All the members of our team are big fans of cross industry learning -- meaning we find tremendous leverage in studying the challenges, approaches and strategies of other industries to gain unique advantage in our own industry. In our minds, the struggles of the major airlines to compete in a hostile economic and business environment provides a strong lesson in how important it is to maximize ROI in customer focused programs.
When The Going Gets Tough….
Great strategies often bubble to the top when companies are facing their most trying times. Apple is a great example -- when Steve Jobs returned to the fold -- he pursued a two pronged strategy that combined excellence in product design with a focus on total customer experience management. We all now know (every time we look around us and see Apple products everywhere) that that approach has now become a role model to many businesses worldwide.
As the bigger airlines struggle to compete in an increasing hostile business environment -- we're gaining insights from observing their struggles -- and they're useful for companies that are fortunate enough to be operating in less commoditized industries.
The Airlines' Struggle
Airlines are facing a combination of factors that are increasing the pressure on their attempts at achieving higher customer satisfaction and loyalty. The combination of tight margins, pricing pressure and high cost base are forcing the majors to not only shift their models away from pure price competition -- but also to achieve a laser focus on which programs / product enhancement will generate the maximum impact.
You'll notice that different airlines are taking subtle approaches to fine-tuning their customer experience -- ranging from different fee structures to creative frequent flyer programs. There seems to be a lot more inconsistency in pricing and packaging than at any time in the past.
Lesson For The More Fortunate
Those companies operating in less challenging industries have a different challenge -- to maximize returns and profitability. The laser focus applies again though -- by leveraging customer feedback -- pinpointing which service enhancement will have the biggest impact on sales will allow companies to deliver higher profits via lower investment in loyalty programs.
We won't call it willful waste, but many companies are caught in a trap of underutilization of capital. When they invest in programs, they often rely on internal judgement and wait too long to determine whether the programs are generating meaningful business impact.
Why not take a page from the airlines which have their backs to the wall and create greater pressure in your business to make sure every dollar invested in customer focused programs counts?