By Mark Overbye
An airline I recently flew on "burned my chicken on both sides." Not literally, but figuratively. I may or may not get over it. And here's what I am going to do about it.
First, the backstory. Two travel vouchers worth $200 each expired one day before I got to use them. Incredulous, both a supervisor and then a “customer relations” rep confirmed I’d ventured into the no forgiveness zone, of which there is no return. I imagine some airline bean counter quietly uttering, “Dodged another one.”
Just because their policy is what it is, I’m not placated. In fact, I’m infuriated. Yes, I should be able to sufficiently operate a calendar, properly taking action to avoid this. But how does their obligation that is good on Sunday suddenly vaporize on Monday? I get it, they can dictate their policies and enforcement at will. But they do so at their own peril, just like everyone else.
What happens next? My former fondness for this airline was replaced by aggravation that put them on my "no fly" list. As good fortune would have it, I have platinum status on Delta. I get free upgrades for me as well as for my wife, my bags travel free, I can change my plans without paying a fee and get to board first. Great benefits I don’t have on the other guys. I’ll be OK on Delta.
So why am I bent? Sure, I’m out the travel vouchers, but witnessing compromised business opportunities and poor business execution drives me crazy.
This could have gone so differently. Had they said instead, "Since it’s only been one day since expiration maybe we can be flexible if you’ll use the vouchers in the next week to make reservations,” I’d remain a loyal customer. The cost to them? Zero, beyond just honoring their original promise.
Looking deeper, calculating the Customer Lifetime Value of my business should cause that aforementioned bean counter to pause. Yes, they saved themselves having to honor vouchers of $400. But I’ve been a customer of theirs since the 1980s. Directly and indirectly I had a hand in buying over 25 tickets on that airline just last year. If a CLV is a 10-year calculation, at roughly $400 per ticket x 25 tickets x 10 years, it produces a big number.
Recent travel statistics show airline passenger revenue off by as much as 70% in some cases. Further, evidence suggests this airline's C-suite may be tearing their hair out over survival strategies like their competitors. While one end of their company is alienating customers, the other is struggling with how to win more.
According to Forbes:
- Customers switching companies due to poor service costs U.S. companies a total of $1.6 trillion.
- 87% of customers who say they had a great experience will make another purchase from the company, compared to 18% of customers who had a very poor experience.
- Brands with superior customer experience bring in 5.7 times more revenue than competitors that lag in customer experience.
The true purpose of a business, Peter Drucker said, is to create and keep customers. Distilling this further, the strategy question is how do you get customers to choose you?
Though this lens it’s easy to scrutinize your policies and processes to determine whether you attract or repel customers. Consider these key questions:
1. Do your policies and practices win favor or burn customers? Address your policies from your customers’ point of view to determine whether doing business with you is a positive experience. If your policies antagonize your customers, your competitors win.
2. Are your front line reps empowered with flexibility? Are your teams trained to make customers happy or enforce the rules? If you truly want to grow your business this choice is obvious.
3. Have you explored the economic impact of no forgiveness? Your CFO should be able to give you the detailed value of each customer. Now multiply this by 10. If you jilt even one customer, what will it cost you in dollars and time to replace this business?
4. Does your business follow a customer centric or business metric model? Few scorecards include, “How many customers have we lost?” Acknowledging and understanding this vital figure and the reasons behind it are crucial for business expansion.
5. What are my competitors doing right? Once you comprehend that your customers have myriad choices your mindset should adopt a “How can we help?” attitude. Doing this elevates you from the fray of self centered businesses suffering from customer churn.
Ultimately, doing it right and winning favor with customers costs less. Having the right mindset and integrating that into your business is the correct path. Maybe I’ll see you on a Delta flight.
Mark Overbye is the CEO of Anthem Marine, as well as the chairman of USA Waterski and Wake Sports Foundation. He is also the founder of Montara Boats and Gekko Sports.