restrictions from the operational business or traditional line management expectations so that alternate avenues would often need to be explored. As the business transformation partner and central part of this product organization, Valtech lead the conceptual work and anchored the Corporate Customer Experience (strategy, concept and implementation via continuous focus group and testing). Valtech also co-initiated and supported the transition from line management into the agile product organization.
No Standard Agile Implementation
Adjusting to an agile way of working can seem daunting, and many clients hope for a standardized, one-size-fits-all template for the implementation. However, there can be no one solid way to adjust to agile working that applies equally to all companies. In our experience of shifting clients to working agile at scale, we’ve discovered that the best course of action is to develop a way of working that’s tailored to the needs of the client while not giving up the framework’s core principles (in this case SAFe). This means that we took our deep knowledge of the agile framework, looked at how Lufthansa had already applied it in parallel areas, and applied the specifics of the loyalty program and customer portal to consult on the set-up of the new product organization around Lufthansa Group for Business. This shows that adapting an agile mindset is about more than just ticking off boxes on a SAFe implementation check sheet.
B2B Customer Segmentation Is More Than B2C Personas
Valtech had to aggregate insights about corporate customer needs and behaviors which were not captured in the existing, traditional segmentation approach. To figure out how to serve recurring pain points across a surprisingly diverse landscape, Valtech used data science methods to group corporate customers into so-called “Corporate Archetypes” that could be used much like personas.
Traditional B2B segmentation, based on regionality, industry and revenue, did not deliver the right answers to product development questions of a more innovative scale. With statistical exploration, surprising insights and new clusters emerged, grouping seemingly unrelated corporate customers together. With the lens focused on behavioral patterns, previous assumptions were disproven (e.g. a company’s industry does not actually dictate travel behavior as much).
Additionally, corporate decision-making processes make behavioral analytics via customer journeys more complex to map than in a traditional B2C environment. Compared to the simple one-decision-maker B2C persona, multiple stakeholders are involved in the corporate travel process; pain points and needs are varied and distributed. Overall, Valtech collected diverse data from sales staff surveys, customer interviews and quantitative travel data, and integrated this input into clusters that would be used by the product development teams to stay true to their customer-centric mission. These “Corporate Archetypes” laid the foundation for how the newly tailored loyalty offering looked and it contributed with a higher predictability for success, as well as the potential for data-driven automation.
Results: From Strategy to Happy Customers
The result is an industry-leading digital B2B solution with many innovations in just over two years. The new loyalty program offers more options which are more uniquely tailored to the needs of the customer than were offered by the discounts and rebates model originally used. In addition to this new ability to tailor loyalty offerings to specific customers, the new customer-facing portal also gives customers more information and more control over their loyalty benefits as well as the ability to see the real value of the perks they choose.
Despite a high level of complexity in the technical landscape and operational setting, Lufthansa managed to build a pick-and-choose menu of loyalty benefits with automated self-service rules from scratch. Customer feedback after roll-out of the platform was immensely positive. New incentive products and novel processes, easy access and handling due to digital 24/7 access and self-control, automation that reduces the corporate customers’ workload, fast feedback and improvement due to agile, iterative development, and an ever-improving relationship with the customers. Lufthansa Group sales staff now has more time to have better-quality conversations with a lot of the operational work being out of the way. Sales staff happiness increased, and service center calls decreased.
A driver of this successful development surely was the mindset of adaptability and customer-focus and having a dedicated product organization that lived by it. A simple and successful solution emerged out of a complex environment because of this flexibility. The program set an example inside the organization and will be the cornerstone of an integrated suite of B2B solutions within Lufthansa Group for Business.