CRM Comes From the Heart

My original column for this slot, written the first week of September, included both a title and considerable copy alluding to a fatal plane crash. The analogy represented the downward spiral of the airlines themselves, caused by their failure to practice any semblance of CRM--and not the fate of an airplane with passengers aboard.

But, many of the words and images were suddenly and sadly inappropriate. So I discarded it, set to write a replacement. Before I could begin, however, I read a news article in the Wall street Journal that made me reverse direction and retrieve, if not the column, at least the core message.

The article described the airline industry asking the government for a bailout--but not just to cover the consequences of September 11. The industry asked for a suspiciously large amount in the eyes of some in Congress and the Bush administration that appears designed to help bail them out of the financial straits they were in before tragedy struck. My original column was about those very financial straits, which I attributed to the airlines not practicing CRM's customer-centric strategies and customers now paying back the airlines for their lack of consideration and loyalty to fliers.

But the article made me realize that where the airlines were financially prior to September 11, and why, were still relevant topics. It described the first attempt that we're aware of to cash in on the deaths of so many through the misery of their friends and family. That reminded me of a fundamental rule of CRM: Remember to care.

This generation of airlines can't practice CRM as they've shown in so many ways that they truly don't care about their customers--or much of anything else, other than themselves. Nor can any other industry or individual company practice CRM that doesn't care about customers, about employees or about their responsibility to the public.

That's what I was wrote about previously. Here's the revised version:
Talk about turning the tables. What goes around, comes around. Whatever your favorite retribution phrase may be, what's going down in the airline business right now is painting a graphic picture of what happens when companies ignore CRM and the economic forces driving it.

Who'd a thunk it? The airlines ride merrily along, soaking up from business travelers $1,500, even $2,000, midweek for round-trip tickets to many cities. The business travelers grudgingly pay because they've got no choice. For their huge investment in tickets, passengers get stingy meals, surly service, and frequently late or cancelled flights. Oh, and sometimes their luggage arrives with them--although most business travelers are so terrified by airline baggage service they'd go without clean clothes rather than risk checking a bag.

Meanwhile, the airlines are blithely assuming that they have the business traveler by the throat. And when the economy starts to tank and business travel budgets get cut, what's the airlines' first reaction? Raise fares further to cover the shortfall and administer deeper cuts into travel agent fees to drive customers onto the Web (where airlines collect all the money). Shining example of partner relationship management, eh?

Then the economy really goes south. Suddenly, business travelers find Web conferences an acceptable substitute for many face-to-face meetings--especially training stuff involving flying people all over the place.

And just as bad for the airlines, perhaps even worse in the long run, savvy business travelers who fly a lot start going to the very Web that was going to save airlines commission money. There they search for bargain rates offered by carriers starved for traffic. Hey, frequent flyer miles and first-class upgrades are great, but not at an $800, $1,000 or even $1,200 premium. Especially when there's not a scrap of a relationship to make customers think twice before jumping ship (and frequent flyer bribery doesn't build relationships). Then the airlines get in such a financial bind that tacit agreements among airlines that kept major airline rates so high are falling apart. Isn't it great to see airlines reducing prices and reducing each other's margins in one fell swoop?

But that's what happens in today's business environment, where companies focus on pleasing stockholders and securities analysts at the customers' expense. The risks of customer retribution and desertion are much higher now, which is why we have CRM in the first place.

Thanks to a potent cocktail of production and service delivery capacity in most sectors rising faster than market demand, spiked with e-commerce options that give customers new channel choices and then topped with a dried-up economy, we've got all the makings of a buyer's market where customers, including business flyers, hold the upper hand. And economists don't see the switch from traditional seller's markets to newly created buyer's markets going back any time soon, regardless of what the economy does. That's very bad news for customer abusers like airlines who've grown arrogant after too many years--hell, decades--of telling customers how things are going to be.

So what's a poor airline to do faced with all these adverse conditions? Well, one thing they should have done--and there's a lesson here that applies to companies in many business sectors--is start building bridges with customers when times are good. Because when times are bad in a competitive business, and too many sellers are fighting over too few buyers, customers remember how they've been treated. They remember big-time.

What should airlines be doing going forward? Where do we begin? We could fill a book on that, but everything would come under one heading: You can't get from customers more than you give. Major airlines that don't start adding value to the business traveler's experience aren't going to see much of their lost revenue again. And we're not talking about adding value by spending huge sums the airlines don't have. We're talking stuff like rebooking passengers with missed connections, before they even land, on a later flight and on another airline, if necessary. Creating enough space between seats so that normal human beings can sit comfortably. Being honest with customers about late departure times, so they can rebook. You could probably add a whole page of improvements yourself--all of which would help retain current customers and win back old customers. But these improvements won't happen until airlines stop treating their good customers like load factor.

As I'm sure you've guessed, this message isn't for airlines alone. Many more industries are about to go through what the airlines are going through right now--increased customer choice leading to increased customer power that changes the rules of the game. Financial services and car sales are high on my list of prime candidates. Business software is another, including CRM software.

Businesses like those with long records of customer mistreatment had better be picking up those CRM headsets in a hurry. Switch from win-lose with customers to win-win. Build customer-centric strategies. Redesign work flow around customers. Carry out the new work flow with reengineered work processes. And yes, in the majority of cases, support it all with CRM software.

What'll happen if they don't? Hey, just look at where the airlines were--before September 11.