What the Customer Really Wants? – Part 1

OK, I know I am becoming a grumpy old man. As my appointment with the ‘Grim Reaper’ gets closer the more things in corporate travel seem to rankle. For example my pet hate at present is the strap line used by ACTE to promote itself.

It seems the three key things that most attract new and current members are to ‘be smart, be hip and be seen’. Now I can go with the first one but I think there are a few other worthy aspirations slightly ahead of being ‘hip’ and ‘seen’. I mean what is all that about? But I digress!

My diatribe today is all about ‘the customer’ and what they truly want. Now this is not easy as, depending where you dip into the supply chain, you get a different definition of customer. It becomes clear that each definition of the customer is more linked to who we want them to be rather than who they really are.

If you go to an airline like say American they are likely to say the traveller. Go to an international corporation and they would say we, the company are. Go to a TMC and they will say either or both depending on who makes the decision to appoint us and who has the strength to get us sacked. Go to the GDS and they will say ‘we buy/sell segments from and to airlines and TMCs so we don’t need to know.

Now let us assume for one moment that the traveller is the decision maker. In many cases this is fact. They may get influenced either strongly or weakly by their budget holding employers but hey, they can usually find a way around that. So what do they want? Simple you may think but I contend otherwise.

If you read the papers, magazines etc what everyone is interested in price. How do I get this cheap, who can give me the best price package, how can I get lower fares but better perks? The low cost carriers came along and thrived by undercutting the big established boys and the glory of cheapness became a reality. But hold on a minute, those low cost flights were on high density short haul routes and every time a transatlantic model was launched it failed. Does that say something?

It says to me that people are prepared to put up with most kinds of discomfort on little commuter routes but not when they are going any distance. Then the cabin gets cramped, the service poor and the food practically inedible. But despite all this the media and corporate hype is all about how all travel should be cheap and fares stripped down to their component parts.

The result is that although the truth of low fares is that they are in reality getting less available, the call for them is getting greater. It is also now on all routes not the one hour local shuttle service. So how do the mainstream airlines cope with this demand? They simply give the customer what they think they want in a base price but ‘nickel and dime’ the price up on ancillaries. Result? They are probably better off because they have also stripped out a load of service costs.

Unfortunately these extra services that have been removed out are the very things that differentiate them in the market place. They have also had a major impact on how they are perceived by ‘the traveller’. To me British Airways is a fine example of this although there are many more. BA has shed cost like a snake sheds skin. With all these customers supposedly wanting lower prices they either had to re-register as a charity or strip to the bone. They chose the latter and it is bearing dividends for them…in the short term, as the backlash is growing.

My mood was not improved last Sunday when I was reading the Sunday Times Colour Supplement. In it there was an article that was hugely critical of British Airways and its Heathrow hub. It self righteously condemned BA on everything from staff attitude to catering. I did not get a proper traditional English afternoon tea one interviewee bleated; another was depressed about meagre snacks and miserable staff.
Come on guys, you killed the airline BA was in order to create the one you say everyone wants.

BA simply charged too much for the modern world to stomach so what did they do?
They made themselves competitive by taking on the unions to reduce overheads, shed unprofitable routes, cut back on catering, and started charging for previously free services. And what do we do now they have become lean, mean and cheaper? We criticise them and mourn the demise of those dear little things we took for granted.

So is there a moral behind all this? I think there is. And the answer, in part was in the final paragraphs of that idiotic article. The piece listed all the things that passengers are supposed to want from an airline like BA (most were what BA used to do) and then it said on behalf of the traveller ‘We’ll pay – provided it’s good’ Wow!

So the traveller wants service after all? Maybe it is not universally about price? Could people really be prepared to ‘pay – provided it’s good? Your guess is as good as mine but in the meantime I suggest we could all take a good look at what we are turning this industry into and whether we are willing to pay to put part of it back together again – if it is good.

READERS FORUM

I would really like to hear more from you!

Reason being that I want to know if what I write is worth reading.
I am not actively seeking compliments (although they would be nice) but also comment/criticism too.

So if you are pleased, annoyed or anything in between please use the comment facility on this or any of the relevant blogs

I would also welcome statements an particularly questions and suggestions on any topic. Is there anything you want me to write about?

Also I have kind of slowed down my industry blogs but I am thinking of starting again out of frustration that nobody seems to be resolving the main issues. What do you think?
Be watching out for you and you are welcome to remain anonymous if you wish
Take Care and thanks for reading.
MIKE

RESPONSE to Who is the customer?
You bring up great perspectives in your comments Mike. Any business worth its salt can tell you who their highest yield customers are and who drives the decision making process for that customer. The TMC and the corporate travel department are key and if you don't count meetings and incentive travel, corporate travel makes up 25 percent of all travel in the US. When booked through the TMC, the average yield is significantly higher than when booked online direct with the airline.
With the order of so many new aircraft announced this week, you would think that American would be planning ahead on how to fill those planes profitably.
~ Chicke Fitzgerald, Founder and CEO, Solutionz

And

Excellent!
Warm regards,
Kevin Mitchell
Business Travel Coalition, Inc

Mike
I went through your blog today, read many posts and I found it very interesting and well written.
Keep up the good work
Kind regards

Daniel



Daniel Zetík

Who is the customer around here anyway?

OK, OK, I know. I said I was going to quit corporate travel and disappear into the mists of travel legend…or something like that. But it is so very hard! I am rather like Frank Sinatra was, or Michel Jordan is, where something happens which triggers off a new reason why the lure of starting again becomes too much.

The trigger for me was American Airlines president Tom Horton and a guest article he wrote for ‘The Beat’ on ‘Customizing the Travel Experience’. Right, it was the expected sanitized statement that had no doubt done the rounds of the AA public relations department before release but it made one thing screamingly clear to me. That is, who American Airlines think their customers are.

They are clearly playing their ‘customer’ card. In fact in a smallish statement of circa 800 words they had used the term (and derivatives) at least 15 times before I gave up counting. Reading the words of the article it is also clear that by customer they refer to travellers and the choices AA are offering these individuals. In contrast he used the word ‘corporate’ once (that I saw) and that was referring to ‘travel agents’ customers.

Does this matter? Is it a simple slip? Or does it show a complete lack of recognition, empathy, and understanding with the corporate travel world? After all, do corporations really want their travellers to have all these extra choices at an extra price? Do they want the lack of control that this brings to their travel policy? Do they want the extra expense taken out of their control for potentially both bookings and ancillaries?

Does it matter that the president of AA still thinks of such a key intermediary as a ‘travel agent’ when the corporate service provided is now Travel Management hence the correct and more accurate term TMCs. This may sound like splitting hairs but is it. Or is it more that? Is it AA demonstrating a worldwide apathy amongst airlines to accept that the corporate world is changing around them?

So what is this ‘customizing’ all about? To me it is about the airlines tweaking the evolving business market to their own advantage whilst ignoring the needs/demands of a major sector of their market. Is that such a surprising thing? Probably not but I cannot bear all this sugar coating around what is actually some very unpleasant tablets. Here are some examples:

We don’t want to pay the GDS any more even though it is the medium of choice for those ‘travel agents’ corporate customers. We do not seem to be able to renegotiate a deal with these GDS so let’s provide a direct product. OK it is not what corporates want but hey, think of the savings, the control, the MI and the ancillary selling opportunity.

We have been badly stung by the inroads ‘no frills’ airlines have made in our markets. Fares have gone down and their shares have increased, but hang on, there is an opportunity here. These airlines have reached critical mass to the point where they have to add more charges to maintain growth and survive. They are not the threat they were and we can now use their weapons against them. We too can offer basic core prices and then bolt on all those other ancillaries to mask the true cost.
It seems to me that corporations themselves are helping (or at least not hindering) such strategies. Corporations seem to like unbundling as it works in other spheres of procurement. But does it work in travel? Ah, that is far more complex and has greater ramifications in the supply chain. Cost has a habit of moving, not disappearing.

I suggest corporates need to have a much greater influence in the travel industry. Their associations need visibly shift away from their suppliers who they use to subsidise their costs through sponsorship and advertising. These bodies need to push their way to the table which is totally dominated by the major suppliers. They need to be heard and recognised.

Suppliers need to understand that the world has moved on and that the ‘customer’ in the corporate world is the company itself and not its employees. Those intermediaries such as TMCs are not simply booking travel agents but an outsourced arm of their corporate customer. Only then will we have a successful transition to a new model.