Mining For Deals

By David F. Carr  |  Posted 2006-09-06 Print this article Print

How improved Web site performance and customer service are helping to turn around this online travel service.

Mining For Deals

Another approach to targeting cost-conscious buyers came from Travelocity's customer relationship management group and its Good Day to Buy program. Every night, the program mines the firm's Teradata data warehouse to compare the latest airfare price updates with the previous day's fares. When the system detects price drops of more than 20%, it matches them with registered members of the Web site who have shopped for travel on that route without buying a ticket and sends those customers an e-mail alert, according to Laura Johnston, vice president of customer relationship management and loyalty for Travelocity.

Travelocity customers who receive one of these e-mails related to a destination they have recently researched are seven times more likely to make a purchase than recipients of a generic marketing e-mail. In fact, this turned into one of the most successful e-mail marketing campaigns ever for Travelocity, generating an additional $4 million in revenue when it was launched in 2004 with an additional $6 million expected this year.

The Good Day to Buy program started in January 2004 as a small effort run manually by the marketing department, with employees assigned to analyze price changes and send out

e-mail alerts three times a week. Between August and September of that year, Johnston says she realized this approach was so effective that Travelocity should be doing it every day, and she got the firm's data warehousing team to develop an automated routine for running the analysis every night in Teradata.

Successes like this nothwithstanding, Travelocity's turnaround is far from complete. Although Sabre earned $196 million in 2005, Travelocity's operating loss was $2.8 million. In comparison, Expedia had net income of $163.5 million in 2005.

Sabre CEO Sam Gilliland, appearing in a video clip shown at the Miami conference, said that when the operations research project started in 2002, "We didn't know exactly what we could achieve at that time, but we knew we could dramatically improve the business." Today, Travelocity is still "not nearly where we want to be" but it has a far better understanding of what customers are buying and what they are likely to buy. In Gilliland's words: "Before, we were in essence flying blind."

NEXT PAGE: Travelocity Base Case

David F. Carr David F. Carr is the Technology Editor for Baseline Magazine, a Ziff Davis publication focused on information technology and its management, with an emphasis on measurable, bottom-line results. He wrote two of Baseline's cover stories focused on the role of technology in disaster recovery, one focused on the response to the tsunami in Indonesia and another on the City of New Orleans after Hurricane Katrina.David has been the author or co-author of many Baseline Case Dissections on corporate technology successes and failures (such as the role of Kmart's inept supply chain implementation in its decline versus Wal-Mart or the successful use of technology to create new market opportunities for office furniture maker Herman Miller). He has also written about the FAA's halting attempts to modernize air traffic control, and in 2003 he traveled to Sierra Leone and Liberia to report on the role of technology in United Nations peacekeeping.David joined Baseline prior to the launch of the magazine in 2001 and helped define popular elements of the magazine such as Gotcha!, which offers cautionary tales about technology pitfalls and how to avoid them.

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