iBiz: What is online distribution?

NWA: Distribution of our main product, which is to sell tickets on our airplanes. Northwest is like all companies, there are different ways you can buy the product. You can go through a travel agent. You can call Northwest direct and you can buy on the Internet. Either online at our web site or online through other intermediary web sites.

iBiz: You've formed alliances with whom?

NWA: We've got some alliances with other sites out there. For the most part they're site similar to when in the old world you went through a travel agent. There's a need for customers to be able to go through an intermediary site. The biggest ones are Travelocity www.travelocity.com, Expedia www.expedia.com and Preview Travel www.previewtravel.com. You can buy our airline tickets just like through an old time travel agent. In the physical world I should say not the old world. Or you can buy through NWA.com.

iBiz: I was just looking at NWA.com. My understanding is the site has been successful for you since it first went up. Is that true?

NWA: I'd say that is definitely true. We weren't able to measure it very well when the site first went up. We didn't have online booking capabilities. It was back in 1995. We were similar to everyone else then. We put some content up and it was successful in terms of web visitors and achieved our objectives in that way. And then in March of '97 we launched our new web site design, which is what is currently out there. That's when we added functionality, including online booking. Starting then we can really measure the success rate. We have beaten our first year ticket sales forecasts and we are tracking ahead of online tickets sales forecasts for this year as well. We've more than doubled ticket sales this year over last year.

iBiz: I bet everyone is happy about that.

NWA: It's nice to be associated with a very successful product. What we have recognized is ultimately, businesses make money by selling their product. Our web site is successful in not only selling the product, but in helping service our customers by providing them information for their travel planning and in issues regarding Northwest.
Aside from our sales, our web hits themselves, our page views have continued to grow at a very steady and rapid rate. This helps us know our customers are coming to our site to get their questions answered about our service and a certain percentage are continuing on and making purchases as well. Both of those help us achieve our objectives of lowering our costs. Which is always a challenge.

iBiz: Do those savings get back to the customers?

NWA: If you can't keep your costs down it will reflect in the price of your product.

iBiz: Your CyberSaver is a favorite with most everyone I know.

NWA: Yes. It was actually at the end of June 1996 when we launched the CyberSaver product. Originally customers could look for the weekly specials and call a special number and book. But the weekly specials were only published on our web site. The last year in October we added the online booking capability. Now we're receiving over 80% or our CyberSaver bookings online. It's been a great product for us and our customers. It helps us gain awareness of our web site and increases comfort in our customers. They may hear about us through CyberSavers, they fly us once, they like us and then they come back. So it helps us that way in our objective of gaining customers as well as in the short term. Those are seats that we think will potentially go empty so we sell them at cost pretty much. It helps us recoup something from a seat that would otherwise be a total loss.

iBiz: I've read online sales of travel has risen as high as 200% above last year. The numbers I saw were from $1.6 to 2.8 billion.

NWA: Last year we received nine different awards for our site. Among them was best money making web site.

iBiz: How many people does NWA have working on the site? Do you do the majority of it in-house or do you outsource it?
NWA In keeping true to the newness of the Internet we have a new organizational structure, matrix organized. Most of us report to different VPs to add a challenge on top of it, but it works well. We have internal and external team members. So the core, we kind of look at it as the nucleus, is myself in Distribution Planning, a woman in our IS division for the technical support and another woman who works in our passenger marketing area. All of us have some support staff. I have two people, the marketing side has one or two people and the IS, I believe, has five additional programmers. In addition to that we have about 2 or 3 external people who do some HTML and coding and our agency of design. We use them for strategic recommendations and insuring the integrity or our web site design. Aside from that there are two other major key players we utilize. They are Microsoft, for our main booking engine, and Worldspan for the CRS system that the airline uses.
We license the booking product from Microsoft and have developed with Worldspan some other booking engine products. We meet with them at least weekly via conference calls to talk about strategies and what we can do to make the product better.

iBiz: Are there other airlines participating in the same program with Microsoft or is it exclusive to Northwest?

NWA: Actually there is another airline today. How it started was Microsoft built the Expedia platform. Northwest evaluated all the products out there and said we need an online booking engine. We can build it ourselves, which in the long term doesn't seem the most cost effective and will probably not be the best product, or we can license. We went to Microsoft and said we think you have a good product there. We'd like to license it and customize it. They hadn't thought about that. We struck a deal and they said, "Hey it's got some merit." So we were the first one to help them develop that idea. Now they've gone out and licensed that product to Continental. We've added to our agreement our partner KLM as well. So the booking engine is used in the Netherlands, Northwest has three points of sale with it, US, Canada and Japan. Mutually with Northwest and KLM we'll be adding five more points of sale in Europe in the next couple months. I think Continental has three points of sale with them now too. I think Microsoft realized it was a good idea and they've expanded to include other partners. I think they're looking to see if other airlines want to get involved too.

iBiz: It seems like quite an effort.

NWA: It's interesting because Microsoft is in Seattle, KLM is in the Bahamas and the Netherlands. We've got a person in Japan we interact with so we do global conference calls. We have discussions and our main form of communication is email. We have a virtual office.

iBiz: Are you thinking about doing the meetings online? The technology is certainly there.

NWA: We've started to look at that. We haven't jumped into it yet. I think we'll be moving towards that in the future.

iBiz: Was the CRS a legacy booking system that existed before the Internet.

NWA: Yes. All the airline go into some type of CRS system. There are different CRS systems the Northwest system is Worldspan. Other carriers have different systems and there are usually more than one or two carriers with each system.

iBiz: Was it a big effort to integrate the systems.

NWA: Actually, that's why going with Microsoft for a main booking engine was so attractive because Microsoft had already decided that Worldspan was the best system for them to hook up with. They had already begun development, programming and code changing to interface with Worldspan technology. That made it even simpler for Northwest to jump on it. We could make fewer modifications in the behind the scenes coding.

iBiz: Who does the coding for your site?

NWA: We've got that about as automated as we can get it. Like CyberSavers, we just type in the markets and the price and the rest is automatic. For the regular pricing and everything else it's a data feed from the CRS systems. But there is a lot of content updating as we add press releases and modify different information that is out there for the customers. Information that is outside of fares. That is a large effort. We've worked on and created some different internal processes to make sure it's as efficient and streamlined as possible. We can change things very quickly.
I think a good example of our ability to keep the site refreshed and up to date is during the strike period. We don't like to point back to that, but I think that is a good example of how we kept all the press releases up to date. They were being posted at the same time they were being released to the press. In fact the press was often coming to our web site to find the latest information and status. That was a good thing for our customers to see as well. I think we gained some customers that way.
They came there and saw it was reliable. It was convenient and accessible from their desk. They saw that and they've stayed with us since.

iBiz: What can you tell me about Northwest's Intranet activities.

NWA: Our Intranet is managed by our IS division. It's a totally different than the Internet.

iBiz: Who is your agency of design?

NWA: Our agency of design is Shandwick.

iBiz: They created the look and feel of the NWA.com site?

NWA: Right. They've been involved since the start of our web site in '96. Actually we're working very closely with them right now. We're about to launch some minor design changes and later this year we'll have some significant changes. I think customers are really going to find their user experience much more efficient.

iBiz: I think the site is easy and efficient to use already. Navigation is good. It's a very nice site now?

NWA: Thank you. Hopefully soon it'll be even better. In particular it'll have an even faster response time. That's the name of the game on the Internet. It's an interesting challenge. The technology is constantly changing by the time you implement something there's more than likely something newer. The cost of the latest and greatest technology, the actual cost of that versus what the return is, or the shelf life of it, as well as the intense competition and bench marking on the web site. Just keeping abreast of what else is going on in other locations I could spend a month and a week. When you bring all that to a very dynamic industry like the airlines you end up going hyper speed.

iBiz: How long have you been involved with the NWA.com project?

NWA: I started in March of 1997, just when we launched the booking engine and site that's currently out there. I've worked at Northwest for thirteen years, all of it in marketing. I think a unique thing Northwest recognized right away was that a web site is going to customers and is presenting information about the company to customers and shouldn't be led by an IS technical team. It's more communication-media vehicle and a part of marketing.

iBiz: Does your department supply all the content?

NWA: Yes. Myself and GG Delorean-Knap who works in the customer marketing area are the ones who are drafting and finalizing and approving all the content that goes on the site.

iBiz: What do you see in the future, for Northwest and the Internet in general?

NWA: I think it will continue, at least for the next couple years, to grow at a very rapid pace. Especially direct commerce company sites like NWA.com just because the whole penetration and audience using the Internet will increase. They'll become more and more comfortable with Internet buying as well as the technology. For ourselves and other sites I think it's important to improve the response time and make sure you're building a web site based on some solid objectives and looking at it from the customer standpoint: e.g. understanding what the customer needs are.
A lot of web sites have failed because they think it's cool to be out there and their objective may be to supply information but they don't. The site fails because it's not relevant to the customer. So keeping the customer frame of mind in it is the important thing. Going out three or four years the growth will not be as exponential. I think at that point we'll see more and more intermediaries cropping up as well. I think in any product life cycle you see the actual businesses themselves are the distributor to start with. Then the intermediaries start coming in. I wouldn't be surprised if something similar isn't seen on the Internet as well. Portals are kind of the start of that, kind of creating that little shopping mall with a purpose. It'll be interesting to see how they develop in the next couple years.

iBiz: I think we're going to see the emergence of many smaller portals based on content. If you're interested in Knitting then you go to the Knitting portal. Things like that.

NWA: I think you're right on that. People going onto the Internet treat it like a library. Most people don't go to the library saying, "I'm going to go surf the bookshelves." They go there with a purpose in mind. It's the same thing with the Internet. The concept of small, content portals is good because it can be very valuable if it serves the purposes of the customers or visitors.

iBiz: Does Northwest have a banner ad campaign?

NWA: We have some banners we're test marketing right now on sidewalk.com. We haven't traditionally done a lot of Internet advertising. Our marketing strategy is that this is another way to talk to the customers and for customers to reach us. So all the collateral we put out, in addition to our phone number, has our web site address. We're just starting to delve into advertising on the Internet with mixed emotions. Part of it is because it's a new medium, a change of paradigms, or shift of paradigms for people internally and externally. Until recently the success of advertising online has not proven to be cost effective always.

iBiz: ROI has been very difficult to measure.

NWA: Right and I think just recently more tools have been put in place and the audience has become large enough that the effort to create those banner ads can pay off. We tend to look at those things, and our business as a whole, very conservatively. Always with an eye towards can our dollars be spent somewhere else better. We think now is a good time to come onboard.

iBiz: Have you used any other online tools to create more business.