A few thoughts on customer service from the SOCAP convention

The Society of Consumer Affairs Professionals is holding its annual conference in Atlanta this week, and I was fortunate enough to be an invited speaker. I shared my thoughts about travel and customer service with a select group of SOCAP members from the travel industry yesterday.

I met a lot of people who I’ve dealt with by phone or email for the first time yesterday. Folks like Anne Munoz, the senior director of customer care at Continental Airlines, and Cindy Waisganis, the manager of business systems and reporting for United Airlines’ customer relations department.

It was a polite exchange and the discussion afterwards was spirited but productive. I could tell that despite all the recent cutbacks at travel companies — and especially within the customer service departments — that many companies still cared about their customers.

I didn’t find that surprising so much as I did reassuring. It felt as if we were on the same team.

One of the most fascinating discussions revolved around the question of how much a customer is really worth.

Valuing customers is often as much of an art as it is a science. When someone makes an unreasonable demand of a company, how do you decide whether to tell them to take a hike, or cave in?

If it’s an elite customer, do you just give that person what he or she wants? What about the tourists? If you can’t value them by evaluating their elite status, are they worthless to you, as a company?

The takeaway to you, the consumer, is that there’s a group of hard-working people on the other side of the phone line. They care that you have a good trip. They care that you’re happy. They care that you’ll come back again.

After all, this is the hospitality business, right?

The bad news is that these departments are hamstrung by higher-ups who often pressure them to control costs and say “no” more often. They are told to focus only on the “valuable” customers and let the others go elsewhere. And I know that deep down, these customer service managers feel that’s not the job they signed up for.

I’m working on a project this summer that will be a truly collaborative effort to funnel customer service queries to the right person within a company. No, I’m not going to call it “no customer left behind” — but I could. I’ll have more on that soon.

Thanks, SOCAP, for caring enough to invite me to your conference.

  • SirWired

    And it’s a shame that cutbacks have progressed to the point that only elite customers are those deemed worth saving. Nobody wins, and it continues the customer service / price / cost / profit “death spiral.”

    What is left out of this equation is that if you treat the infrequent, not too profitable customers like dirt, they are rather disinclined to ever become loyal customers. They may not actively avoid you, but they won’t go out of there way to patronize your business either.

    I have no problem with elite flyers getting upgrades, free tickets, etc. But the current system of setting draconian rules and then routinely waiving them for elite flyers and people that contact the media doesn’t work particularly well, and doesn’t really appeal to even a rudimentary sense of fairness.

    A better solution (in my mind) is to set reasonable policies and then enforce them for everyone.

    There is a big difference between how Southwest and the “legacies” treat customers (elite and otherwise.) Southwest treats all its customers pretty much equally (and fairly well) and seeks to EARN loyalty. The “perks” of loyalty don’t extend much beyond free tickets, free drinks, and boarding priority. The endpoint is that most customers end up pretty satisfied, and get what they have paid for.

    The “legacy” airlines treat low-end customers like dirt (fees, draconian policies, hamstrung customer service, etc.), but if those customers stick endure long enough, the loyalty is richly REWARDED. (Class upgrades, fancy lounges, fee waivers, competent customer service, policy waivers, in addition to free tickets.) The endpoint is that a small subclass of customers are generally thrilled with the airline (as long as they have forgotten about their long-ago “non-loyal” days) and the “average” customer is convinced that all the legacy airlines suck and thus they have no incentive to do anything beyond shopping by price. This leads to a dwindling amount of incoming loyal customers…

    I think a quick look at market share numbers, revenue, and profitability easily demonstrate which model works better.

  • jen

    It is a shame that companies are being told to focus only on the valuable customer. I’d think a first-time customer would be one of the most valuable.

    Over the past 10 years my travel budget has increased exponentially, but I still have a soft spot for those budget places that provided great service when I was watching every penny – but now if I use them I’m also upgrading to the extras I couldn’t afford before. I’d rather deal with a trusted hotel group or airline that has treated me well in the past than take a chance with someone new if their attitude is that new customers are the bottom priority.

    Consumers like me who are just starting to reach out to higher end properties will be very discouraged if we’re not welcomed as potential long-term customers. How do you build loyalty by only rewarding customers who are already loyal?

  • Lee

    Aol Travel sent an airline expert undercover to investigate America’s most popular airlines and rate them on their service in the sky.

    http://news.travel.aol.com/2010/04/20/who-flies-the-friendliest-skies/

  • Steve Surjaputra

    I’ll have to agree with SirWired. It’s a shame that the infrequent fliers are treated like that. What the legacies fail to realize, I think,is that these fliers may not flymuch but they may have friends who do, and, they can convince them whether or not to fly with a particular airline. What was the old adage? If you give customers a bad experience, he or she will tell ten of their friends and each of those will tell ten of their friends and so on.

  • MVFlyer

    The occasional passenger of today may be the frequent flyer of tomorrow.

  • Sarah Di

    In my case, I don’t fly much. I only fly once every year or so and don’t spend much on airfare, fees, etc…

    However, I handle the booking of travel for everyone in my company and I can easily avoid a carrier, hotel or rental car company when booking that travel that has been wrong to me if the prices, routings and times are similar. People within my company come to me with questions about booking travel for themselves personally as well and I have family and friends that travel.

    These companies also forget that we have the power to speak out. If a particular company basically tells me that I’m not worth anything to them, I can spready my opinion of them far and wide. If all customers do that, it can really damage their reputation and pocketbook.

    An airline cannot survive on elite passengers alone and if you anger enough infrequent passengers, they might just decide to drive instead.

  • SirWired

    To continue on my earlier remarks:

    When I first started traveling for business, I quickly gave my loyalties to AA where possible because of their now long-gone “More Room in Coach” program. I have VERY long legs, and the extra little bit of pitch was much-appreciated. Did I fly enough to get “elite” status? Nope. But I certainly was not a no-profit passenger either.

    They discontinued the “more room” program (years ago), pile baggage fees on top of the fare (which makes a difference for my leisure travel), and let their customer service go downhill.

    My business flying (and profitable last-minute trips) have gone up over the years, and if AA still had my loyalty, they’d be raking in an okay amount. My leisure flying has gone up too. Too bad AA decided I wasn’t worth the trouble. Now Southwest is my preferred airline, and it has to be a really good deal (or a destination Southwest doesn’t serve) to get me to fly anyone else. (And “good deal” means AFTER baggage fees, and a little “bump” to account for the change fees I occasionally have to pay (and don’t have to pay on SW.))

    I’m a nobody. I’m beneath a rounding error on AA’s (or Southwest’s) quarterly report. But surely there are others like me.

  • Carver

    Let’s cut through the BS. Who are frequent fliers? They are primarily people who fly for business. The average leisure traveler might hit 25,000 miles, 50,000 with some international travel, but will rarely sustain those numbers over time.

    The bread and butter of legacy airlines are elite business travelers who spend substantially more than occasion leisure travelers. The reality is that airlines can afford to piss of low revenue leisure travelers.

    That is not to say that leisure travelers should be treated badly, but we need to understand that the entire travel industry, whether airlines, hotels, or car rentals, is geared towards providing excellent benefits to elite, presumably high revenue, customers, and lesser benefits to non-elite customers.

    As long as travelers demand rock bottom pricing we get rock bottom service. Normally that’s not a problem because generally there is a price point for every budget. But airlines provide a unique challenge, because most planes only come with the same one, two, or three classes of service. By contrast, there are 51 one hotels that service LAX airport and 11 car rental companies, each with about 10 different types of cars.

    So flyers must generally choose between steerage class and “luxury” with nothingin between. That’s like shoppers being limited to shopping at either WalMart or Neiman Marcus with nothing in between.

  • SirWired

    @Carver: You certainly cannot afford to piss off highly profitable frequent fliers. However, you also cannot make those frequent fliers LOYAL (and therefore very profitable) if you treat them like crap prior to them demonstrating their fealty. To do so is to prevent them becoming frequent fliers on your airline, and instead converting them into dedicated bargain shoppers. If they are all going to treat me like crap, where is my incentive to do anything BUT shop by price?

    I have no problem with the idea of “elite” loyalty programs. I have no problem with rewards for extremely profitable customers. What I do have a problem with is requiring me to become elite to receive even a basically competent level of service.

    I don’t expect AA (or any airline) to roll out the red carpet for my non-loyal self. I don’t expect the upgrade fairy to bestow business-class upgrades on coach pax at random. I don’t expect to be admitted to the special security lines, or be able to cut in line at check-in, or check all my worldly possessions for free.

    What I do want, to EARN my loyalty, are little things like phone reps that I can understand on the phone, one checked bag as part of my fare, non-surly flight crew, seats that can actually accommodate a normal-sized human, and flights that at least have a chance of being on time.

    Yes, those elite flyers are quite profitable for the airlines. But all the different airlines that have toted me around over the years certainly didn’t do so for free. Nor, in most cases, did they do so cheaply.

    Is AA crying great big tears that they lost my loyalty? No, they most certainly are not. But the lost profit from the lucrative flights I HAVE taken, multiplied by thousands of consumers that also no longer care that much about which of the “majors” they fly, means real financial hurt.

  • Carver

    @Sirwired

    I understand your point, but history tells us its not true. All of the elite travelers were non-elite travelers with our preferred airlines at some time yet we stuck with it and became elite. I’ve flown with AA since the late 80′s when Eastern imploded. I was a leisure traveler and I didn’t achieve status until 1999 when I became a business traveler due to my consulting job.

    If you are likely to become a frequent travelers you will most likely pick one or 2 airlines and fly them exclusively. How you were treated as a non-elite isn’t likely to factor into it unless you were treated particularly poorly. More likely you will look at convenience and expected benefits.Or your job dictates which airlines you fly, especially for junior folks.

    The reason why you don’t have to be elite to know about elite perks is that we don’t live in a vacuum. Non-elite travelers see the difference between their treatment and how elites are treated. They see the shorter security lines, the shorter ticket lines, the bigger seats in premium class, and we all watched Up in the Air.

    And the dirty little secret of air travel is that the airlines can treat leisure travelers poorly. Because for each person who might have taken AA but didn’t because they had no loyalty, there is another person who did take AA, because they had no loyalty to another airline, and so on.

  • Sarah Di

    Look at it this way. You could have someone who flies very frequently but is dissatisfied with their current airline. So they try out another airline to see if there’s a difference, not notifying the new airline of their elite status on the other airline. If the new airline doesn’t give them any sort of customer service, they will have missed out on a new frequent flier and a lot of money.

  • Carver

    @Sarah Di

    More likely they will ask for a status match or challenge to quickly obtain elite status. At that point, they will judge the airline or other travel partner

    Elite status members are frequent travelers and they know how the system works.

  • Sarah Di

    I was thinking more along the lines of if the traveler chose to “test” the new airline by not revealing the elite status on another airline. I know that the second airline would like match status or treat them well if they knew all the details, but I’m sneaky enough to want to test them by not using those factoids with an initial flight.

  • Carver

    @Sarah Di

    LOL. You’re a strange one. But seriously

    Elite flyers are a whiny, self-indulged, entitled bunch. They moan if they don’t get a pre-departure glass of water They’d never fly without status. Swing over to Flyertalk and see what I mean.

  • SirWired

    @Carver: Given that the legacy airlines have been a complete and utter financial sinkhole since deregulation, I’d wager that the number of loyal (and profitable) passengers has dropped over time. The whole idea of treating everybody but elite flyers like complete and utter crap clearly has not worked.

    AA claims to know “why I fly.” They clearly do not have the least freaking clue.

    Those “elite perks” are not enough to earn my loyalty to any one airline. I now choose (within the price constraints dictated by my employer) the route most likely to get me to my destination on time, and I try to avoid cesspools of customer service where possible. I want to get from point A to point B in a prompt manner, and I’m willing to pay a little extra if that can be done with the basic customer service I am due as a paying client.

    Because THAT is “Why I Fly.”

  • Carver

    @Sirwired

    I respectfully disagree

    1. Airlines have been deregulated since 1978. The airline industry has not been in a sinkhole since 1978.

    2.Airline traffic has increased by about 7 percent annually

    3. Southwest’s profitabilty is primarily because of A) hedging fuel futures, 2) paying the employees a lot less. Neither of which has anything to do with the flight experiences.

    4. You’re mixing individual airline profitability with industry profits. Loyalty affects the profits of individual airlines, but it has no effect on the industry as a whole. If you need to fly from Point A to Point B, it doesn’t matter which plane you fly, the industry as a whole gets roughly the same funds.

    5. While I too would rather pay a little extra to get better treatment, the market has spoken. AA tried that with MRTC (more room throughout coach). Midwest tried that with bigger seats. Silverjet tried that with all business class jets. All failed. Consumers have shown that they fall into one of two camps. Cheapest price or loyalty snob.