Performance Management Solutions

In this final blog on ‘customerization’, we take a look at the third major industry that has opted for this approach – the airlines

On a recent trip to South Africa, I had a very ‘customerized’ travelling experience. Instead of going to a travel agent, I surfed the web and found a site that provided an overview of all the airlines, their routing, and the schedules. This is, of course, what a travel agent would have done for me. Having selected a specific airline, British Airways in this case for ease of connections and the directness of the routing (only three flights in each direction), I surfed to their website to compare prices – again, a service previously provided by the travel agent. I then booked my tickets on-line, paid on-line and was sent an email that contained my electronic ‘eTicket’.

I then rang the travel agent and asked for their best price for the same route and found that it was exactly the same – I had, therefore, done all the work and received no financial benefit whatsoever. The airline, on the other hand, had received a benefit in that they did not now have to pay a commission to the travel agent.

Just under 24 hours before departure, I ‘checked in’ on-line and was able to print off my boarding pass for the first leg. I also ‘checked’ my luggage. On arrival at the airport, I had to deliver my bag to a special, but conveniently located, counter at which I came across my first human. Interestingly, she needed my eTicket and from that she was able to produce my long-haul boarding pass and the short-haul for Jo’berg to Port Elizabeth. So far so good. From my point of view, I had not been inconvenienced in any way and I had avoided the check in queue – all benefits to me that I valued.

At Jo’berg, I was reunited with my bag but then had to take it myself to a different part of the terminal to re-check it for the domestic flight. I felt I was doing what in early times the airline would have done for me as the bag was ‘checked’ all the way through to Port Elizabeth. This frustrated me until it was explained that the South African Customers and Immigration services did not man the Port Elizabeth airport and thus I had had to ‘enter’ the country in Jo’berg. All right, I could live with that easily enough.

There was a similar set of experiences on my return with the only major difference being that I was re-united with my bag in Belgium.

What is different about the airline’s ‘customerization’ in comparison to that initially offered by the petrol companies and the banks (see the two previous blogs), is that they overtly sought to change the customer’s travelling expectations by making it clear that by using the on-line services to do the work the customer had reduced hassle, reduced queuing, and this would make the whole ‘terminal-based’ experience a little bit better. They offered no financial benefit but travel has become such a hassle-filled experience the customer’s perceived benefit and changed expectations have allowed them to make the change to doing the work themselves without complaint. This is helped, of course, by the airlines coming much later to this and having learned from the experience of others – they also started their ‘customerization’ after people had become used to, even expected or preferred to use, on-line services. They also provided experienced and competent service personnel at convenient points.

So, what do the airlines get out of this – they certainly wouldn’t be doing it if there were no benefit to them? The most obvious company benefit is that they received their money far faster and far earlier than they would have had I booked through a travel agent – if every one of their thousands of passengers each day did the same, then they would be generating large in-flows of cash with which to support their cashflow requirements or even to utilise on the overnight bank lending market and thus generate large additional revenue for little effort or risk. The second obvious benefit to the airline is the reduced ground staff requirements – by my calculation, the reduction is around 20% and that will make a very significant impact on their staffing costs – possibly saving millions of pounds, dollars and euros each year.

There are some who conflate ‘customerization’ and reduced airfares and feel that the first should not happen without the second. This is to confuse the issue: the ‘cheap flight’ model (for example, Ryan Air or Easy Jet and there are many more around the world) requires customers to forgo certain services and to do things themselves so that the airline can offer cheap tickets – the cheap flight model is based on running a bus service rather than a travel experience.

All in all ‘customerization’, if positioned correctly and if the perceived benefits to the customer are valued by the customer, is good for the customer and for the business but it really does need careful handling and should never be an instant response to rising operating costs and the need to reduce overheads.