Page 2

2.1 Analyzing Variables Generally, three indicators are adopted, namely, recent time interval, frequency of consumption, consumption amount (i.e., usually recognized R, F, M) as evaluation variables, in the process of customer value evaluation, to calculate customers’ value sorted based on value scores. Stone [4]and Miglautsch[5] improved the RFM model, and divided R into different duration attached with different weights, at the same time they modified F and M then calculated customer value by sum of F and M. Sung[6] using SOM classified the value of the customer's RFM at first, then compared all kinds of RFM’s average value and the average of all the customers’ RFM, in order to observe the change rule of all kinds of customers; further, through its rise or fall, it was determined whether the various types of customer are high Platinum customer with high loyalty or customer about to lose. There’s a lot of research constructing customer value evaluation based on RFM model, and using RFM model obtaining customer value assessment has become a mainstream technology. But note that different industries have different specific business meaning, the use of substitution variables are not necessarily the same, even the same variable, whose representative meaning may vary greatly. In the traditional indicators, the consumption amount factor does not apply to the airline customer evaluation. Through analyzing the airline business, a more reasonable approach uses the customer's upgrade mileage and the average discount coefficient of flight instead, and customer relationship length is added which impact evaluation of customer loyalty [7], additionally, taking the complexity of aviation business into account, the foregoing analysis method uses only a few indicators portraying customer value which seems too simple. Through deep and careful analysis of aviation business, the index variables are ultimately determined which impact aviation customer value evaluation including the following three parts: an indication of value opportunity. 1) Flight Value Indicators In the embarkation value indicator, the following variable should be considered: The interval from the last time by air (the number of month since the last time customer taking our aircraft), The times of the flight(the number of customer’ accumulated taking our aircraft up to now), two cabins’ proportion (the number of customer’ accumulated taking our FC aircraft up to now/the times of the flight(FC cabins are first class and economy class)), the average discount (accumulated mileage up to now after discount/actual accumulated flight mileage), upgrade mileage credit(only customer’s accumulated basic mileage up to now), Promotional Credits (so far customer’s accumulated promotion points taking our aircraft ). 2) Partnership Value Indicator Mainly include partner redemption, that is, the customer’s accumulated redemption point from partners of the company. 3) Loyalty Value Indicators Loyalty value indicators mainly include: Membership duration (the number of month after member’s enrollment), integral rate (the total exchange integral/all the accumulative history integral), condition of registering to participate in promotional activities (a value of 0, 1, indicating whether or not registered to participate in the activities of the company's sales promotion). Since the interval from the last time by air variable is inverter, the reciprocal value is actual used. As to other variables, if it is empty, zero is used instead.

2.2 Analysis Model 1) General Analysis Model Through careful study of indicator variables affecting the evaluation of customer value, the following value models are proposed: TABLE 1 TOTAL VALUE ANALYSIS MODEL

Step1:Using expert investigation to determine flight value, partners’ value, the proportion of the loyalty value, and thus acquiring their final value weights (w1, w2, w3); Step2:Based on principal component analysis method to calculate the flight value and loyalty value of customers; Step3: Take advantage of weights given by Step1, and compute the customer total value score, i.e. Score = w1 * Flight value + w2 * Partner Value + w3 * Loyalty value Step4: Normalize the total score into percentile scores, and sorting. -2www.sjae.org

Comprehensive evaluation analysis of airlines frequent flyer value  

Guohe Feng, Xiaoxiao Zhang, Xia Feng, Yun Xue

Advertisement