Air NZ flies direct the email way

By SIMON HENDERY

Since the start of last year, Air New Zealand has doubled the number of email campaigns it sends out. It sees email marketing as a key to the success of its new low-cost business model.

The problem: When Air New Zealand morphed from a full-service airline to a budget domestic carrier in 2002, it realised that it needed to do more than cut costs to stay in the air.

The airline that had received an $885 million post-Ansett Government bailout the previous year realised that increasing sales volume was also vital for its ongoing survival.

"The whole airline industry was turned on its head and we were in a situation where we had had a number of difficult years and were quite aware that there were a number of low-cost airlines looking at coming into this market," said Air NZ global marketing manager Michele Teague.

"We had to re-engineer the business and a big part of that was to look at developing a whole new distribution channel on line."

The strategy: Increasing sales by marketing directly to the travelling public was a key part of the airline's reduced-cost business model.

It engaged direct and interactive marketing agency Aim Proximity to develop an online marketing strategy.

Although Air NZ has continued to execute traditional direct marketing (DM) campaigns, it has found email DM - which customers must opt-into - is about 20 per cent cheaper, Teague says.

Aim Proximity chief executive Sharon Henderson said although her company had implemented a number of email marketing campaigns before the Air NZ work, the airline's need for regular but low-cost communications with its customer base required the development of new technology.

The execution Although spam email may be the curse of anyone with an email address, Teague said Air NZ's customers had willingly opted-in to receive the company's regular offers of special flights and deals.

Customers are able to book online directly form the emails, and specific offers can be targeted at certain groups of customers.

At the same time spam paranoia has made the job of getting the message past corporate email firewalls an ongoing challenge.

"We have to be totally ahead of the game at all times," said Henderson.

By linking data with the airline's popular Virtual NPC online rugby game, Air NZ was able to target flight offers to teams in the real NPC competition that specific customers supported.

If the airline needs to quickly fill certain seats, offers can be sent out to customers within 72 hours.

The results: Teague said the email DM system had revolutionised the cost and frequency of communicating with customers.

The campaigns had averaged a 15-to-1 return on investment, with some achieving double that return.

For example, an interactive email sent out around the launch of Pacific Express earlier this year where customers scrolled over a map of the Pacific Islands and clicked on a location for more information generated 54,000 entries in a prize draw and a 20-to-1 return on investment.

The Air NZ campaign also won Air Proximity nine awards in this year's Direct Marketing Association awards.