Social networking and the new customer relations paradigm


Whether it is a fad or a core social change in a state of evolution, social networking is very much a part of today's world. Just ask Hosni Mubarak or Muammar Gaddafi. Any airline that looks the other way is taking a big risk. The core issue is customer relations - but don't just follow the pack with your social media strategy.

  • Social media is not just a fad, but a rapidly evolving phenomenon that is changing the way people communicate and share information.
  • Airlines need to embrace social media for customer relations and crisis management purposes.
  • The power of social media lies in its ability to reach millions of people instantly, making it a force to be reckoned with.
  • The rise of social media in emerging markets like China, India, Indonesia, Brazil, Russia, and Turkey is reshaping the airline industry in those regions.
  • Social media platforms like Twitter and Facebook are interconnected and should be used together for maximum effectiveness.
  • The Qantas A380 incident highlights the importance of social media in crisis management and the need for airlines to have a comprehensive social media strategy.

This article appears in the April edition of Airline Leader, CAPA's airline management magazine. Go to www.airlineleader.com to download the full edition.

THE SOCIAL MEDIA SCENE IS JUST A FAD. It's for self-promoting kids who have attention spans of 30 seconds. They have nothing better to do than waste their whole lives telling their virtual "friends" about themselves. If that's your starting point, reassessment may be in order.

Perhaps where we are now is just a fashion, but social media will continue to evolve. Just as low-cost airlines were once a "fad", they became mainstream, while diverting the mainstream along the way. As the character playing Facebook founder Mark Zuckerberg said in the movie Social Network: "Fashion is never finished." As it evolves, social media's opportunities are changing the way many hundreds of millions of people communicate and share information. The behavioural change now under way is irreversible. A lot of that information is about your airline and you won't be controlling it - or, often, won't even know about it.

For the industry, as this two-part Airline Leader report addresses, the main uses of social media today are in enhancing customer relations and in crisis management (from mini to major). This is not a breathless and uncritical account, although there are some vital long-term shifts in play. But this is a fast-evolving process. For example, some observers suggest the channels will completely rewrite the distribution process. That is still a story in the making. Meanwhile too, although the US is at the vanguard of the changes, many other countries and their airlines are becoming more engaged, either reactively or as part of promotional strategies.

The phenomenon is expanding, not just incrementally, but algebraically. Nearly a fifth of all Twitter users have more than 100 followers - try taking that five steps along the chain!

The report also indicates that, whatever strategy you adopt, the new pressures on customer relations means that this area will have to be handled differently in future. That will add cost, one way or another. Airlines that already have a customer-sensitive focus and image are best positioned to respond.


The airline which continues to rely only on traditional communications, such as media releases and press conferences, is assuming the old dynamics: that a source transmitter can still issue information to a large body of passive receivers - the few-to-the-many.

This sort of control of information is not dead yet - and never will be - but there has already been a shift in where the information power lies. Now there is the opportunity for the many to communicate with, and learn from, the many. With transparency, the "many" often does not even need to listen to you. The result is that it can dictate to you.

The impact of social media seems to have been sudden, but in fact it is just another step along a road. Key components of the new social media have been influential for some time and they are wide ranging. Ever since the internet arrived as a popular mode, individuals and consumers have become greatly empowered. Consumers have been sharing first-hand travel information on sites such as TripReport.com for years. What happened next was simply that these open for a evolved into closed - and more powerful - "social" media.

For airlines, those early changes quickly imposed greater transparency, most importantly, making competing fares visible. This transparency has also meant, for example, over-simplification and commoditisation of airline products, without regard to distinguishing quality features. Price has become the overriding travel selection criterion, regardless of other factors. But, rightly or wrongly, the consumer gained market power each step of the way. For an industry that survives only on the ability to price discriminate (yield manage), such transparency has been a shock to the way business is done.

Facebook has more than 550 million users and Twitter accounts doubled in 2010 to about 200 million today. With some five billion mobile phones in use (and developing countries feature heavily), you ignore the power of these institutions at your peril. Any resource that can potentially talk to a couple of hundred million people within minutes, directly into their home or their hand, is a force to be reckoned with. And each time that power is demonstrated, as with the "Arabian Spring", so the force becomes more powerful (and reaction stiffens).

Each of these users by definition has access to a computer or a mobile device. While they may not yet be wealthy or regular flyers, they have already gained a certain level of income and education. They are potential or actual customers of yours - and of your competitors.

The new environment brings threats - but also opportunities. There are two very distinct strategic threads here to address. For the directive minds of an airline, any solution may appear just a mirage. The return on investment of getting involved in new social media activities is not easily measured (an issue we deal with in Part Two of this report), so embarking into commercial dealings in this networking environment requires a whole different mindset.

Once an airline engages fully, it becomes a participant, not necessarily a leader. It discards the levels of control over output that it has been used to. This can be alarming for more conservative managers, used to tight-lipped pronouncements from the podium and carefully evading difficult questions. But one-off potential advantages are there for innovators. Airline use of these media is still immature, generally without substantial c-level buy-in, leaving room for first movers to gain disproportionately. For example, a KLM programme of highly publicised airport giveaways was done on a shoestring, relying largely on a group of enthusiastic employee believers. They gained the carrier vast exposure for very little cost. Assuming - and it is still an assumption - that exposure converts to goodwill, and in turn sales, is harder to prove.

Just like online sales, you must take your clothes off to get the maximum value from the interaction. Transparency - at least from the producer - becomes a highly valued characteristic (meanwhile, paradoxically, the participants on the other side can often choose to hide behind anonymity).

Mobile phones promise expanded change in emerging nations

Most of the data and thinking about social media comes out of the US and Europe. But the big explosion, numerically, is coming in the world's most populous countries - China, India, Indonesia and other parts of Asia - along with fast emerging nations such as Brazil, Russia and Turkey. These markets have typically skipped a generation in telecommunications, so hand-held devices dominate internet connectivity, allowing greater mobility and instantaneous information.

The rising penetration in these countries prefaces sharp changes in the likely shape of airline dealings in those parts of the world. At Feb-2011, among a global population of seven billion, approximately five billion mobiles are in use. This is not all good news for Facebook and Twitter though - nor will it make life easier for global airlines responding to social media needs. China, for example, with its nearly half-a-billion internet users, is not fertile territory for US giants. There, Baidu Inc dominates search, with three-quarters of the market and a capital value of USD53 billion; Sina Corp owns the country's Twitter-like leader and Youku.com covers the YouTube territory.

Stiff censorship - the "Great Firewall of China" - is one plank of the government's strategy, while the other is to invest in the scene at state level. Official news outlets Xinhua and the People's Daily are investors; Xinhua in search with Panguso.com, jointly with China Mobile; and the Daily has its own search engine, Goso.cn, as well as a Twitter lookalike. RenRen occupies Facebook's role - which meanwhile can only be accessed through proxy servers - greatly limiting its reach, except for the Special Administrative Region of Hong Kong, where usage exceeds 50% of the population.

India's democracy is more hospitable to social media, notably to Facebook, although less than 2% of the population is signed up so far. More importantly, that proportion has doubled in the past year, with some 22 million today. Sixteen million of those are males, outnumbering females by a factor of almost three (in the US, females exceed males). Finding a bride is still a high priority.

Indonesia already has 35 million on Facebook; Turkey has 26 million; and Brazil (where there is stiff local competition in the Portuguese-speaking country) has 13 million, double the number only six months earlier.

Russia's leader at present is Facebook lookalike, VKontakte, with 28 million users. Facebook is still small there, but growing; Mark Zuckerburg has specifically stated he wants to penetrate that country's market, as a prelude to invading China.

And Indonesia and Brazil top the stats for market penetration by Twitter, each with 21%. The US, by comparison is a humble 12%, while Japan sits at 17%. For a phenomenon in its early stages, these are remarkable figures.

Local dynamics are important; Japan, for example, has US-level Twitter usage, but only tiny penetration by Facebook. Homegrown medium, Mixi, which allows greater anonymity, has about 15 million members, with a market cap of USD1 billion.


In this changing world, the newspaper is dead, just like magazines and books. They are for old style "transmission", with no interactivity. Just a minute - not so fast! There are plenty of newspapers out there and still plenty of people reading them, online and print . In the US, a 2010 survey performed for the Newspaper Association of America found 57% of the sample identified local newspaper websites as their "top online source for local information". This was considered clear evidence "of newspapers' successful multiplatform transition".

Newspapers also contain an affluent demographic. Another US survey, from Scarborough Research, used by the media planning and buying community, showed 80% of adults in US households earning USD100,000 or more had read a newspaper in print or online each week. (This is not quite as dramatic as it might sound; casting the net to include as little as one read in the past week, online or print, can hardly be described as obsessive use.)

A 2010 Canadian Nadbank survey, however, found that about a third of those aged 18-34 had read a newspaper (online or print) the previous day. This increased to half for the 50-64 age group and nearly two thirds for those over 65. Meanwhile, US Twitter users' demographics include nearly 40% in the 25-34 age group, about twice as many as in any other age grouping. Facebook users are typically younger; 21% are still in high school and only 23% are in the 25-34 category.

But the movement is not all about Gen X and Gen Y ( or the even younger "Millennials"). Change is afoot. Younger users are restless and seek constant new applications, helping destabilise evolutionary paths. At the other end of the spectrum, according to Pew Research, again in the US, "Some of the areas that have seen the fastest rate of growth in recent years include older adults' participation in communication and entertainment activities online, especially in using social network sites such as Facebook." The Dec-2010 report found that in May of that year, 50% of 45-55 year olds and 43% of those aged 56-64 use "social network sites". The startling thing about these data is the change since Dec-2008. The 45-55s increased from 20%, a 250% expansion. But the "older boomers", in the 55-64 bracket, grew over 400%, from 9% 18 months earlier.

This alone sends an important message about where airlines' customer relations opportunities - and challenges - may come from in the next five years. Cross-tabulating this increased tech-usage trend with other demographics such as income levels and leisure time raises all sorts of interesting scenarios.

These data also highlight the fact that each communications mode forms part of a whole - a part of which includes the print media. Each of them gains strength by linking into the others. The most effective media - and the most effective way of using them - is b y building linkages. That much has never changed. One example of crossover: over a third of television viewers in the US are also plugged into social media while watching, so any commercial which appears on TV will attract social media commentary - and, typically, many writers will vie for the funniest or most outrageous comments. They will also be open to instant tweeting, to take up a competition or fare offer, another form of instant interactivity.

They Are Different! Some Global Social network Media which are Used for Business

SOCIAL NETWORKS TAKE VARIOUS FORMS, EACH WITH INDEPENDENT ORIGINS and usually with different target markets. As their inter-connections grow, they become increasingly valuable for each of the components. For this reason, they are constantly being redesigned to allow easy connectivity across the different platforms. Each has very different potential uses (and risk profiles) for airlines. When they converge, they become a community of communities, a sort of loose federation that greatly increases their collective profile.

For the media, combining strengths generates more custom all round in this virtuous circle. They need to be flexible and open, as users will not be satisfied with closed systems that confine their behaviour. Users want to be able to communicate between Twitter and Facebook, or YouTube, as a minimum.

So, to be effective, an airline's social media strategy should mirror this structure, working flexibly across the different platforms, looking closely at their respective attributes. And because of their interconnectedness, if an airline adopts one medium independently of the others, it cannot gain maximum advantage.

Also, specific to the travel area, the derivative, Facebook Places - which provides a platform for friends to share travel experiences - has potential to become a driver of flight and destination choices, adding in commentary which intrudes into areas previously the domain of sites such as TripAdvisor.

MySpace, an antecedent of Facebook, was overwhelmed by the latter's expansion and can be disregarded as a player in this game. It was too rigid in its design and didn't facilitate others to make money. At News Corp's Feb-2011 earnings announcement, the company made clear it wanted to divest its once-strategic buy. As it paid USD580 million in 2005, News will sell at a substantial loss. Even the best-equipped experts can make wrong calls in this volatile field.

For airlines, the pointed end of these media is Twitter - positively, for its potential use in customer relations, marketing and selling and - negatively, for its ability to magnify problems which are not well handled.

Twitter user numbers doubled (!) in 2010. A handful of active leaders drive change. A recent survey by Sysomos found that 23% of users were responsible for 90% of all tweets last year. But more significant is that 21% of twitterers now "follow" more than 100 people - many of whom will be influential opinion leaders. A year before, only 7% achieved that level. In turn, 16% of Twitter users have more than 100 followers of their own. It is obvious from this that the interconnectivity of the linkages spreads exponentially, like a massive three dimensional spider web - or perhaps even a global airline network!

Qantas' serious incident of 4-Nov-2010 provides the best recent example of the havoc misreporting can wreak to an airline's image. That morning, Qantas CEO Alan Joyce was speaking at a lunchtime event, among other things listing the numerous events that go wrong in the airline business, from volcanoes to bird flu. As he returned to his office, all hell broke loose. Millions of people had already heard a Qantas aircraft had crashed. Only Qantas senior executives and a handful of others knew it wasn't true.

On climb out from Singapore, a Rolls-Royce engine on one of its A380s had exploded over the nearby Indonesian island of Batam. A large, intact part of the engine cowling, unfortunately emblazoned with the airline's distinctive flying kangaroo emblem, landed in a school playground during the day. Within minutes, reports of the Qantas "crash", along with pictures of the engine part, were flashed around the world.

People on the ground, armed with mobile phones, heard an explosion, saw the large part fall from the sky and understandably concluded there had been a mid-air explosion. Anxious to tell the world, they tweeted vigorously. The news was almost instantly posted on Facebook too, then picked up by wire services - and the media flashed the word across the world of "reports of " a crash of a Qantas plane. In reality, there had been a particularly serious incident, which miraculously had not brought the aircraft down. But as a result of the Twitter/news relay, the incident imprinted an indelible safety concern about this previously invincible airline. It took Qantas a considerable time to hose down the story. By then the damage had been done. It was an awful experience for the airline and terrifying period for anyone who had friends or relatives on the flight. Until then, Qantas had been a relatively passive user of social media. It had a nominal Facebook page, but no "appropriate Twitter accounts".

After this event, Qantas' whole attitude changed.

For the airline industry, the message from the Qantas A380 "crash" is that Twitter must now be an essential part of any comprehensive crisis management strategy. The sequence also illustrated the interactivity between different media types.

Qantas and the 'crash' of A380 Flight QF32; 4 Nov 2010

As Qantas CEO Alan Joyce described it to Airline Leader, "The reports from Batam Island sparked a lot of activity on Twitter, with people asking what had happened, s eeking information and also retweeting conversations. Several media outlets also reported on the tweets and indicated that there were reports that a Qantas jet had crashed after leaving Singapore. This included several reports on wire services. This information and reporting happened very quickly and it was difficult for Qantas to correct the record immediately, due to the volume of misinformation on Twitter."

Two-and-a-half hours later (by which time the air craft was back on the ground in Singapore) Reuters was still freshly reporting to the world that "Qantas says crashed plane an Airbus A3 80 … Qantas told CNBC television that a plane that cr ashed near Singapore was an Airbus A380. No other details were immediately available." By now, a combination of wrong tweets combined with a misquoted, incomplete report of a CNBC TV statement, made the crash seem authentic. Says Mr Joyce, the big problem at that time w as, "Qantas had no instant way of getting the message out to the world in its own words."

Despite the fact that "within minutes" Qantas officials had "provided information to the media that no air craft had crashed and that the A380 was making a return journey to Singapore", the damage had already been done. Because of the long tail of news (eg via news wires, which are picked up and often repeated by online and hard copy conventional media with very little change or cross-checking), the incorrect reports were reverberating across time zones faster than the correcting news could reach. "Regular updates followed and mainstream media started to report correct information, rather than rumour reported on social media channels," says Mr Joyce. But the "mainstream" media also took time to percolate and redirect the original wrong material. As a result, the bad news hung out in the media much longer.

As Mr Joyce candidly admits, "The challenge for Qantas on the day of the QF32 incident was that we did not have the appropriate Twitter accounts to either provide information or respond to the many questions which were being asked about this incident." The same is still probably true of most airlines. Not so Qantas. Not any more.After this initial firefighting exercise, Qantas then "fast-tracked the establishment of a number of channels, including @qantasmedia. This was set-up within 48 hours [of the A380 incident]. This account is set up purely for the provision of factual information for the media (and others) during normal operations and also crisis situations."

"We had this up and running very quickly to ensure we could provide updates on the grounding of the A380 fleet, as well as other delays, incidents or news which would be of interest to the public. We also used other social media platforms during the next 19 days to provide updates to the public. This included a message [from the CEO] on YouTube when we announced that the A380 would recommence services for Qantas." And, as Qantas now recognises, these media are not just useful for communicating with the world at large: "A link was provided to our Frequent Flyers, as well as employees." As a consequence of this experience, "social media channels are now integrated into [Qantas'] crisis communication plans, alongside the more traditional media and communication platforms. Twitter provides a good vehicle to broadcast a message, as well as provide a platform for two-way communication. The latter is a challenge in our day-to-day operations. The next challenge platform to improve our customer service and integrate these channels into our model, alongside email, telephone and the website."

In the next part of the report we examine two of social media's most prominent channels, Facebook and Twitter, and the value airlines derive from them.

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