A case study of marketing concepts put into practice


AB Airways, a reputed international airline with head quarters in an advanced country has a customer relation department which took more than 12 weeks on an average, to respond to customer grievances. It lost 60% of calls from customers on any given day and the cost of compensating customers was rising rapidly.

A dynamic senior executive was inducted into the organization as the Chief of the department and formed a new team. He immediately set himself the task of reducing the response time of 12 weeks and also to have more satisfied customers. The new team in customer relations, decided to take a proactive role in retaining customers. The new motto was to champion the customer as opposed to defending the company.

Actions and amendments in the working of the customer relations started in the following manner,

Find out why customers defected:
Making quick amends when a service failure occurred and eliminating the operational weaknesses behind them. The team had to first improve the understanding of why customers defected. Some customers left AB though they had no complaint; their reasons ranged from a job change to another airlines’ new frequent flier’s programs. As for customers who had some grievances, 50% chose not to tell anything; they simply defected to other airlines. Out of those who did contact someone at AB about their grievances, 87% did not defect.

Make customers into champions:
The conclusion by the chief and he team was that those who wished to tell about the service they had received could be turned around. More was found out about these customers and ultimately developed a model ‘Making Customers into Champions’.

Transforming AB’s traditional defensive role:
It was decided to first transform AB’s culture and methods. All along, customer relations had served as an investigator and adjudicator and had pursued four basic objectives:

1. To insulate the company from unhappy customers. Accordingly, customer relation was highly centralized and never conducted any analysis of customer data. To ascertain the reasons.

2. To assign blame for poor service, rather than to help the organization learn how to prevent or fix problems. As a result, line functions saw the customer relations department as an adversary. The customers’ silence having grievances towards AB was purchased for the lowest possible price. Framing detailed rules for compensation was the result.

3. To focus on the volume of grievance handling activity—to process the largest possible number of customer complaints. Consequently, the level of service to complaining customers was lost sight of. Customers did not find customer relations easily accessible.

The New Objectives: The new team instituted four new objectives:

1. To use customer feedback more effectively for improving the service quality. A system was installed to collect and analyze customer data, and to distribute the findings to AB’s operations around the world.

2. To strive to prevent future service problems through teamwork. This objective was achieved by having line operations join customer relations department in monthly reviews to discuss how customers perceived service quality.

3. To change approach to customer compensation so that it would meet customers’ needs. For this, AB instituted a policy of dealing with all cases individually and began holding internal reviews each month to identify the most effective means of retaining customers.

4. To practice customer retention, not adjudication. The team started assessing on the basis of customer-retention rates on the basis of the division’s effectiveness in retaining customers Preventing customer defection became the main aim. It was translated into a modus operandi of ‘retain, invest, prevent’, which was incorporated into all training programs, coaching sessions and performance criteria

Retaining the customer is Job one:
First and foremost, the customer has to be retained. Debating whether the customer correctly perceived facts was a non-issue. AB had to deal with their perception. In training the relations team helped staff to understand the following:

* If AB replies to a customer and claims that events did not happen as the customer had stated, then the customer perceives AB to be calling him a liar.

* If, after investigating, AB reports back that events indeed took as the customer claimed, then the customer could become even more agitated because he infers that AB did not believe him at first.

* If AB passes on some information to the customer to the effect that he did not know, he may think that AB is finding excuses for poor service.

To deal with these issues, customer relations developed a four-step process and incorporated it into all technical and human systems.

* Apologize and own the problem. Customers do not care whose fault it was or who was to blame; they want an apology and they want someone to champion their cause.

* Do it quickly. Aim to reply to the customer the same day, and if that is not possible, certainly do it within 72 hours.

* Assure the customer that the problems are being fixed.

* Do it by phone.

Computerized Customer Case History:
On the initiative of customer relation team AB has introduced an image-based computer system, Caress (for Customer Analysis and Retention System), eliminating all paper. Caress also allowed a customer’s case history to be shared easily and quickly across the organization and makes it easier to spot trends.

Redesigning the Customer-Service Process:
In conjunction with Caress, the number of administrative steps required to serve a customer were reduced from 13 to 3.

Throwing out the Rule Book:
The Rule Book mindset was eliminated. Instead, each customer relations employees was fully authorized to use whatever resources he thought were necessary for keeping a customer’s business. The new system for assessing the division‘s effectiveness in retaining customers ensured that expenditures did not skyrocket.

Building Interpersonal Skills:
The new emphasis was on coaching employees on how to allay customer’s anger, how to negotiate a win-win situation for the customer and company, how to listen and empathize and how to be assertive without being defensive. In addition, employees were trained to help each other cope with their emotionally grueling jobs, lest they took it out on customers.

Encouraging customers to communicate:
Research found that less than 10% of customers ever communicated with the airline about service issues—good or bad. Of those with complaints, only 8% contacted customer relations. These customers turned out to be most loyal: They not only stayed with AB, they also provided invaluable information on service quality. The key, therefore, was to get more customers to communicate back.

Customer retention policy pays back:
Data told us that this pursuit was well worth it; for every single pound invested in our customer retention efforts, AB received two pounds back. The benefits were made up of three components. First, by resolving more and more customer problems up front, AB now, had to spend much less on retaining customers. Second, the satisfied customers now gave AB more of their business. Finally, these customers helped win additional business by actively promoting AB to others.

AB listens to customers intently:
Customer relations employed new measures to increase its approachability. The first was the establishment of listening posts. These included an international, postage-paid card that customers could use to mail in comments; customer forums attended by AB executives where customers could air grievances; and the ‘Fly with Me’ programs , in which , AB representatives and customers would fly together, to experience customer problems first hand.

Prevent it from happening again:
Finally, success of the strategy required partnerships among customer relations and other AB departments. Only with such partnerships could AB move from cure to prevention, utilizing all information to spot service failures and to design an early warning mechanism on potential service failures.

The above is an actual case and the AB was successful not only in surviving the competition but also increasing the customer base. For other services or products a different approach may be needed to overcome customer grievances.