Tag Archives: Costs

American Airlines’ Poor Policy Costs $75,000

A recent experience trying to get a standby seat on an American Airlines flight left me baffled.  What does it say about a company if they could treat you well, but don’t?  Does such a company value your business or take it for granted?


  • The plane had available seats.
  • I had a ticket on a later flight.
  • The gate agent said that American Airlines’ policy was that I couldn’t get a free standby seat.  (Not a friendly policy, but I can understand that they might want to charge a “change fee” to take a different flight.)
  • BUT adding insult to injury, the policy also prohibited the option of paying a change fee to take the earlier flight.  Huh?  Are they afraid they’ll run out of peanuts?

It used to be that customers could take an earlier flight, if space were available.  Now, even when space is available you can’t buy a seat?

From a customer experience perspective this policy is, well… stupid.  The policy is just as detrimental from a business perspective because customers have choices.  In this case, I walked further down the terminal to a rival airline (Southwest) and paid $250 for a ticket.  What did/will the policy cost American Airlines?

  • An unsatisfied customer who will relate the poor experience via word of mouth
  • A nominal change fee
  • Approximately $75,000 (future value of my air travel)

The pivot point is that companies should seek ways to serve customers and earn their loyalty instead of implementing policies that alienate customers.  Last I checked the airlines weren’t so healthy that they could look down their noses at customers.  But if American Airlines chooses to implement such a policy, then consumers can certainly choose to take their business elsewhere – I did and I will.

What companies have earned your scorn and lost your business?

Customers Willing to Pay for Exceptional Service

With each passing day, more and more evidence suggests that providing differentiated customer service is financially rewarding for corporations.  Are we at a point where the C-suite realizes that exceptional customer service can create a sustainable competitive advantage?  How will your company respond?

In the B2B space, a recent Finextra Research study showed that:

  • 68% of corporations would switch banks for better customer service
  • 57% would pay higher fees for a better customer experience

While in the B2C arena, a Harris Interactive study noted:

  • 85% of consumers would pay more for better customer service
  • 10% would pay a whopping 25% more!

Can executive management afford to continue to take a short-term view of their customers and their business?  Or are there still some who claim the way to improved stock performance is to cut costs at the expense of customers?  Taking that path has pitfalls (see below).  Question is… how will corporations respond?

That same Harris study suggested that:

  • 82% of respondents had stopped doing business with companies that provide poor service
  • 40% switched to competitors who had “exceptional” service

The pivot point is that during increasingly competitive times the fastest way to profits may not be acquisitions, innovation or cost-cutting, but in taking care of customers.  The numbers don’t lie.  Here’s hoping executive leadership will look up from the sand to take notice and here’s hoping Wall Street will give exceptional service its due.

Popular Posts in Customer Service

In honor of customer service week, highlighting my popular posts:

  • The Secret to Accomplishing More – It’s no secret that customer service departments, like all others, are asked to do more with less.  The secret (shhh), is companies that do a few things with focus, are better able to satisfy their customers than companies that do many things with mediocrity.
  • Snatching Victory from the Jaws of Defeat – If your company is like most you have problems with customer service.  Those problems may emanate from poor products, over-sold capabilities or legitimately bad service itself.  It makes sense to plan what to do when things look darkest.
  • Tea Leaves, Tarot Cards and Customer Service – Most companies think they know how their customers view them.  Most companies think they understand what their customers want.  Most companies are wrong.
  • Steps to Employee Engagement – I read a good post at HBR not too long ago whose premise was that if your employees don’t know what your company does, it’s unlikely your customers will.  Unfortunately not only do employees not know what the company does, they don’t know that what they do matters!
  • Cutting Costs vs. Saving Money – There is a big difference between cutting costs and saving money.  Although both are looking to free up budget resources, saving money is helpful while cutting costs is harmful to organizations.

Appreciate your feedback and continued readership… come across a topic you’d like more information about? Let me know!