A technology company that happens to fly airplanes for a living

SAS case

SAS flies approximately 90,000 people around the world – every day. All the while, the airline is busy gathering customer insights in order to create new products and services, and the passengers are met with a steady flow of new digital features. 4.3 million customers have signed up for the EuroBonus programme. SAS has one of the strongest brands in Scandinavia and is rewarded with great loyalty from their passengers. And currently, oil prices are giving tailwind. However, in a not so distant past, SAS was standing on the edge with a free fall in sight. How did they manage to turn this around?

A technology company that happens to fly airplanes for a living

SAS case

SAS flies approximately 90,000 people around the world – every day. All the while, the airline is busy gathering customer insights in order to create new products and services, and the passengers are met with a steady flow of new digital features. 4.3 million customers have signed up for the EuroBonus programme. SAS has one of the strongest brands in Scandinavia and is rewarded with great loyalty from their passengers. And currently, oil prices are giving tailwind. However, in a not so distant past, SAS was standing on the edge with a free fall in sight. How did they manage to turn this around?

Crossing borders

In 2012, SAS found themselves two brief hours away from bankruptcy. The 70-year-old flag carrier of Scandinavia had to convince the banks that they could once again become profitable and create lasting value to their customers and owners in an industry defined by significant headwind. If they did not succeed, it would be the end of SAS. A transformation programme was put in place, and pretty much every item on the list of to-do’s in a company turnaround could be ticked off: outsourcing, centralisation, reducing the number of employees in the administration and increasing the productivity and flexibility among remaining employees – under heavy union negotiations, one might add. However, winning in a tough market required more than increasing productivity and reducing costs. Something new had to be brought to the table in order to secure SAS’ position in the market.

Eivind Roald
Executive Vice President and Chief Commercial Officer, SAS Group Worldwide

Eivind joined SAS in 2012, after 8 years as Managing Director for Hewlett-Packard Norway and 16 years as a consultant within sales and marketing. Eivind is fascinated by cars and enjoys paying a visit to the biannual Frankfurt exhibition. By his own account, he drives too many fast cars… Speed has always been in his DNA, however, as a teenager it was manifested in the 100-meter dash, where Eivind was third best in Nordic at the age of 15

“We started to realise that we would not win in this very tough market only by focusing on reducing costs and running the company more efficiently. We needed to bring something new into our strategy to actually be the number one airline company”, says Eivind Roald, Executive Vice President and Chief Commercial Officer for the SAS Group. SAS took a close look on who actually constituted the foundation of the airline’s existence, namely their frequent flyers. Safe in this knowledge, they put together a commercial strategy with the overarching purpose of “making life easier for Scandinavia’s frequent traveler”.

The strategy was built on deep customer insight and the knowledge of how to use this insight to drive loyalty and improve the customer experience. This was the first step towards the mission of becoming a membership airline with the new branding platform “We are travelers”. It was decided neither to focus solely on the business segment, nor on leisure travellers. Instead, SAS chose to focus on customers who travel more than five times a year; a segment which alone stands for more than 70% of all spending on airlines in Scandinavia.

“When you have been loyal to us for more than 10 years, we will be loyal to you for the rest of your life”.

Loyalty is a marriage

SAS’ strategic focus on targeted segments and its work with elements such as customer recognition, personalisation and service consistency is a continuous journey. The first, current step is to improve the core product before, during and after the flight and add new products and services related to travel, including airport express trains, taxis or hotels. “Looking back, I realise that we actually managed to navigate SAS out of that perfect storm. I think that the main reason why we have been able to succeed in our transformation is that we had a clear strategy. Secondly, we have based all of our transformation work on facts and data from our customers, competitors and benchmarks. And we were able to involve the organisation in a way where everyone understood that we had to work together as a team”, Eivind states.

According to Eivind, the fundamental idea behind establishing a loyalty platform is to build a community with a sense of belonging as the cornerstone. With relations and loyalty as an anchor, SAS decided to take further steps towards becoming a membership airline. SAS discovered that even though the EuroBonus programme had existed blissfully since 1992, the programme had an unleashed potential for supporting the membership and community spirit and SAS’ mission to create a lifelong bond of loyalty. “When you have been loyal to us for more than 10 years, we will be loyal to you for the rest of your life. Accordingly, we will change the rules stating that you have to be 60 years old and have 10 years’ tenure as a gold member in order to receive a gold membership for life. Now you will be a gold member for life regardless of your age. Loyalty is like a marriage. It’s forever”, Eivind explains.

SAS is Scandinavia’s leading airline. In 2014/2015,a total of 28.1 million passengers traveled with SAS to 119 destinations in Europe, the US and Asia.

SAS is introducing extensive changes to the aircraft fleet as part of its investments in the future. A simplified and renewed fleet tailored to large and small traffic flows will strengthen SAS competitiveness. Fleet renewal is also an important part of SAS’s overall goal to reduce emissions.

The primary target group for SAS is frequent travelers in Scandinavia, regardless of whether the trip is for business or leisure purposes.

“Five to six years from now, I think we will primarily be a technology platform who happens to have some aircrafts in our service offering, too”.

The magic of technology

The commercial model at SAS is centred on knowing the customers and fulfilling the airline’s mission of “making life easier for Scandinavia’s frequent traveler”. Technology is the key to realising the community vision. SAS has presented a range of new initiatives; the award-winning SAS app, which is in fact the most downloaded app in Scandinavia, better route schedules, new airplanes, a significant upgrade of the existing fleet, extension of the lounges, train/taxi/hotel services and constant improvements of the digital touchpoints. But SAS wants to go a lot further in the digital space. “Going forward, our members will be able to buy their groceries through the SAS app.
You can sit in Oslo, fly back to Copenhagen on Friday night, and use the app to order milk, bread, juice, pizza or whatever – to be delivered at your doorstep upon your arrival. This has nothing to do with an airline, but it has a lot to do with providing a service and making life easier for you. We have numerous other ideas pending to make life easier for our customers. By introducing these types of services, we hope our customers will find SAS to be much more than an airline company, and rather a community company”, Eivind describes and concludes, “five to six years from now, I think we will primarily be a technology platform which happens to have some aircrafts in our service offering, too”.

Open garden networks

When 1+1 = 3. At QVARTZ, a distinct part of our strategy is to join forces with bright minds in order to develop the best solutions and create the most value-contributing results. When helping SAS take their EuroBonus programme to the next level, we partnered up with Designit, a global strategic design firm. Together, we handpicked a team of consultants, experience designers and airline experts in order to unite the best minds to solve the task at hand.