CRM eWeekly (e-Newsletter)
Cloud Dashboard (e-Newsletter)
CRM Featured News
CRM Across the Wire
Archived Best Practices Articles
Big Data CRM
Customer Service/Call Centers
Consumer Packaged Goods
Big Data CRM
Customer Service/Call Centers
CRM Buyer's Guide
Best Practices White Papers
CRM Evolution Conference
Customer Service Experience
What is CRM?
How to Advertise
Don't Burden Customers With Your Costs
Growth does not come from cost cutting, but from customer relationships.
For the rest of the January 2004 issue of CRM magazine please
Continental Airlines recently introduced a new policy in its frequent flyer programs. Beginning this month Continental passengers who fly economy class will be penalized: They will receive only a fraction (25 percent) of the actual miles flown. But if they fly full-fare economy (does anyone do that anymore?) or book on the airline's Web site, they will be awarded full mileage credit. By doing this Continental has joined a long list of companies that fail to understand their customers' experiences. As such, the new policy will most likely generate the opposite effect of Continental's desired outcome. The past few years brought to passengers more choice in the form of lower-cost airlines. More corporations are placing pressure on their employees to travel with those airlines instead of Continental or any of the other established airlines. Passengers are resisting the pressure, citing their mileage accounts as the last frontier of perks to compensate for the hassle of travel. Continental just took away the last excuse that passengers had to stay loyal, and pushed them straight into the hands of the discount airlines. For 25 percent of the actual mileage flown, it is not worth the fight inside the corporations. Customers will choose other battles instead. For busy travelers with a complex, heavy travel schedule, the travel agent is their lifesaver. They have grown to trust them to save the day after flight cancellations or with last-minute itinerary changes. Asking the customers to drop travel agents in favor of online booking is another failure to understand the customer experience and what is important to them. Unless Continental is planning to provide similar personalized service, it has no right to ask customers to stop using travel agents. Full-fare economy is a fare that does not exist in corporate travel. Continental's own sales force is providing discounts over full-fare economy prices to win corporate accounts. Yet the company penalizes the passengers who are now supposed to fly on the negotiated rates. Even if a passenger asks for a full economy fare, his company's corporate policy will not allow it. Here is a case in which Continental has set the stage and then penalizes its desired passengers without understanding their customer experience.
The new Continental policy is proof of how the recent cost-reduction trend has blinded some companies to their customers' needs, and of how customers are now the main bearers of the cost reduction's consequences. This new Continental initiative is just one sample of similar cases in which companies fail to understand their customers' experiences and design their value proposition accordingly. The newly desired corporate objective is growth. Growth does not come from cost cutting, but from customer relationships. It is time for companies to stop making customers bear the cost of their internal efficiencies and start delivering differentiated, premium-commanding experiences that will bring customers back.
Lior Arussy is the president of Strativity Group Inc. and the author of
He can be reached at firstname.lastname@example.org
To contact the editors, please email
Every month, CRM magazine covers the customer relationship management industry and beyond. To subscribe, please visit
Analytics Give Companies Important Competitive Advantages
Drive High-Velocity Selling Through Salesforce
Repsly Enhances Mobile CRM and Data Collection App
Yieldify Launches Predict and Convert
Other Sites from
Database Trends and Applications
Faulkner Information Services
Smart Customer Service
Streaming Media Producer
Delivering Certainty Through In-Depth Analysis of Enterprise Technology, IT, Marketing & Media Trends
Coming August 30th: "Extreme Call Deflection: Utilizing your Digital Arsenal"
While the phone still remains the most popular safety net for customer service, it's not the consumer's first choice. Today, 64% of consumers begin their journeys online, and over 70% will seek live agent assistance if they can't get what they need done on the website. Register for this free webinar and you will learn how to deal with extreme call deflection.
Coming September 7th: "Outperform Through Analytics: Understand Your Business, Optimize Your Resources, Satisfy Your Customers"
Join this webinar and learn how Qlik helped HDFC see the whole story within its data, increase end-to-end understanding of its business, and better leverage resources, resulting in cost savings, reduced customer response times and improved satisfaction, and increased growth, making HDFC Life one of the top private life insurance providers in India.
CRM Topic Centers
CRM Industry Solutions
© 2000 -