Three Lessons Retailers Can Learn About Service From the Airlines

Discussion
Sep 16, 2011

As a frequent flier with over 1.5 million Aadvantage miles (how about that!), it struck me on the way home from Shop.org that the retailing industry should use the airline industry as a cautionary tale. It’s a business that could do SO much better, but doesn’t, and has devolved into a commodity industry whereby the definition of success is safely transporting passengers from one place to another. And, God bless them for that! U.S. airlines, at least, have a stellar track record on safety.

But airlines have optimized the logistics end of the business  to the point where it’s all about cramming as many passengers as possible onto as many flights as possible, moving them from point to point efficiently, and calling it a day.

Three Retail Lessons

1. Don’t promise what you can’t deliver. Simple enough, right? The old adage of under-promise and over-deliver applies, and yet the airlines do it in reverse 99 percent of the time. Returning from Shop.org, I traveled on a jetBlue flight that was delayed 90 minutes due to weather plus a slight (if there is such a thing) mechanical problem. Here’s the rub: jetBlue announced a 40-minute delay and delivered a 90-minute delay. Traveling for 30 years, as I have, this is almost always the case. Any ultimate delay will actually be worse than originally announced. Retail Lesson: When there is a problem, give your customers a realistic assessment of the issue right away, and then try to do better than that.

2. Don’t try to go from full-serve to self-serve. Since I hadn’t flown on jetBlue in 5+ years, I noticed the difference, so I’ll pick on them. When jetBlue first started flying, they had free snacks and free TV. While they still offer those two things (sort of), they have downgraded to an a la carte menu where you have to pay for movie channels on the “free” TV, pay for a headset, pay for “premium” snacks, pay for a pillow/blanket “kit,” pay for a few extra inches of leg room, etc. In short, they are now a regular airline and the TVs are in need of updating, too. Retail Lesson: When your business is founded on offering “free” extras, don’t start nickel and diming customers. If you are a full service retailer, be careful when you start trying to get your customers to check themselves out, use kiosks to find merchandise, help themselves at the meat case, etc.

3. You didn’t have me at hello! Does anybody but me remember the “good old days” of flying when flight attendants and gate and reservations counter attendants actually greeted you and maybe even spoke a complete sentence or asked how your day was going? It’s been well over a decade since I got more than a “good morning” from an airline employee. (Side note: I have had better luck on the phone and almost all airline employees have been civil if not friendly when asked a question). Retail lesson: Just think of the extra business you could garner if your associates were actually friendly and engaged each potential customer.

For retailers, commoditization could mean the industry degrades to the point where a handful of retailers successfully delivers products to consumers more or less on time, with an optimized supply chain, but with minimal to no service and differentiation. And, we don’t want retail to be like the airline industry, do we?

Discussion Question: What’s the best way for chain retailers to motivate their employees to offer superior service? What’s your air travel tale of woe, and what can retailers learn from it?

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22 Comments on "Three Lessons Retailers Can Learn About Service From the Airlines"

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Ryan Mathews
BrainTrust
The best way to get any employees to offer superior service is to (a) screen new hires for non-sociopathic, non-entitlement personalities and then to treat them like human beings so there’s a semblance of a chance they’ll return the favor when they deal with customers. As far as airline stories go, I remember when I passed the million mile mark on Northwest (now, sadly, Delta). The airline sent me a luggage tag and a pen made out of the same material they were making their newest plane out of. Tongue firmly planted in cheek I sent Customer Service a “Thank You” note asking if I got anything a tad more tangible — say lifetime status instead of having to re-qualify every year. I got a nasty email back telling me to refer to the terms of the frequent flyer program which clearly spelled out who was eligible for what benefits. I sent back a nice email explaining that if we assumed each “mile” cost a minimum of one dollar (based on the way Northwest gouged business travelers, a very modest assumption) then I had personally spent over $1,000,000 with the airline — a contribution they had acknowledged with a five… Read more »
Dick Seesel
BrainTrust

My biggest takeaway from air travel is that the “budget” carriers (Southwest, AirTran, JetBlue) often provide higher service standards and associate training than the “legacy” airlines, at competitive prices. (At least, that’s my experience flying in and out of Milwaukee, which is dominated by budget carriers.) Legacy carriers who expect passengers to pay more (at least where they control more market share) ought to operate at a higher standard of “expectations,” but they don’t.

Customer satisfaction surveys bear out the same trends in retail: The highest-ranked stores are often value-oriented rather than high-end merchants. They seem to be better equipped to meet consumer expectations, either through low-cost cultural efficiencies or through different expectations. High-end stores may not be able to match on cost-effectiveness, but they ought to exceed expectations on service…even if it only means being greeted consistently when walking in the door.

Peter Fader
BrainTrust

Here is the very important Lesson #4: Don’t be afraid to charge different prices for the same product/service.

Retailers (and other service providers) are very bad at doing this; they lack the courage and know-how to charge different prices to different people for the same thing. This is a huge source of profit that is being ignored — there might be a greater “ROI” for effective price-matching than for many experiential/service-oriented activities.

Airlines have shown that people don’t really care if they’re paying more than the person next to them. It’s that simple. All the other attributes (e.g., service, selection, quality, and convenience) matter a lot more than pricing.

So airlines are rotten at many things, but they’re the best when it comes to pricing tactics, and everyone else should learn from them.

David Biernbaum
BrainTrust

Al, I think I probably passed by you at the airport yesterday going in the other direction. Unfortunately, the airline industry has become generic and it lacks service, points of differentiation among brands, and it lacks character. What the retail industry should learn from the airline industry is that lack of attention to your customers and treating people the same as luggage will result in a bumpy ride with turbulence.

Gene Hoffman
Guest
Gene Hoffman
6 years 2 months ago
Chain retailers need to inject a sense of theater and a sense of involvement into their operations and make shopping, and working in their stores, a desirable and fun experience. My air travel experiences have gone from delightful to “cattle car” tolerance. I, too, have flown multi-million miles and my first business flight was the very best ever and last week’s was the worst. On that initial flight I flew with my wife from St. Louis to LA, first class on a 707 prop plane, to make a commercial in Hollywood. My tickets were paid for by the film syndicator because I bought a series that was slotted in a sought-after prime time slot on NBC that Kroger controlled. When we were in the air the flight attendant took our drink and dinner orders. Later she prepared our dinners on a mobile cooking cart next to our seats. Next came desert which she presented graciously. After dinner, we when to the back of the f/c section where there was a sofa to relax upon and enjoy an after dinner libation. All of this f/c graciousness cost $248 round trip. That flight hooked on me flying and I abandoned train travel.… Read more »
Bill Emerson
Guest
Bill Emerson
6 years 2 months ago

Al has picked three great examples of what I would call the overarching issue, which is that competing strictly on price will ultimately have a negative impact on service. If you doubt this, try to find a sales associate on a Macy’s sales floor. Same formula; endless price promotions to drive market share + lower margins + slashing expenses (biggest being sales associates) to protect profits = lousy service. Compare that to Apple; innovative products, fabulous service, #1 or 2 in market cap.

Competing on price, regardless of the industry, is a footrace to the bottom.

Cathy Hotka
BrainTrust

I love the airline analogy. At least retailers don’t require ludicrous “patdowns” before you can enter the store.

My 21-year-old has worked for four retail chains and has depressing reports from all. One chain scheduled her for work in unpredictable ways and gave her the schedule on Tuesday for a week that began on Wednesday. One had no place to sit down, so employees stood for 8 hours. One had music so loud that employees had to shout to be heard. When these are the conditions, and the pay is $8 per hour, it’s hard to imagine much sales associate motivation to go above and beyond.

Mel Kleiman
BrainTrust
I have too many tales of woe to even start. The problem is I am old enough to remember the good old days of when flying somewhere was something I looked forward to it, even though I was doing it 60-70 times a year. But the problem in some cases was not caused by the airlines, it was caused by the airlines giving the consumer what they said they wanted. Low price and then even lower price. Now they are selling something they cannot deliver. Customer service and low price. As the old formula goes, you can pick two of the following but you can’t have all three. Price, quality or service. Now to the other question, how do you motivate retail employees if you are facing the same situation the airlines are facing? The answer is simple:1. Don’t treat your employees like you treat your customers. 2. Treat them better than you do your customers. 3. Make sure you have great managers.4. Empower your employees.5. Give them a family-friendly environment to work in.6. Just because you are low cost does not mean you have to be low pay. 7. Give them lots of training.8. Make it a fun place… Read more »
Bill James
Guest
Bill James
6 years 2 months ago

Q1: Set up an employee frequent flyer-like program focused on delivering superior service. The more points they earn through the program (perhaps a function of sales through by each employee) they can turn those points in for awards, prizes, perhaps even paid vacation days.

Q2: I had a major airline (top 3 in the industry) gate agent tell me once after I had been bounced from a flight due to it being oversold that I was, “…simply nothing…” when I asked her what I am to her company as a customer. I wrote a letter to the CEO and received 25,000 frequent flyer air miles and a free ticket good anywhere in the continental USA from them. I’m pretty sure it did not go as well for her.

Doron Levy
Guest
Doron Levy
6 years 2 months ago

Honestly, at first when I read the headline, my feeling was: what in the heck could retailing learn from the airline industry? Then I read on. Al is 100% correct. Even though the airline industry is a customer oriented business, where empty seats mean lower margins, most majors (save for SWA), are back-end based. CEOs and executives come to their offices every day with the thought: how can we save money? Not: how can we get more customers? Granted, this biz is heavy on the overhead (those plastic fold up trays don’t come cheap).

The bottom line is that customers power the business. Ironically, up north, Air Canada is facing its second labor disruption this year when flight attendants voted 98% in favor of striking. Awesome considering we only have 2 major carriers to choose from (one of them being AC). In the meantime, I will have to suffer with stale peanuts and bitter employees. I will have to watch “Catch Me If You Can” and the upcoming series “Pan Am” to live out my flying fantasies.

Floyd Trujillo
Guest
Floyd Trujillo
6 years 2 months ago

One thing I am unclear of from the responses is the point several of you made about competing on price being unwise. It seems that when the discussion is on Walmart or the competitors who are losing to Walmart, it is about price. Certainly they are not known for having a good customer service experience.

Tony Orlando
BrainTrust

Airline travel sucks, period!

Now let’s get on to the retail lesson to be learned. Consumers have a huge amount of choices they can make in retail, and for the most part PRICE WINS! People will stand in line for over an hour to get out of a Sam’s Club or a Costco, because they want to save money, so in my humble opinion, the retailers will continue to find ways to cut out the extras, in order to stay competitive, and the higher-end niche retailers will give all the extras to keep the rich folks happy. Unfortunately, in my business (supermarket), the people with money want it both ways, and it is very hard to turn the profits from years past. Give great service with a smile, offer your best price to everyone (no loyalty cards), and always tell your customers the truth. You have to build strong trusting relationships with customers, one person at a time, and in the long run, they will remember how well they were treated.

That is my 2 cents worth, and hopefully it will keep me around for another 20 years.

W. Frank Dell II
BrainTrust

At 2.5 million American miles, I have lived every evolution of their program and seen firsthand the failure of most frequent shopper programs. Chains are big today and few have the personal touch, yet their frequent shopper program contains the solution. Simply greet your best customers by name at checkout. American upgrades me, sometimes out of the blue; this says they care. Let the customer know you care. For top tier customers, send them something when they least expect it. Keep the relationship going by showing they are important to you.

Ralph Jacobson
BrainTrust
Judging by the title of this article, Al didn’t head in the direction I was expecting. I was anticipating something along the lines of: Most airlines generate compelling reasons for frequent flyers to favor one carrier because of the obvious main perks (Miles and lounges). So, airlines actually have some of the strongest loyalty in the consumer marketplace … and they always have. As a multi-million miler, who once sat next to “Mr. #6” in American’s Aadvantage Program (he had more than 28 million miles), I can name endless stories, both good and terrible. However, I would still go back to my original point. How can retailers — of all kinds — generate the intense loyalty that most airlines command, rather than just giving their typical, mass, untargeted frequent-shopper discounts at the POS? Those same consumers will then go down the street the next week to the competitor when the promotions are more attractive. I’ll ask the question that begs, then. What can retailers do that would drive people to shop ONLY their stores? That’s the question that’s been plaguing the industry for decades. Airlines reward people with perks that don’t cost much. Stick them in an empty seat when… Read more »
Craig Sundstrom
Guest

I’m sorry to report that – save for a singular experience in Detroit – I’ve not had any “travel tales of woe” (actually I’m glad to have to report this, but it leaves me anecdotally impoverished). I see the service issue as (largely) a management failure: namely that managements can’t communicate the basic process of bad service > lower sales > lower wages/profits to the front line because they are spectacularly bad at communicating it (the “cost” of poor service) to themselves: Ryan’s (non)relationship with Delta says a lot.

Ed Dennis
Guest
Ed Dennis
6 years 2 months ago

The best way to motivate employees is to hire right. Don’t give in to quotas and quick fixes. You business depends on your employees — only accept the best! Southwest is currently the best Airline going. This is because it does not bury any consumer with expectations beyond what it can deliver. They know their business and execute it well. AirTran will be a challenge to integrate as their employees are a cut or two below the typical SW employee. I don’t know if you can coach them up as “attitude” seems to be their middle name. The key lesson for retailers is to spend their time and money hiring right.

Bernice Hurst
BrainTrust

Although I am loathe to say anything too nice about any airline, rarely having had more than a barely tolerable experience, the only one that consistently reaches even that level is Alaska Airlines. Especially flying into Anchorage. Crew are generally happy, friendly and helpful (even sociable) because they are generally going home. Passengers ditto either because they’re going home or on vacation. Retail lesson — encourage employees to feel part of the operation AND encourage them to communicate with customers.

My big question, though, is how come so many of you guys with more than a million miles haven’t used them???!!! Could it be because redemption (a word I use advisedly) is so difficult?

Richard Layman
Guest
6 years 2 months ago

WRT Ralph Jacobson’s comment about the “premier POS line” it’s an interesting idea, but it still depends on the nature of the particular business.

If it is true that the net profit for a grocery store is what, 3-5 cents per dollar, at $150 for your transaction, they are still only making $4.50 to $7.50 on you. (Even less if you’ve bulked up on promotional items where the margin is further reduced.)

There’s not a lot of profit margin there to be spending a lot of money on free 99 cent bags and extra personnel to serve you.

Yes, people say they want quality service in retail, but they spend most of their time searching out and patronizing the lowest price options.

There is room in the market for quality service options, but as we know, the segment isn’t very big and it doesn’t seem to scale well on a national footprint for single companies. (The retail co-op model is one way to help local businesses compete, but not necessarily differentiate.)

Bill Hanifin
BrainTrust

Having been in the air this week, I can echo two contrasts in the customer experience at major airlines.

1. The call center personnel are friendly and very helpful in arranging changes to flights and meeting other needs.

2. In-flight personnel are typically miserable, though there are exceptions. It seems the more the on-board announcements emphasize that the cabin crew are “here for your safety,” the less friendly they are providing cabin service.

I am more convinced each day that including employee groups in our campaign execution plans will unlock a new level of service across retail, airline, hotel and other groups. It’s time to make that change.

Mark Price
BrainTrust

Superior service is consistently driven by a sense of shared commitment and empowerment. When employees feel like they are not just a number and a body in a uniform but a valued contributor to an organization that trusts and cares for them, the customer can see the result as caring, thoughtful customer service. To do this, retailers must begin by offering to employees the kind of treatment that they want employees to provide to customers. If you treat employees like “idiots” who cannot think for themselves and cannot be trusted, you will receive the same treatment, in the end, for your customers — and who would want that?

My air travel tales of woe go on and on but are all driven by overworked employees in stressful situations who feel like the company has abandoned them.

Dennis Serbu
Guest
Dennis Serbu
6 years 2 months ago
1. Provide a pleasant environment to travel/shop. Airlines like United and Delta stuff you into a cramped seat and torture you for 3 hours. Your carry on goes into the overhead bin and your briefcase goes under the seat, leaving no room for your legs. I will take waterboarding over coach any day. Retailers should provide a good flow to their stores and ease the customer in and out with a minimum of stress. 2. Don’t bombard the customer with constant interruption of unnecessary announcement. Let them relax and shop. Airlines (Delta and United) have perpetual announcements about how many miles you earned and how wonderful they are to fly with. After the safety announcement, I want to work, read or sleep. United had the audacity on a recent flight to solicit signups to their credit card, complete with flight attendants handing out applications. Let your customers shop and browse. A couple of interruptions to make sure they are finding what they need is fine, but stop the bombardment of announcements trying to sell something. Minimize the sensory overload. 3. Make me feel important. Yeah, flight attendants deal with lots of people every day. So do retailers. Get a clue,… Read more »
Mike Osorio
Guest
Mike Osorio
6 years 2 months ago

The number of posts clearly indicates that the airline situation strikes a nerve with almost everyone. For most routes, the choices are few and the airlines know it. So in a financial model driven by high fuel and labor costs and meager profits dependent on pure price and supply chain efficiencies, it is no wonder that expecting anything other than arriving safely in your destination is futile.

On the retail side, the sobering reality is that a model built purely on supply chain and pricing efficiencies will deliver an awful experience over time. And unlike the airlines, there are usually other options and the customer will go elsewhere.

It has always been this simple: Retail interesting and innovative products in a compelling environment (virtual or physical), staffed by caring, knowledgeable people who love what they do. Hire for these talents (merchants, store leaders and staff alike), pay well, invest in development, and authentically engage them in the business. Unfortunately too many retailers over-complicate the formula and chase each other down the uninspiring product and price-driven path to boredom and irrelevance.

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