Austrian, surprise me!

I am writing this post for three reasons:

  1. To find forgiveness for a small act of revenge in a tweet
  2. To correct my behavior from criticism to constructive dialog.
  3. To help an airline change.

 The story about my revengeful tweet

Rainy September, late evening. I am surrounded by a group of strangers having late dinner at a hotel in the center of Vienna. All of us are here for the same reason – we missed our late flights and the airline company assured the dinner and accommodation. A young French couple is sitting at the opposite table. I can hear the woman talking to the waiter: “You want to say that we have the business class and now we have to pay extra for some cheese on my pasta?” The clerk’s answer is unemotionally neat and clear: “Yes exactly”. Cold and factual service is what I really got enough today. I’m taking my smartphone and tweeting the following.

It all happened when I was flying from Belgrade to Bucharest over Vienna. To make more productive the next day, I decided to take a less comfortable evening flight over Vienna instead of the direct one in the morning.

My flight from Belgrade was getting late in departure, and I missed the next plane. This was not the worst thing one could have experienced, but somehow I really felt that after that no one in the service chain really cared whether I would miss this plane or not. Moreover, I believe that I could have caught it if it was different. Here is the story about my perspective and suggestions on how Austrian airlines could have done it differently. I use the “#idontcare” (I don’t care) tag from my tweet as a synonym for the missing service experience.

 The First #idontcare at the airplane

Just after we landed to Vienna, while some of the passengers were still at their seats, I told the flight attendant that my boarding for the next flight ends in 20 minutes. She responded by telling me just to go through the regular procedure. Without any additional information – will I make it or not. At the time, I was sure by the tone of her voice and her expression, that she meant: “You should make it by passing the normal procedure”. It turned out lately that this was my first #idontcare that evening.

 If you won’t, competition will set standards for expectations

Second #idontcare I experienced was in front of the craft. While we were waiting for the cabin luggage, passengers to Frankfurt were invited into a van waiting aside. Some of us with tight schedules also asked the attendant about our options but we were told just to proceed to the bus and gates. The Frankfurt van only increased my expectation-perception gap. “This was the way I should have been treated” was the only thought that could have come to my mind.

Glass of wine Austrian flight

 Security check is part of your service too – sorry to tell you that.

Third #idontcare was at the security check. My time was running out when I reached it. I saw that there were perhaps just a few minutes to make it to the gate some 30 meters away. From my position in the queue I told the security person that my boarding is about to close. She just shook her shoulders and said that I had to wait. Some nice granny was the first to show some compassion and let me in front of her and her husband. However, the security check took it’s time with the second turn to pass my shoes through the x ray. I missed the gate closing for just about 4 minutes.

An airline might argue that security check is an independent organization not concerning them. I do not take that! Airport security does not take part of bureaucratic government agencies any more. I would not agree with an argument such as “This is under airport authority, and we are just an airline”. It is up to the airline to develop a business model that assures certain service level (with delivering on schedule as its minimum), by that I mean including the whole ecosystem – security, airports, cattering, check-in process, travel agencies, on-line booking services, and even (to go to extremes) air traffic control authorities if needed.

It is also about the way we associate brand with service: Austrian airline – Vienna – Vienna airport. Now tell me who do you associate the security service with. Got it?

Some airports do not require additional security checks when switching flights. Austrian airlines (ups sorry Vienna airport) does. Competition sets expectations (once again).

 The fourth #idoncare: at the service desk

When I reached the gate, the person standing there, just concluded that “The boarding is completed. You have to go to the service desk”, pointing to the nearby booth with 5 or 6 working places and 2 or 3 persons servicing clients.

Although short – maybe 6 or 7 people, the queue at the both was very slow. After 10 minutes, I started feeling uncomfortable: “What if there is a next plane departing in minutes? What if I’m missing it by standing in this queue, what if…”. The problem was I could not check any status as there were no displays in my sight, and I was afraid to leave the queue that was becoming seriously long behind me. A young woman cried because she missed the same flight, a group of people in front of me discussed about what they should do. After a long waiting, the group of people in front of me was serviced in seconds as they obviously stood in a wrong queue. Overall, at the service desk the “#idontcares” reflected in significant lack of information as well as indifference about the impact of the process on the passengers. While standing there, you feel blind, dump and not really serviced. Next time in such situation, I’d like to understand what is happening, how long will it take and what are my options.

Customer care around empathy and caring

The general #idontcare during my experience with the missed flight is the overall absence of empathy in all interactions in which I was involved with Austrian airlines representatives. By that I meant the Vienna airport and security employees also – sorry again. I do not blame Austrian for not having designed the customer facing processes around empathy. However, I do mind the ease in which I was left to spend the night in Vienna, without anyone even pretending to try to help or at least care.

 Austrian can you do that?

Finally by writing this, I am answering to the Austrian airlines tweet, I’m  investing time and energy to “co-source” the design of Austrian’s “#idocare” processes. To be honest, I’m not sure that it will make any difference. I suspect that this correspondence will remain just another check on a to do list of some “social media specialist” who did his or her job just by finally showing some compassion and care thus avoiding bigger harm to the image of the brand.

There are just a few companies which have the culture and the business model integrated responsive and actionable in the way that a client complaint would have made any substantial internal changes, and I’m really not sure that Austrian Airlines with its service ecosystem (the craft crew, the security check, the service desk, the lady at the gate, the airport stuff,…) is among those.

 Austrian Airlines, surprise me!

About my Commentary Printed in Harvard Business Review Jan/Feb 2011

I had an honor to have the edited version of my comment to Harvard Business Review case study “Preserve the Luxury or Harvest the Brand?” printed in its January / February 2011 issue. Here is the case…

I had an honor to have the edited version of my commentary to Harvard Business Review case study Preserve the Luxury or Harvest the Brand? printed in its January / February 2011. The commentary was part of the gojceta.com initiative and it is embeded in my web 2.0 “personal strategy”, which is partly described in one of my posts.

Snapshot from the Jan/Feb 2011 HBR

I posted the comment to the hbr.org community in October 2010 after having read the intriguing case study. The complete text is available in the Jan/Feb 2011 issue of the Harvard Business Review, or on the HBR.org. In short, the case was about an imaginary French winery Chateau de Vallois. Vallois is a typical family business with simple business model combining vineyards cultivation with wine making. They are traditional in producing high quality wines and selling it through the traditional channel which exists for centuries in Boreaux. The negociants are wine merchants that diminish the risk of wine placement, but take the majority of the sales margins in return.

The youngest member of the family, after her MBA study and engagement with a leading consulting firm, wanted to make some change and start branding and selling wine on a much larger scale, targeting lower market segments. The young women’s idea engaged the family into discussion. Others were concerned about Vallois’s ability to market, their capacity to go for large scale, the relationship with negociants and similar.

The authors of the case study Daniela Beyersdorfer and Vincent Dessain wanted to hear opinions about going with a more affordable wine or stay with exclusivity.

This was my original commentary to HBR.ORG Vallois case study

Personally, I would’t go from exclusivity to wide market. We learned lessons from different industries such as car producers or fashion brands where this was often a bad idea.

I would rather use an even more exclusive wine*, sold directly from the chateau as brand exstension. Brand extension is fair even if adding several percent to profits of a business. Let’s say, in this case a new wine would make only 5% of the total quantity. Its margins would be double than the usual shipments due to direct sales and would add a 30% due to exclusivity. In this case the 5% of the revenue could contribute with additional 13% to the margin, assuming their selling price as base price and that the new production wouldn’t generate excessive additional cost (vine making is their core business anyway).

The new brand extension with exclusive price, channel and quantities would be a lever to increase demand for other wines purchased by negociants. The 5% of the total quantity wouldn’t create problems with the lack of grapes and would not harm the negociant’s market, but rather increase the whole brand value through scarcity of the newly introduced wine. The new wine would allow the owners to gain marketing expertise and establish the new business model with a low risk approach.

*In the original text it stands “vine” instead of “wine”

What was my point?

The approach I suggested was keeping the family business set up, while giving them the opportunity to start building their sales and marketing capability. The approach with even a more prestigious vine brand, sold directly from the vinery, would have been focused on profits rather than revenues.

How did I reach the above calculation?

Negiociants used to resell Chateau de Vallois’s wines with around 100% margin. If the Chateau would have had produced additional 5% of a more exclusive wine with higher margin of 7 value points from 5 quantity units, compared to the 135 value points they gain from 100 quantity units through negocitants (supposed cost ratio is 80 value points per quantity of 100 for both vines), it would contribute with 13% of additional profit margin (7 of 55).

New prestigious wine Actual wine
Quantity units 5 100
Production cost (value points) 4 80
Price sold out (value points) 12 135
End consumer price (value points) 12 200
Ch. de Vallois margin (value points) 7 55

What did I mean by lessons from different industries where brands have eroded due to switching from serving exclusive segments to wide markets?

Different exclusive car producers have given up their exclusivity to address a wider market. Not many of them have succeeded. Instead, many have struggled for years to regain the original brand proposition. Some of the examples were Porsche’s front engine GT models discontinued in 1995, or Jaguar’s trip into middle class car production.

The CRM seminar redesing – the whys and hows

After several years, I’ll keep an open seminar on CRM. Read about the challenges and the approach I took to overcome them.

Some time has passed since I held my last open seminar on Customer Relationship Management. In the mean time I had some engagements on universities or in form of in-house education.

From my experience, open seminars are particularly challenging comparing to the other two forms of lectures. In-house educations allow precise matching the content to the audience. Thorough preparation and understanding of expectations of the audience can be performed before the actual education. Usually one or more preparatory assessments and meetings are performed. The company that orders the education is in most of the cases a fair candidate to be used in business cases.

Academic lectures, from the other side, usually have homogenous audience. The lecturer has to prepare more facts, is able to offer long definitions that students systematically write down. Faculty students are unfortunatelly, in general, passive in terms of expectations over the quality of lectures and speakers. This puts lower pressure on the lecturer, despite his decisiveness to invest time to gain the maximum quality.

Open seminars however attract people with very different expectations, mostly totally out of lecturer’s control. It does not help much even when put the maximum effort to understand each seminar attendant’s „why“. You will usually have 3 or 4 different homogenous sets of people within an usual group of 10 or 15. Here are some profiles from my experience:

Est. share Profile Their motivation
40% The general knowledge seeker I heard a lot about this CRM. I’d really like to learn more about it.
30% The CRM professional Let’s see what does this guy have to say that I still don’t know.
20% The project guy We are implementing the XY software, we will learn how to do it (usualy 2-3 persons from the same organization)
10% The victim of transformation My boss has sent me ’cause we have te fancy HR initiative in our organization, but I don’t care much about the topic. You don’t mind if I leave after lunch?

The bottom line is that you will never be able to make everyone perfectly satisfied with the content. Therefore I usually estimate which of the groups is dominant and then try to narrow the content for that group, without forgetting the rest of the audience.

My first open seminar after several years has some additional challenges comparing to the previous ones. The education provider (Institute for management / Istitut za menadzment) offers mostly soft skills educations such as coaching, fast reading techniques and creative writing. My CRM course stands out from the self–transformational and workshop–like educations. I estimate that the general tone given by most of the lecturers at Institute for management will impact expectations over my content and educational style. Therefore I have decided to adapt the seminar, making it more interactive with more usable material to take away. My next imperative, independent to the Institute for management’s clients, was to modernize the content, make it more attractive and up to date. So I’ll spend some time during te seminar on the Social Media role within CRM and I’ll open a discussion about a new CRM concept. I will share some of my thoughts about new possibilities of Web 2.0 enabled CRM development, which I call the in-the-product CRM.

The CRM seminar redesing

Wow, I’m looking forward to lead the course on 18.11.2010. at Institut za menadzment, Zagreb.

My Article on Organizational Gaps in CRM (translated to English), Banka magazine, March 2003

The article elaborates the problem of a “CRM organization” – the one that behaves in a consistent way throughout all of its ways of operation, including different departments, people and processes. Author has put a special focus on “non CRM” departments, such as fraud detection and collections, because those often forget to take part of an integral CRM ecosystem…

CRM organization and its gaps

If you will use this text for publishing or academic pursposes, be so kind to cite the author and source: Alen Gojceta, Banka, 03/2003. Thank you!

The main target of Customer Relationship Management is to provide consistent, yet differentiated, service based on one-to-one principle in all interactions, all functional areas and over all organizational layers to your customers. CRM starts by putting the needs of individual customers at the very center of the overall business strategy.

Mature CRM organizations are those rare that manage to provide an experience of a genuine, consistent and personalized service, simulating one to one relationship with their customers. CRM organizations acquire this kind of “CRM maturity” by a sufficient quantity and quality of collected customer data. They possess information systems that support “intelligent” interaction with a large customer base throughout business systems. Mature CRM organizations gain true acceptance of the corresponding philosophy in all aspects of their business operations including people awareness and adapted processes design. CRM is often emphasized to be a strategy, a business philosophy, rather than an IT solution. However, personalized relationship with each individual from a large customer base is achievable only by use of modern IT solutions. On the other side, it is important to understand that IT is just a part of a successful CRM story.

An often and among the most dangerous mistrusts is that it is enough to purchase a CRM solution to enhance the customer relationship. Well that’s not the whole truth. Data collection is only feasible through a lengthy and carefully designed process. Consistency in managing customer relationships is a matter of internal organization and the degree of the maturity of the related business processes.

Gaps of a CRM organization are caused by lack in managing internal business processes and missing to create a corporate culture that makes CRM an integral part of the organizational ecosystem.

The most common CRM gaps are those coming from the inconsistency of the organization itself. Simply put, they occur when CRM is managed by a separate department or departments within the organization. In such cases there is often no true intrusion of a CRM strategy throughout the organization. The “CRM departments” are usually marketing, sales or a specialized customer relationship (customer care, customer intimacy) department. Relationship with customers is not “painful” in organizational segments that are oriented toward clients by their nature. Problems arise elsewhere.

The obscure guys in the CRM team

Modern organizations often have obscure departments similar to police cells whose job is to identify and sanction “non-complying” customers. Unfortunately, these departments often maintain tradition of methods known from the time of economic system that where common throughout the world, regardless of the political system – the monopoly. One supplier and one attitude towards customers shorten to the phrase “you need us, we possess you anyway.”

The most common business processes that are managed by “anti – CRM departments” are fraud management and collections (collecting accounts receivables). Both business functions often take an integral part of financial and telecommunications industries, known as strong acceptors CRM strategy. What makes the difference between collections and fraud detection processes during the economic monopoly and today, during the era of CRM (open markets), is the starting point of observation of the resulting problem (potential fraud or unpaid obligations). CRM organizations start from exploring reasons of a customer behavior. On the other side, organizations with recurrence of monopolistic behavior begin with the assumption that they are always right, and that customer is the sinner who should be sanctioned.
The basic assumption to the selective and intelligent approach to the potential customer “sins” would be the use of information technologies that are an integral part of modern CRM system. In such scenarios, business intelligence tools can recognize potential fraud or debt. Given the user’s position within the CRM segmentation model, campaign management tools generate different messages (research or warning) or trigger different background processes (e.g. block account). The campaigns are carried by the interactive part of the CRM system, usually contact centers, and the results are forwarded to other departments such as finance or fraud management.

A mature CRM organization will, before marking a customer as a defaulter, check whether it is possible that there is a mistake made by them. They would check whether customer’s transactions where properly processed within the systems. When this is done, they would contact the customer to hear his side of the story, without anticipating the final result. Only after the verification call, the CRM organization will put the “carrot” aside and start threatening with “sticks” in form of activation of different methods of pressure or forced collection. Even when the user is actually “guilty”, CRM organization shall, before starting the “mechanism of force”, try to collaborate with the customer to negotiate a solution of mutual interest.

Comparing advanced CRM organizations that have succeeded in merging CRM philosophy with its own corporate culture and some unsuccessful companies in this regard, significant differences in the resulting relationships with customers can be noticed.
There are two most common reasons: (1) inconsistency in customer relations through the whole organizational structure and (2) the process mismatch.

A bitter experience

Everyday life is full of examples of how the experience in doing business with organizations that invest considerable effort in building advanced customer relationships can turn into a nightmare.

Recently my colleague from a neighbor country described his experience with one of their mobile operators. After he got married, his wife moved to the capitol, where he worked for some time already. When moving she required her bills to be sent to the new address. She notified the operator about her new family name. The change procedure was simple. She could have chosen between different channels of communication: Internet, fax, mail or telephone. She decided to use the Internet option, so she filled the form from the mobile operator’s portal. After a short time, she got a call from the contact center agent who wanted to verify the entries. The changed data appeared on the protected area of the internet portal.

The process was simple and perfectly comfortable. Her mobile operator was gaining credit. Everything was fine until the time when the first bill should have arrived to her new address. It was just not coming to the new destination. After ten days from the standard bill date, the woman decided to take the initiative. She sent an e-mail complaining to the customer care department. Right after, she received an answer that the bill will be sent soon to the new address. In the meantime, she began to receive SMS alerts. The new bill was not coming. After an additional 10 days, she noticed an envelope with the logo of her mobile operator put aside of the mail boxes in her building. She took a look at it, and there was her maiden name which was not located on her new family mailbox. She paid the bill with almost 30 days of delay, when she already started receiving severe threats of service termination. The next month the data was correct. On the envelope was her new family name, but her new account balance was showing properly accrued interest for the “delay” from the previous month.

Us or the client?

It is obvious that the young woman’s mobile operator, despite all the investment in modern infrastructure, was unsuccessful in aligning back-end processes. Collection and the customer service departments where simply not in sync. Detailed insight into such CRM implementation can reveal its false side. All processes that are important to support the CRM strategy arise from the needs of the mobile operator, rather than the needs of its clients. Besides a good contact center application and a convenient customer facing processes, in essence the mobile operator has cared only about itself. As a service provider their major concern was to force the customer to pay. They did not care about finding out who was to blame of the payment mistake, nor they shown effort to connect the logic of user complaints about the bill with the errors in the address directory and the penalty interest. The colleague’s wife remained faithful to the mobile operator despite the sad episode, but not without bitterness.
There are dozens of such examples on the market: a bank that accommodate their clients in leather armchairs at its branches while, on the other hand, they require travelling hundreds of miles from province to the nearest town to raise a loan; or the authorized car service with perfect kindness and state of the art customer processes with employees that forget to mention tax and cost of labor when proposing a service.
If you want to survive in today’s market by being desirable to your customers, then you need CRM, a business strategy which originates from the very top of the organization, merges all departments, and integrates with all channels of customer interaction. It’s a way of thinking embedded in all the pores of an organization, in all of its processes, including knowledge management and human resources, supply chain, partner relationships, as well as “customer punishing” processes such as fraud management and collections.