February Issue

How Royal Caribbean Personalized the Customer Experience

A new reservations system lets the cruise line personalize ticket prices for each customer.

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Credit: Shutterstock

Royal Caribbean Cruises made a splash last fall with the launch of a new ship, Quantum of the Seas, which is equipped with tablets for check-in, RFID wristbands for guests, a robotic bartender and a "viewing capsule" that lifts passengers 300 feet above sea level.

The vessel, which Royal Caribbean calls a "smartship," is intended to wow would-be passengers with an array of onboard technologies. The second-largest cruise line in the world also deployed state-of-the-art IT systems behind the scenes: Fine-tuned pricing software generates personalized discounts, changing the customer's experience even before boarding.

Royal Caribbean replaced its rigid proprietary reservations software with a more flexible system atop a business rules engine from IBM. "The original reservations system and pricing model was fashioned after the fare codes used by airlines, which ultimately didn't align well with the more dynamic environment we are in," says Santiago Abraham, vice president of global business solutions at the $8 billion cruise line.

Royal Caribbean can now get more creative with its offers. For example, it can launch campaigns on the fly if a particular voyage isn't selling well, or enable customers to use all of the offers for which they qualify. In the past, starting a new promotion took weeks, because IT had to build systems to support it. And there was no automated way for customers to combine of all their personal discounts--say, one for being member of the Crown and Anchor loyalty program, another for being a senior and yet another for being a resident of Florida. Cruisers had to call Royal Caribbean for workarounds. "It was difficult for a guest to decipher the best price we could give," says Abraham.

Now customers automatically get the best offer based on which discounts can be combined, he says. And that makes for a much improved customer experience.

"This makes sense for cruise lines, especially if they are sending these targeted offers to their existing customers," says Mark Ferguson, a management professor at the University of South Carolina. Cruise lines typically collect and keep more data about customers than airlines or hotels do, because they track onboard spending habits over the entire trip, he says. Offering a discounted base price to a customer known to spend a lot of money on extras aboard ship is likely to be more profitable than offering discounts to everyone based on a simpler trigger, such as the timing of when a ticket is purchased, he says. Royal Caribbean is known for courting repeat customers. The company says that as many as 50 percent of the people on a cruise are repeat passengers.

"We can get much more dynamic because it's all built into the system," Abraham says. Revenue analysts and marketers can create and launch promotions in hours, as they did with the 123Go! campaign, through which passengers on Royal Caribbean's Celebrity Cruises can choose one of three perks: free beverages, covered gratuities or an onboard credit. That program is expected to have paid for itself by the end of this year.

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