Inside Jobs, April 25, 2008

Airlines Miss The Point Of Loyalty

If you’ve picked up any newspaper or business magazine over the past several years, then you know the pain and suffering that the airline industry has been experiencing. Rising fuel costs, aging fleets, employee strikes, price wars, and most recently - maintenance controversies – make for turbulent times. Just ask any of the airlines that have filed for bankruptcy recently.

In the midst of this ugly environment, airlines must do everything in their power to attract and retain customers. Their primary weapon in this never-ending battle for the customer is the embattled frequent flier rewards program. Every airline has one, and each has it’s own set of advantages and fatal flaws.

Apparently, airlines believe that the mere presence of a reward program is enough to get customers to stick around – even when the next price war wages around them. Certainly it works for some customers; there are those neurotic frequent fliers that will schedule their entire lives around their ability to keep their reward miles climbing with their favorite airline. However, I would argue that betting the health of your business on a group of neurotic customers is a shaky strategy.

Airlines simply miss the point of customer loyalty. They do a poor job of attracting the next generation of frequent fliers and do a poor job of catering to former frequent fliers.

New to our airline? Go to the back of the plane please.

First, most airline rewards programs penalize new fliers. If you are a young professional just joining the throngs of frequent fliers – then you have no preferred status with the airlines. That often means loading last, sitting in the back of the plane, and often being relegated to a middle seat that always seems to situated between two unpleasant individuals (feel free to use your imagination here).

“Just keep flying with us for about 25 more segments and you’ll get preferred status,” a smiling airline representative would say to these newbies. After surviving several experiences like that, it’s a wonder that people stick around to get their preferred status at all.

Haven’t flown with us for a while? Go to the back of the plane please.

Being on the other end of the frequent flier spectrum doesn’t work all that well either. I was a notorious frequent flier for nearly 20 years. During that time, I racked up miles and achieved preferred status on several of the major airlines. Specifically, I attained ‘Platinum’ status on American Airlines and was a proud card caring member for most of that time.

I learned recently, however, that my loyalty to American is not reciprocal.
Let me explain. I recently had to travel to Chicago on business and, as a loyal American Airlines customer, I booked a flight on American. But guess what? Despite being a great and loyal customer for years – I now have no preferred status. None. Apparently, since I quit traveling to start up ClearBrick over the past 2 years, I am no longer a loyal customer. American’s rewards program seems to be based on the ‘what have you done for me lately?’ principle. So it’s back to square one for me; back of the plane, last to load, middle seat misery.

“Just keep flying with us for about 25 more segments and you’ll get elite status,” a smiling airline representative would say to me.

Nurturing Commodity Behavior

What most airlines don’t realize is that the rewards programs that are intended to instill loyalty are having an unexpected side effect; they breed commodity behavior. Customers with no preferred status with any airline will tend to exhibit commodity behaviors; they’ll look for the lowest price or wait for the next promotion, then choose the lowest bidder.

As we’ve learned, attaining and retaining elite status with an airline can be difficult and fleeting. Take the rewards programs out of the picture and the customer is left to decide which airline to fly based on a number of very commodity-like attributes. Most airlines fly to and from the same cities, operate the same aircraft, and serve the same snacks and soft drinks. In addition, more and more airlines are merging to attain operating efficiencies, leaving the customer with fewer differentiated alternatives.

Why wouldn’t the customer simply choose the lowest cost option and continue to exhibit commodity behavior?

Breaking the Cycle

Certainly a few airlines have been able to break away from the crowd. Southwest tries to make flying ‘fun’, JetBlue adds amenities, and MidWest offers all first-class seats and a warm chocolate chip cookie. These few outliers seem to get the fact that they need a differentiated experience in order to compete for the ever-important customer.

A truly loyal customer base is not built on elaborate rewards programs or hard to attain preferred status. That’s a point that many airlines seem to miss. Rather, true customer loyalty is built over time – by delivering a unique customer experience.

With no preferred airline status anymore, I guess I’m free to choose any airline for my next flight.

First class seat and a warm chocolate chip cookie anyone?

Inside Jobs, April 16, 2008

How Do I Touch Thee? Let Me Count the Ways.

Customers come, they buy, and they go. Often, the only lasting impression they leave with your company is a record of the financial transaction. Sure, it would be easy to say that they had a good customer experience. They bought something didn’t they?

But hold on big fellow.

The total number of touch points that the customer encountered goes well beyond the point of sale. Getting your head around all of your company’s touch points – and how your customers navigate them – can mean the difference between customer joy and dispair.

So, how do you touch your customers?



Defining when and where the customer experience begins and ends is perhaps the most difficult task facing any business. Too often, companies define the lifecycle and customer touch points too narrowly, leaving critical elements of the customer experience to chance. Consider a carpet cleaning company who focuses only on the transactions; did the carpet get cleaned or not? They are missing the more important elements of the product (cleaners), service (servicemen), customer contact, appointment scheduling, flexibility, timeliness, and payment options. The carpets may have been cleaned, but the customer could be disgruntled due to a number of these other factors.

So what exactly is a touch point? We define a touch point as any customer interaction or encounter that can influence the customer’s perception of your product, service, or brand. A touch point can be intentional (an advertisement) or unintentional (an unsolicited customer referral). In this era of customer skepticism, often the unintentional touch points matter the most. Which would you trust more: a company’s ad pitch or your best friend’s personal referral for a product? Both are touch points, but one carries much more value than the other.

When your business interacts with a customer, it’s often easy to overlook what is really going on; you are touching them in many, perhaps subtle, ways. When it comes to customer experience management, the right touch can make all the difference. To do it right, you must first identify all of your potential touch points, then work to optimize each one (if possible).

Consider this (short) collection of potential touch points:

Customer Attraction Phase

Touch Point	Description
On-Line Ads	Whether you are using display ads or pay-per-click (PPC) text ads, what you say and how you say it can have a lasting impression on your customers.
Radio Ads	Radio ads, often only 15 to 30 seconds in length, must engage the listener and leave them with a compelling call to action.
Television Ads	Television advertising, which has traditionally been reserved for only the heftiest of advertising budgets, is now becoming more affordable to small & medium sized businesses through firms such as SpotRunner.com.
Print Ads	A tried and true ad approach, print advertising can be an effective – but sometimes costly – approach for promoting your business or products & services.
Direct Mail	Direct mail continues to be a popular way to reach your target customers. When done right, direct mail can be an effective and efficient touch point for attracting customers to your business.
Signage	For brick & mortar businesses, external and internal signage can be an important touch point to cast the right impression and attract customers to your store or office location.
Press Release	The press release is tried and true publicity tool that can represent a highly effective touch point to inform customers about your business.
Sales Representative	Field, floor, door-to-door, or telephone sales representatives all touch your customers in different ways. Understanding and managing this important touch point can have a dramatic impact on customer conversion.

Customer Interaction Phase

Touch Point	Description
Facilities	Whether you are a retail store, bank, hospital, certified public account, or auto repair shop, your facilities will say more about your business than you might think. Don’t just think about your physical building. Consider all factors such as parking, ingress & egress, and signage to your building.
Employees	Each time one of your in-store employees and customer service representatives engages in a dialog, your customers have been touched. As you might expect, not all encounters are the same. Depending on the training, experience, mood, and emotion, each discrete touch point encounter can leave dramatically different impressions.
Product Presentation	Product presentation is often a critical factor in the customers buying process. If the product looks cheap, it probably is. Keep in mind that product packaging can leave an impression well beyond the point of sale.
Store Layout	In the case of retailers or wholesale businesses, the layout of the aisles and checkout lanes can have a dramatic impact on the shopping flow and experience.
On-Line Landing Page	In the on-line world, the landing page is perhaps the most important of all touch points. It represents a major opportunity to engage the customer, inform them of the benefits of your product or service, and convince them to take action.
On-Line Shopping Cart	Not all on-line shopping experiences are created the same. Consider the steps that are necessary for a typical customer to select, pay, and receive their product on-line. Too many steps can leave them with a poor impression.
Point of Sale/Point of Service	For bricks and mortar business, the point of sale gets all the attention. It represents the most tangible touch point where the customer completes the transaction. Loyalty points or rewards can be redeemed, and payment is received. Although it is an important step in the customer experience process, it represents only a small fraction of the total experience.
Point of Service	For service companies, the point of service is typically where the service is performed. For physicians and hospitals, this may be the examing room. For in-home services, it may be the customer’s home. For professional services, it may be the client’s office location. In all cases, the point of service represents a major touch point.
Invoice	For non-cash businesses, the often overlooked invoice can represent an important touch point in the overall customer experience. Does it provide adequate supporting details? Are payment instructions well defined?

Customer Cultivation Phase

Touch Point	Description
Customer Support	When your customer calls, or writes, how will your business respond? The customer support touch point can be influenced by responsiveness, and the degree to which the customer’s problem is quickly – and definitively – resolved.
Alumni Relations	For colleges & universities, alumni relations are critical. Businesses should pay attention. How businesses interact with former employees is also important. Don’t overlook this important touch point.
Newsletter	Newsletters, both print and on-line, can represent an effective way to maintain a dialog with your customers, well after the original transaction.
Blog	Blogs (formerly known as web-logs), are a growing method for individuals and businesses to establish an open dialog with their customers.
Customer Testimonials	What your customers are saying about your product or service is an important touch point. Often these unintentional touch points can have a much greater impact on customer perception that any other.

A typical customer encounter with your company may include numerous interrelated conversations, referrals, or advertisements that influence the customer experience. Each encounter, observation, or influencer touches the customer is some way and contributes to the quality of the customer experience.

Together, the collection of touch points represents the individual notes in your customer experience song. Some touch points may add significant value while others detract from the overall customer experience. Identifying the touch points and understanding their role and contribution to the overarching customer experience process is an important step in mastering the customer experience.

Obviously, you can get significant benefits by optimizing each touch point. Touch points may include different stakeholders or representatives of your company and span all channels. The objective should be to improve the overall ease, convenience, and quality of each customer touch point. By optimizing your touch points, you can increase the transaction amounts of your existing customers, improve customer loyalty, and improve overall customer satisfaction.

Touch points, when understood and coordinated effectively, can make a sweet symphony for your customers.

Now go make some music.

Inside Jobs, April 3, 2008

Learn how to compete with Customer Experience

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