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Customer Satisfaction Strikes Out
"Can't anyone here play this game?" was muttered mid-season by baseball manager Casey Stengel as he watched his hapless 1962 New York Mets on their way to losing a major league record 120 games. With less "Stengelese," a spate of recent national stories describing poor or nonexistent customer service indicate that the '62 Met spirit of futility - minus the lovability - has been reborn in companies across the country.Pride in customer service, which was often touted as a corporate strategic goal in the 1990s, seems to have all but disappeared. The move to offshore customer service call centers took a lot of the blame, but even companies that haven't moved centers offshore now only seem to pay lip service to the idea of satisfying the customer.
As an example, let's take the airlines' promise to ensure that your suitcase will arrive at the same destination as you do. According to SITA, a provider of IT baggage tracking systems to the transport industry, some 10,000 bags a day were lost, stolen or misplaced by US airlines alone in 2005 - an increase of over 45 percent from 2003. Not surprisingly, lost baggage is the number one gripe of airline passengers. Warnings are already being posted to expect even greater baggage turmoil in the current season.
Why then - given that airlines have faced the fundamental business requirement of moving passengers and luggage together since they started regular passenger service May 2, 1919 - can't they get it right? As you might suspect, it is a combination of decisions made over a long period of time - ironically, often made to improve customer service - in which inherent risks were under appreciated that is now conspiring to undercut future customer service.
For example, with airline industry deregulation in 1978, most airlines decided to move from their point-to-point passenger service to a hub-and-spoke network system. Using hub and spoke not only allows airlines greater efficiency of resources but gives passengers more choices of destinations and flight frequency. This was a good thing.
However, to make hub and spoke successful, the baggage management systems (BMS) have to work very efficiently to transfer bags between incoming and outgoing flights. If the baggage systems don't work well, bags get left behind. Additionally, any small problem with baggage at one hub can cause huge problems at other hubs. SITA statistics indicate that 61 percent of baggage problems are caused by baggage transfer failures.
The airlines knew they needed to rely on automation of their baggage handling process to make the hub-and-spoke business architectural model work in practice. The volume of bags arriving and departing hubs is enormous - tens of millions at larger airports - making speed and accuracy of baggage movement essential. Also, automated baggage systems provided an opportunity to reduce the airlines' baggage workforce and physical resources like baggage tugs and carts required to move bags around, which went straight to the airline's balance sheet.
Unfortunately, automated baggage management systems are large scale, complex, electro-mechanical devices which sometimes break down. Luckily, it doesn't happen often (e.g., Frankfurt international airport's BMS has a 99.65% reliability rate), but when they do, they become major bottlenecks. Perhaps worse is that a BMS relies on reading the barcodes printed on individual baggage tags to track and route them to the proper location. Bar coding baggage was seen in the 1980s as a solution to the baggage tracking problem. However, barcode reader reliability is at best 70 to 90 percent in most baggage systems. This means that at least 10 percent of bags require some sort of manual intervention, which increases the probability that your bag won't make it onto the airplane. At Las Vegas airport, for example, some 6,000 to 8,000 bags per day have to be manually rerouted. Using radio frequency identification (RFID) technology to track luggage would decrease the baggage reading reliability problem to between 1 and 5 percent, but this would require massive investment by the airlines. Airlines have learned the hard way that the more the automation of infrastructure typically means less flexibility to adapt in the future.
While "good" customer service has been an oft-stated goal of the airlines, that sentiment seems only to arise when business is good. History has repeatedly shown that in times of stress, airlines are quick to reduce costs by reducing personnel, with baggage support often the first to be let go. The baggage system meltdown over the Christmas holiday at U.S. Airways, during which thousands of bags were stranded at its Philadelphia hub, is a prime example. Few airlines see customer care in general and efficient baggage handling in particular as a primary business discriminator - a dangerous view in a commodity business.
In 1999, under threat of congressional action because of continuing poor customer service, the entire airline industry promised to step up to the challenge. As part of that promise, every reasonable effort would be made to return a customers' checked baggage within 24 hours. SITA says the average lost or misplaced bag is returned in an average of 31 hours and climbing. You might notice that no airline has ever promised that they would make every reasonable effort to ensure each bag traveled with its passenger. As one airline executive said, "We know where it [your bag] is, but it isn't where it's supposed to be." Thank you very much - that knowledge makes us all feel better. Further proof is that the costs to U.S. airlines of mishandled baggage last year was $2.5 billion, and will be even higher this year.
In a nutshell, the airlines' business architecture, its dependence on information technology to make it work successfully, and its view of customer service as something separate from the former two, make it increasingly likely that your bags will not accompany you on your next trip. I would venture a guess that such an event would increase the likelihood that you will reconsider flying that airline again soon.
Unfortunately, many service-oriented businesses are mirroring the airline approach to customer care. Even though the effectiveness of their customer service is directly linked to their business model - which is dependent on information technology to succeed - customer service is an add-on. Product companies learned long ago that quality cannot be added in after a product has been designed - service companies need to think the same way.
Casey Stengel used to say that most ball games are lost, not won. The same is true of successful customer satisfaction.
Robert Charette is president of risk management consultancy ITABHI Corp. and director of the Cutler Consortium's ERM & Governance practice. He can be reached at charette@itabhi.com.
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