Hazel’s Thursday Thoughts – Another Lesson from the Airline Industry

Airline Industry

In an article last week, United Continental said it would offer a basic economy fare to passengers as of January 2017. This fare option will have no preassigned seating, will board last, and will allow one personal bag that must fit under the seat.  Ostensibly this is a response to customers’ request for more choice, but in reality, it provides the airline with an additional revenue stream.

There’s a powerful and striking lesson here – did you catch it?  Downgrading your services like this only to repackage them at an additional cost does not solve your customer’s problem; it erodes your value proposition and in some cases, it erodes trust.

This is a phenomenon we’ve witnessed in many industries, not just the airline industry.  However, we have seen increasing customer intervention in traditional airline processes with little, if any, relief in ticket prices not to mention stagnant service quality.  Customers are now checking themselves in, printing their boarding passes, paying for checked in bags, paying for food, and being charged for amenities that were historically included in the price of the ticket.  The airlines blame increased fuel and airport fees as the primary drivers, but there are operational factors at play.

As organizations grow they begin to focus inwardly in an effort to achieve cost efficiencies.  While this is important, it’s absolutely critical that the customer value proposition remains central to the execution of the operational strategy.  This may seem obvious, but many instances occur, particularly in markets with few competitors, where companies take away customer value as a way of maximizing profitability.

Instances like this apply to internal customers as well. Here’s an example. I helped an organization create a problem solving culture to improve critical business outcomes. One of the first processes we addressed was employee onboarding.  This process, when executed poorly, introduced many new productivity inefficiencies. Employees experienced frustration as a result of not having building access, no computer, no telephone among others.  This negative experience at the onset diminished the employee’s perception of the organization and contributed to unnecessary turnover. In a world where attracting and keeping talent is a competitive advantage, you can see why this process was a priority.

Your Challenge for This Week:

  1. Where are you adding additional costs to your customers?

For every company, costs are continuously rising, but the answer isn’t just reducing value or charging for everything in sight. Instead of adding new fees, ask if there are operational improvements you can make to eliminate them.

This is how I help my best clients. By uncovering opportunities to improve their operations they prevent the erosion of their integrity. Before you start charging your customers to use the restroom, I think we should have a chat.

About the Author: Hazel

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