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Terry Jones: Building a loyal customer base in a digital world

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 Terry Jones, Chairman, Kayak.com


Terry Jones,
Chairman, Kayak.com

The Internet has altered many industries over the last 20 years, but few have been more radically transformed than the travel business. Sixty percent of all travel purchases now happen online. Terry Jones has not just witnessed the evolution from up close; he’s been driving the change. From travel agent to marketing executive to CIO and entrepreneur, Jones has held key positions at American Airlines and Sabre, he founded Travelocity, and is now the chairman of Kayak.com. Here, he offers advice about how usage data and customer feedback—in combination with advanced analytics engines—can point out both looming threats and immense opportunities.

Consumer behavior has changed pretty dramatically over the last 15 years. It’s one thing to incite that kind of change, but dramatic change isn’t always conducive to loyalty. Do you have advice on how to engender loyalty online?

I’ll go back to Travelocity, where we did it pretty successfully. By the time I left the company, we had 40 million members. Early on, we asked ourselves the same thing, how do we build loyalty? We couldn’t afford a loyalty program like the AAdvantage program at American Airlines, which I helped build. So we focused on personalization. We bought a lot of data about the customers and we added what we already had. We spent a lot of time in those days on e-mail, which still works surprisingly well, tailoring offers to these people—and the response rates were amazing. We also talked differently to different people—so a single, working mom got something that looked very different than a married couple, for example, even if it might be the same offer. That really worked for us, as did trying to give them information about what they had done in the past, saving searches and welcoming them to the site, all that stuff that should be commonplace by now. But in reality, even now, many companies don’t do that. They aren’t thinking about building a digital relationship with customers. When I consult with people, I tell them, “Look, you really need to start by attracting people. You make them curious so they explore, they learn. Now you begin engendering trust. And trust is part of loyalty. They have to trust you before they’re going to be loyal. They have to see what other people say. They have to see that you have a community. Now if they purchase something, they’re a customer. Then the question is, how do you strengthen that relationship? How do you rekindle it if it flags?” That all comes down to data.

So in the data lies great opportunity?

Well, it’s both an opportunity and a threat. It used to be that the value came from having access to information that no one else had. But that era is gone. Information escaped—including pricing data. Look at the airline business. If it doesn’t figure out how to get back to winning on service, it’s all going to become Ryanair, where they keep costs low by not even having window shades. That’s a huge problem for the airlines. Another problem can be seen in the success of Travelocity, Expedia and Orbitz. These companies had the chance to be successful because the two big travel brands at the time never competed in the digital space. You wonder how many other industries will experience this same thing because larger companies don’t see something as a threat or don’t know what to do about it. We’ve seen what happened to the video industry, the music industry and the travel industry.

How can forward-thinking CMOs spot such threats and opportunities?

I think the more interactions CMOs have with CIOs the better off they’re both going to be. They have to join together to better use new tools in the conversation with the customer. CMOs are demanding answers from CIOs on how to deal with all this stuff, how to monitor conversations, how to turn lumps of data into wisdom. They want to listen to what people are saying about the product and to redesign marketing. In some companies this interaction will be difficult because all the CIO has done for the last 10 years is cut costs, outsource and get rid of stuff. But more and more the people who are getting promoted to CIO have demonstrated that they understand the business and that they really can come forward with ideas to help the company move into the digital age. Now the CMO and the CIO both have to ask, “How in the world do we join together so that we can use these new tools in the conversation with the customer?” That’s a big change.

You’ve had roles in both IT and marketing. Can you imagine these two worlds merging, at least in part?

Oh sure, we ended up doing that at Travelocity when we moved our data analysts over to learn marketing. They were there every day. They were sitting next to the person who did the radio ads and the TV ads. And the guy who ran marketing and the people under him really had to understand what they could get out of the system or what level of personalization they could then engender both on the site and in the communications to build the customer relationship. As they all sat together and worked together, they learned through a sort of osmosis. They had to learn what was possible from each other. Certainly a good CIO spends a lot of time with customers, trying to explain what the technology can do. And that’s where the CMO has to get involved because marketing has gone from this one-way street to a two-way street. Customers are talking back and that’s a whole new world.

How do you see companies using social media?

I see companies trying to use Facebook to sell things. Currently that doesn’t work very well, as opposed to building the brand and building customer relationships. So people are kind of flopping around, as with any new technology. But it’ll evolve. For now, I think the key pieces are listening to the conversations, collecting data to understand customer interactions and using it all to build loyalty by making it easier for customers to do business with you. One example of a company using Facebook well is Beau Ties, a bow tie company in Vermont. The company posts Christmas tie designs on Facebook in July and asks people which ones they would buy. Then they go make the most popular. In the past, they would have had to do that with focus groups. But a small business couldn’t have afforded to go that route. Now small businesses are getting into this dialogue online on the cheap.

So, it’s not only important to ask questions and stimulate dialogue, but also to listen to the conversations that are happening organically?

The real measure of a brand is what people say when the company isn’t around. You want to learn what people are talking about and figure out what you can do about it. At Travelocity, we put a phone booth in the hall. If you picked up the phone you could listen to customer-service calls. Everybody in the company had to listen to two calls a month and then discuss at our staff meeting how we could fix the problems and how we could give better answers to customers. At Kayak, we don’t have a call center, but we do get e-mails from customers. And we send those e-mails to the programmers. A lot of people think, “Wow, that’s an expensive thing to do,” and it is. But it connects them with the business and they fix the problems. If you don’t have people listening to the social conversation, you can’t be responsive and create the customer relationship you want to create.


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