Relationships Matter
A recurrent, but not universal, theme at the ACTE global conference in Las Vegas earlier this year was the importance of relationships. Former Secretary of Labor Robert Reich identified “relational capital” as one of the four vectors of change needed to transform the airline industry. In a panel discussion hosted by airline industry analyst James Parker, the CEOs of Frontier, AirTran, Southwest and JetBlue proclaimed motivated employees and superior customer service as key competitive advantages that the low-cost airlines enjoy over the network carriers. A senior executive of Delta Air Lines did not touch upon the theme of relationships, choosing instead to focus upon revenues, expenses, geopolitical forces and the structural challenges facing the airlines, which will likely take years to surmount.
Without diverting attention from the economic crisis that they face, the network carriers must expand their focus to include the relationships with their corporate customers. The benefits flowing from a renewed commitment to customers may be significant, are within the control of the carriers and can be realized almost immediately. Moreover, infusing the relationships with a human element will help prevent the complete commoditization of corporate travel. Although customer service at the passenger level is also of critical importance, the discussion that follows will examine only relationships at the travel manager—account representative level.
How can an account representative from an airline enhance customer loyalty? Opportunities abound, but perhaps the most apparent one involves the provision of information. The chaotic rate of change within the travel industry requires travel managers to be vigilant and places a premium upon timely information about industry trends. Whether the information concerns an impending reduction in service to a key market or the exclusion of lower classes of service from a customer’s corporate discount, account executives are the first to know of the change. Access to this key information affords airline account executives the opportunity to serve as quasi-advisors to corporate travel managers, without compromising their allegiance to their employers, the airlines.
How can account executives strike this delicate balance? The simple answer and, indeed, a prescription to improving customer relations in most any field, is to be forthcoming, to be direct yet personal, to see the problem from the customer’s perspective and, if circumstances allow, to present the news with recommendations for adapting to the change or mitigating its financial impact. In short, the savvy account executive must create a “good” from oftentimes negative news.
To illustrate the application of these salutary customer service principles, consider the near-industry-wide decision to remove Q, L, N and V fares from corporate discounts under preferred carrier agreements. This decision constituted a unilateral change to the preferred carrier agreements that would have an adverse financial impact on most corporate customers; predictably, it was not well received. How should an account executive have handled this situation?
As soon as the airlines approved the dissemination of the information in question, the account executive should have called or sent a personalized letter to the corporate travel manager. E-mail is a wonderful, timesaving technology but is impersonal and, in most cases, an inappropriate medium for delivering news of this nature. In any event, time was of the essence to avoid having the travel manager learn of the news from a third party. The ideal would have been for the account executive to schedule a meeting with the corporate travel manager, a gesture that evinces an appreciation of the seriousness of the problem and a willingness to work together to address it.
Prior to meeting with the corporate travel manager, the account executive should have done his or her homework. Of particular value would have been a quantitative analysis of the likely impact of the proposed change on the corporate client. To the extent that the burden would fall disproportionately upon a particular division of the corporation, the account representative should have highlighted, and devised a plan to correct, this asymmetry. These are the precise exercises that the corporate travel manager would ultimately have to undertake. Assisting the travel manager in this fashion would have both garnered goodwill and accelerated the implementation of the revisions to the corporate agreement, which would redound to the benefit of the airline.
As part of the quantitative analysis, the account executive should have underscored the extent to which published fares fell during the months preceding the change in policy regarding Q, L, N and V fares. If, from inception of the preferred carrier contract, published fares dropped 35% on average, and the corporate discount which would no longer be applicable to the lower bucket of fares was 40%, a compelling argument could have been made that the net loss to the corporation was 5% rather than 40%. But that fact, alone, would probably have been insufficient to assuage the corporate travel manager.
The corporate account executive should also have suggested ways of mitigating the effects of the change. Adding fixed fares for some of the affected markets or offering a UATP account to soften the impact of unused, non-refundable tickets that would otherwise have been forfeited are two possible ways of helping “sell” the change. This is not to suggest that the account executive should have offered benefits equal in value to the added revenue anticipated from removing the lower bucket fares from the corporate discount, but rather to admonish that achieving 75% or 80% of the increase in revenues, and garnering goodwill in the process, would be the ultimate victory.
How many account executives manage their customer relations in that fashion? My experience representing corporate travel managers suggests that the numbers are relatively small. More common is the “us” versus “them” mentality, with bad news being delivered in an impersonal manner, along with a deadline for capitulating to the changes. The opportunity to help the travel manager navigate increasingly difficult times is squandered and the situation exacerbated by inept customer relations.
Industry data suggest that corporate travel is rebounding from the anemic levels of the past two years. Airlines are embarking on the daunting task of paring labor costs through work force reduction and wage concessions from the unions. The industry will likely contract, initially through codeshare alliances and, eventually, through the failure of some carriers and the consolidation of others. The confluence of these and other forces will someday result in a mature industry poised for profitability. It would be a grave error for the major airlines to wait until that time to start fostering relationships with corporate customers. That process must commence now and continue without interruption. In short, the network carriers must be mindful that theirs is, to a large degree, a customer service business to which age-old customer service principles apply.
