Linda's Marketing Leverage Blog

Airlines Miss the Boat in Hawaii: How United and American blew a great opportunity to build customer loyalty

The collapse of ATA and Aloha Airlines left many unhappy stranded travelers in Hawaii last week. With virtually no notice, the two carriers shut down and those holding tickets were stuck with paying large amounts of money and/or waiting days to find a flight back to the mainland.

The airline business is a mess in general. Even supposedly well-run airlines can't seem to make much money, and just about all airlines are in the unenviable position of having customers who feel unappreciated, underserved, and often ill-treated. The attitudes are so engrained that they can't even see an opportunity to build goodwill and loyalty when it comes up and hits them in the face.

Here's how. Each of the two big carriers would run an extra plane or two to/from Hawaii to the mainland and make a public offer to carry all of those stranded passengers for a nominal fee (perhaps the $100 normally charged for changed tickets), enroll each passenger in their frequent flier club and give them credit for their entire round trip flight to Hawaii (including the part actually flown on ATA or Aloha), as well as a $100 voucher good on their next trip to Hawaii within the next 12 months.

Would it cost some money upfront? Yes, but with the media attention given to this situation, the amount of PR and free advertising generated would more than make up for the actual costs borne by the airline. Not only that, but the goodwill generated amongst not only these passengers but the general flying public, not to mention the media and regulators, would be incredible. How often does one get the opportunity to come out a hero?

Instead, here's what a spokesman for American Airlines said, as quoted in the Wall Street Journal on Tuesday, April 8, 2008:

"We didn't have a code-share relationship of any kind with any of these airlines, so anything we do to offer people a discount is basically out of the 'goodness of our hearts.' " Mr. (Tim) Wagner said. "Any discount we give is revenue lost, and we won't be getting anything out of their bankruptcies. So in a $100-a-barrel oil environment, anything that any airline does is generous."

Generous? How many people reading this actually thought American's actions here were generous? In fact, this whole approach seems very short-sighted to me. But wait, maybe American didn't have any planes available last week, because they were busy grounding a thousand or so flights to conduct maintenance checks. Their "generosity"  must have been taxed by all the ways the airline was helping the passengers stranded by the MD80 checks, right?

So United where were you? Hawaii has been a key market for you for decades. Instead of gloating about the fact that competitors who have been driving prices downwards (helping consumers) are now gone from your backyard, you could have been building goodwill and customer loyalty instead of more animosity.

Instead, both of you really missed the boat.

Those Pesky Little Fuel Surcharges

Very high on my list of Pet Peeves of how to irritate a customer: Add a surcharge to your bill for oil, gas, delivery, etc. because the price of fuel has gone up.

Excuse me, but when oil is $100 a barrel, it impacts everyone. So not only has your cost gone up, but so have the costs of your customers and the people who work for you. Yet most of us don't go around adding "fuel surcharges" to our invoices.

The cost of delivering your product is part of your cost of doing business. If you've priced your product appropriately, you shouldn't have to tack on these irritating little surcharges.

Besides, when was the last time a company gave you a fuel credit because the price of fuel went down?  Instead, these charges become a permanent part of the invoices and another way for companies to generate revenue.

If you're going to charge me for these types of things, at least have the courtesy to credit me for all the things I do that help save you money (starting with the fact that it costs less to keep and grow an existing customer than to have to go out and market to get new business).

Or deep six the surcharges.

They Still Just Don't Get It: Arrowhead Water

Last year Arrowhead Water informed me that they were making my home water deliveries less frequent to accommodate their needs, not mine. They would also give me more water bottles to make sure I was covered for the longer duration, which, to me, looked like a way to push more product to the customer.

This month an insert in my bill tells me that starting immediately they have a minimum purchase requirement for deliveries. So now, not only are deliveries less often, but I'm also required to buy more. Is this supposed to be improved customer service?

Perhaps someone should tell Arrowhead (and their corporate parent Nestle) that they ought to be working harder to convince me to buy their products--not making it more difficult. Today's customers know they have a myriad of options to choose from--including no longer buying bottled water but using tap water instead to be environmentally conscious. So shouldn't suppliers be taking care of *me* the customer, instead of *them* the supplier?

This strategy is pretty washed up to me.

Food Makers in the Dog House

Today's focus is on the pet food industry—in the spotlight due to the recent finding of tainted dog and cat food, resulting in renal failure and a yet unknown number of pet deaths.

There are so many places to pin blame and shame here it’s almost hard to list them all: The Chinese wheat gluten supplier who provided the tainted raw material, the Canadian food supplier who didn’t ensure the quality and safety of their products, the FDA for not adequately performing its oversight of the pet food industry.

But let’s not forget the pet food suppliers themselves, who it appears are actually marketers rather than manufacturers of pet food. What’s become apparent as a result of this situation is that whether you buy the low-cost economy pet food at Wal-Mart or the high-end specially formulated food from Eukanuba/IAMS, the actual food ingredients all come from the same supplier with the same main ingredient.

What’s wrong with this picture?  While all pet food manufacturers will now need to prove to the public that their pet food is safe to eat, the premium manufacturers will also have to prove to pet owners like me why I should continue to pay top dollar for their products when they are basically identical to what’s sold in Wal-Mart, Safeway or under private label. If the ingredients are the same, then what’s different? The packaging? This is a great example of how apparently identical products have been successfully positioned at various price points without the consumer understanding how similar the products themselves actually are.

We talk about products being only part of a total solution that includes service, customer experience, image/branding and competitive environment. However, the bottom line is that there needs to be enough differentiation in the total solution to justify selling different versions at different price points.

Sellers, you are all forewarned: Hell hath no fury like millions of pet owners scorned.

You Can't Make This Stuff Up!

Ever wonder how clueless some businesses can be about customer service, basic business strategy and lacking in just plain common sense?

Check out this list of the 101 Dumbest Moments in Business, courtesy of Business 2.0 Magazine.

My favorite (although it was hard to choose) is the Comcast cable repair guy who falls asleep on a customer's couch, while waiting over an hour on the phone for support help from HQ. The customer records this and puts the video out over the web. The cable guy is fired, but we don't know whether or not the customer ever got his system fixed.

Saving Trees or the Ultimate Hypocrisy:?

From Chad Barr of CB Software, here's a great example of  TJDGI Syndrome (They Just Don't Get It):

http://www.chadbarr.com/?p=36

Stuck in Lodi Again...

...at the Microtel Motel.

Remember the old John Fogerty song where he was "stuck in Lodi again?" Well, we spent the weekend in Lodi for a club soccer tournament.

Turns out that Lodi is not such a bad little town. It has a quaint little downtown, a number of wineries (which we did not stop at) and the requisite shopping center with Target, Starbucks, Quiznos, Pantera, Chilis, etc. In fact there were 4 different Starbucks we found while we were there.

The problem is we were stuck at the Microtel Inn right off of I-5. We came in with reasonably low expectations--this was obviously not going to be the Ritz Carlton. I booked the reservation on the internet, which gave me a choice of rooms, rates (discount for AAA), etc. Very simple.I did pay a little extra for a "suite", which I figured was the type of divided room w/a door you get at Embassy Suites and other similar places. However, it turns out that for the Microtel Lodi, a room becomes a suite by removing one of the double beds, replacing it with a sofabed, adding a small cube fridge and a microwave, and renaming it a suite.

The desk clerk, who was unfailingly polite, first asked me to sign the checkin form before filling in the daily rate. Good think I didn't do this, because he had an incorrect rate. After finding out that their version of the word suite was different than ours, I had another discussion with said clerk. He informed me that that really WAS a suite. And, besides, if we wanted a regular double room, he was out of those and was therefore upgrading all of the other double requests to "suites" for the lower price.

Thisdid not compute, so I asked if he could then give us the lower rate, since what we had was more like a double than a suite anyway. He smiled and said of course, then proceeded to cross out the old price on my credit card receipt and write in the new one. When I told him that wasn't going to work, he obliged to credit the old charge and recharge it. However, he had forgotten that I was booked on the lower AAA rate, so he had to go back and do that again.

In the middle of the night we discovered that the toilet in our "suite" was blocked and didn't flush right. The last thing we wanted to do was have the desk clerk come up in the middle of the night and try to fix this himself, so we waited till morning to tell the clerk about the problem.

A different clerk was on duty. She listened to me describe the problem, then said with a smile, "Well, those things happen. Maybe it needs to be plunged." Then she walked away.

Let me reiterate what did NOT happen in this interchange:

• She didn't apologize for the incident
• She didn't offer to make any amends for not having a working toilet in the room
• She didn't even write down the room number to get the problem solved

In discussing this with another guest, I found that her room had a bathroom that was both dirty and full of bugs. Yuch.

I should say this was my first interaction with the Microtel Inn chain, and it may very likely be my last. My impression is that Microtel hires clerks that are invariably polite, but untrained in basic check-in systems (crossing out a credit card receipt to do a refund?), ignorant of even Customer Service 101 (how about apologizing for a problem to start?), and totally oblivious to health and sanitary concerns.

Maybe I was out of line in expecting a suite in a motel in Lodi to have a door separating one part from the other. But flushing toilets and clean bathrooms are pretty much nonnegotiable.

Next time if we can't find another place in town, we'll drive to another town to stay. Better than being stuck in the Microtel in Lodi again.