Prosperity's dangers in a service industry

Mon, 05/31/1999 - 8:00pm
Walter S. Ciciora
By Walter S. Ciciora

For most (but certainly not all) Americans, this is a time of great prosperity. Employment is at record peace-time highs. Most employees feel somewhat secure in their jobs. But because these are more competitive times, the degree of security is a little bit less than in previous economic up-cycles.

Luxury goods and premium brands sell well. Even cable subscribers are sold for $4,000 and $5,000 each in the latest cable deals.

But there is a downside to prosperity and dangers for those in service industries. The hazard lies in the memory of the consumer. The consumer will remember being shabbily treated during boom times. Now that cable has serious competition from DBS and others, it is important to build consumer approval. Especially as cable seeks to enter new telecommunications business segments, cable needs to improve its standing with its customers.

Horror stories

Cable must avoid the problems of the airline industry. Those who travel extensively have suffered from what I call the "downside of prosperity." Horror stories abound. Worse-case situations involve unhealthy confinement in overheated aircraft with extended and unexplained delays. In some situations, food and water were depleted and sanitary facilities closed because they reached their capacity. In less unpleasant cases, mere rudeness spoils the experience. Since United Airlines started its Mileage Plus program, I have logged 1.85 million actual miles. At my current rate of travel, I am about a year away from making it 2 million miles on United. And of course, I fly a bit on other airlines as well. This year alone, I did 63,000 miles by mid-May. One might think that United would consider me a valuable customer and treat me rather well.

The "downside of prosperity" is that the airlines have occupancy rates beyond their ability to properly handle them. The result is that the "incremental value" of a customer is rather low.

Facilities, and more importantly, employees are stressed beyond reasonable limits. The result can be frustrating. The advertising campaigns that are out of sync with reality are exasperating and irritating. Marketing tries to portray an image of luxury and caring. What is actually happening is quite the opposite.

Just a decade or so ago when airplanes were typically less than half full, a steady customer was a valuable asset. I can remember when I was upgraded on nearly every flight just because I was a frequent (100,000 miles per year) flier. Now, seats in first class will go empty if not claimed with certificates. I used to be able to make itinerary changes at will. As long as I had a ticket between two locations, the airline would try to accommodate me. A couple of months ago, I was in Los Angeles with a ticket back to New York, and my business was completed earlier than expected. I got to the airport in plenty of time for a two-hour earlier flight. It would enable me to get back to New York at 10 p.m., rather than midnight. However, I had a "flight specific" fare, and it would have cost another $400 to go earlier! No bending of the rules for a million-mile flier here!

Just the other day, I took a commuter jet from Columbus to Dulles. Because the commuter planes are smaller, any but the smallest bags have to be checked and go into the baggage section in the back of the plane. Upon landing, the bags are returned.

At Dulles, my bag was waiting for me at the bottom of the steps. However, not all of the bags were unloaded yet. To my amazement, one of the ground crew had climbed up into the tail section of the plane and was throwing the bags down onto the metal cart, some six to eight feet below! Need-less to say, I complained to a supervisor.

Then, just a half-hour before flight time on the next leg, a gate change was announced, requiring a sprint half way down the terminal. The announcement did not include the fact that an hour's delay was to be incurred as well. Anyone with eyes could see there was no plane at the gate a half-hour before flight time. Yet the monitors continued to state that the flight was expected to be "on time." While rushing past the monitors, I noticed the delay and diverted to the "1K" room-a "special service" room for travelers who do 100,000 miles or more a year. When I called the person who would pick me up at the airport, I got an answering machine. I wanted to leave a number where I could be reached so that I could determine that the ride would be available at the delayed time. When I asked for such a number, one of the other agents barked that the number is not given out for the 1K room-just for the Red Carpet Club room. The "special service" room for frequent fliers chooses not to help in a situation caused by the airline because the agents behind the desk don't want to be bothered with incoming calls!

Flight delays are usually announced at the last possible moment, perhaps in hopes of preventing a move to another airline. Then, only a short delay is announced. Shortly after the delay period expires, another delay is announced. Often, this is repeated several times, leading to a phenomenon called "the sliding lie."

What does all this mean for the cable industry? Tossing bags off an airplane onto a cart six to eight feet below is an abuse of the customer's property-like leaving muddy footprints on the carpet of a customer's home. Abuse my property, and you abuse me! Waiting until the last minute to announce a flight delay is like missing a service appointment. Making a ticketing error is like a billing mistake. An advertising campaign that attempts to claim improving service when it is clearly declining is like an ad campaign to try to put a positive spin on a rate increase.

Can the airline get away with this? Yes, as long as the economy is booming and there are more customers than the system can handle. But frequent travelers will seek ways to avoid travel or look for another airline which is a little more interested in service. When the eventual economic downturn comes, the loyal frequent fliers may belong to someone else.

Can cable get away with similar behavior? Yes, for awhile. But when the customer has options, he will be biased to take them. DBS and MMDS will take their toll if customers feel they are mistreated. While the downside of prosperity is a potential hazard to a service-oriented business, the "downside of a downturn" is the payback for not always taking the customer seriously.



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