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The objectives

The airline industry is not a highly innovative industry, according to customers surveyed in the 2023 American Innovation Index™ study. The industry ranks 13th out of 19 sectors; similar to most industries, the brands within the industry vary dramatically in their innovativeness as perceived by customers. Alaska Airlines is the top-ranked airline at #48, and at the bottom is Frontier, ranked #187 out of the 200 brands measured across all sectors. This demonstrates that your industry does not predetermine your ability to innovate.

Illuminas wanted to create a case study to demonstrate what drives customer-perceived innovation for a specific brand. Alaska Airlines was a good brand to focus on because it is an industry leader but has room for improvement. We relied on a series of questions in the American Innovation Index survey that represent potential areas of focus for an innovation strategy. The objectives were to understand what drives customer-perceived innovation for Alaska Airlines, identify priorities for future innovation initiatives, and differentiate the brand from competitors based on innovation.

case study research

our approach

The survey explored various aspects affecting customer experience and perceptions of innovation. The questions focused on evaluating the results of changes made to products and services, how value is delivered, customer interaction strategies, and the quality of physical and digital facilities.

Utilizing a multidimensional approach, our analysis identified both Innovation Drivers and Loyalty Drivers. Additionally, Differentiating Power analysis was used to uncover areas that drive both innovativeness and loyalty to the brand. As our research has proven, increasing a brand’s innovativeness as perceived by its customers has a direct impact on its future stock returns.

Alaska Airlines Slide American Innovation Index
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the outcome

The findings provided valuable insights into the factors influencing customer-perceived innovation for Alaska Airlines. As illustrated in the graph, the more an attribute scores on both criteria, the further it appears along the diagonal line. Items above the contour lines tend to have a high degree of differentiating power based on their combination of innovativeness and desirability (impact on loyalty). The biggest differentiators, or areas that drive both innovation and loyalty for Alaska Airlines are proactively offering solutions tailored to customers’ needs, adapting to change quickly, having fast and responsive customer service, and rewarding customers for their loyalty.

These findings guided our prioritization efforts, allowing us to pinpoint areas where Alaska Airlines can enhance its performance in customer-perceived innovation to drive future growth. Additionally, our analysis underscored the importance of improving in these areas, as customer-perceived innovation was found to have a positive, significant relationship with the airline’s share of wallet.

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