{Airline Industry: Moving from Hospitality to Utilitarian Retail}

As I sit in a USAir flight from Charlotte to Denver, it dawned on me that the airlines are going through a transition from a hospitality industry to that of retail.

Earlier it was all about hospitality.  Hospitality included a greeting at the door, assisting the elderly to their seat, getting the customer a pillow and blanket, and of course offering refreshments that included food or snacks and beverages.

Somehow in the process of cost cutting, I see a classic case of death by pin-prick evolving.  First the free food disappeared to cut down expenses.  Then some financial genius measured the aggregate payload carried by an airline as a result of all the magazine weight, resulting in the higher fuel cost, and there went the extra magazines. Then went the peanuts and pretzels and the airlines started using captive hungry customers as a revenue generating opportunity by selling food. If that was not the first step to retail, I do not know what retail is!

As airlines move in this format, the big question is the evolving role of flight attendants.  Why do we need them to still greet us as we exit the airplane?  Why the farcical service of walking down the aisle with water once in a three hour flight?  Why not be consistent and completely be a retail service.  In that case the role of the flight attendant becomes more of an enforcer, similar to the ticket collector on a train. We do not expect the ticket collector to get us a pillow, do we?

To be consistent, put some vending machines on the plane, change the flight attendant clothing from hospitality aprons to service jumpsuits and simply offer great service, but don’t try to be in the hospitality industry.  Customers might appreciate the honesty.

Then, if some airlines want to stand out and offer hospitality the old fashioned way THAT would be a true brand differentiator!

{What do You Need to Provide Wow Customer Service?}

After I boarded the flight and sat down in my seat, the flight attendant brought me a glass of cold water.  The water hit the spot.  She saw me with my Taco Bell bag and came to me and asked, “Can I have it?” 

My immediate reaction was, “No it is mine.” 

She smiled at me and said that since I was in the first row I could not have stuff on my lap or in front of me.  She then took my salad and very carefully placed it in one of the stainless steel bins for takeoff.  I watched her closely and was not sure if I should approve of her actions.

As the flight reached cruising altitude and the seat belt lights turned off, she came over and opened my table for me and put a linen table cloth on it. Then she very carefully brought my Taco Bell salad to me with another glass of water. The white linen, the silverware, and the fact that I was the only person enjoying this salad made this a memorable dinner. Thank you, Taco Bell, for making it happen.

But the magic in the air was just beginning.  Mrs. Adams, the flight attendant, tied her apron tightly around her.  She took out a wicker basket and started arranging chips, nuts, and Biscoff cookies.  She arranged them in the basket with ultimate care then with a white cloth over one arm, she came to serve us snacks. I would have never looked twice at pre-packaged snacks on a flight, but her care and pride in the way she served them made me sample some nuts.  After she was finished with the basket of snacks she walked up and down the aisle making sure no glass of water, wine, or soda was empty. Her level of service and desire to make our flight a wow experience was no less than that of a renowned Nordstorm employee or a waiter in a high end restaurant.

I kept thinking about what the airlines provided for her to provide wow service.  Some chips, some nuts, some cookies, a basket, some linens, and a limited beverage selection that includes coffee, tea, water, soda and two kinds of wine. Instead of complaining about the airline not giving her the opportunity to provide wow guest service, she took it upon herself to make the best out of the situation and put customers first.

Wow Mrs. Adams. You were a simply amazing flight attendant. United Airlines should be proud of you and I am so glad that I got to experience your wow service.

{Store Closing Time: For Customers or Employees?}

In today’s tough economy, every store is trying to find ways to increase its guest count.  Sometimes, the smallest of gestures or actions makes a customer walk away.  What is worse is there are times we set an expectation to the customer and then disappoint the customer.  A disappointed customer of course is very unlikely to return.

Think about the store hours that are posted outside any store.  In today’s world customers can access store location and store hours from the web or their smart phones before making plans to visit the store.  How much of a customer base could be saved by simply swapping out a couple numbers on the front door of the store and on the website? I don’t suggest increasing labor costs by extending store hours. All I suggest is setting the right expectations to help brands retain more customers. The ZenMango Leaky Bucket study has consistently reported that an average of 20% of customers who leave a brand and don’t come back do so because of service.  When a store advertises a closing time then regularly cuts off customer transactions 15 minutes, even an hour prior to that time it disrupts the guest experience and frustrates the customer into choosing another brand. The store is effectively pushing its customers to try its competitors by closing early.

Let me put things in perspective with a series of events I recently went through at the DFW airport.

MY SEARCH FOR FOOD: At the end of my three day business trip to Dallas, the anxious-to-be-home, the road warrior in me got to the airport at 5:30 PM although my flight didn’t leave until 7:26. I headed straight for the airline lounge until the announcement came that the lounge would close at 7:00 and last drink orders at the bar would be served at 6:45.  It was nearly 6:30 and I was sure they wouldn’t feed me on the plane so I headed out to search for a grilled chicken salad before my flight.
 

Right in front of the lounge was a Taco Bell, but that evening I was on the hunt for something slightly more gourmet. I walked past the Taco Bell and came to a Mexican restaurant with a Grilled Chicken and Mango Salad on the menu. Perfect. I found an employee near a computer and before I could finish my request she told me they were closed.  Hmm, the sign in front said they close at 7:00 PM and my phone said it was currently 6:35 PM. I tried to reason with the person but to no avail.

My reaction: You baited me, you teased me, and then you turned me away.

MY SEARCH FOR FOOD (CONTD.): I quickly left the restaurant so I could find food somewhere else to eat before my flight left. I found a barbeque restaurant and this time I asked the right question.  “Are you open?”  

The lady behind the counter smiled and said, “Yes we are.”  I looked at the menu, spotted a chicken salad, and placed my order.

As I reached back for my wallet she interrupted me and said, “Sorry, we don’t have salads now. You can only get what we have here in the display.” I looked in dismay at the display. After some conversation with the employee I discovered that the restaurant stopped making food at 6:00 PM, an hour before closing.  In the last hour they try to sell out everything they have made.

My reaction:  Is there some unwritten rule I missed?  Am I doing something wrong?

MY SEARCH FOR FOOD (CONTD.): In sheer frustration I walked to my gate. It was nearly 7:00 PM, there was no chance for any food in my life that day.  As I passed Taco Bell, I decided to go and give it a try. The lady behind the counter was full of energy when I hesitantly asked if I could have a chicken salad, she smiled and nodded.  I was amazed as she took me through the ingredients and made sure I only had what I wanted in the salad. Then I asked her if I could add some extra chicken. She said of course, but it would add $1.25 to the order and asked if that was alright.  I gladly paid, and was very happy to receive my Taco Bell salad as I dashed to my gate. Third time’s a charm.

My reactions:  Wow that was unexpected.  I feel bad that I walked passed Taco Bell the first time! Will I get this treatment at every Taco Bell, every time?  Now that would be cool. I know exactly what I will pick up next time I am at the DFW airport.

When a store says that they close at 7:00 PM, shouldn’t that be the last minute they are ready to serve their customers with a complete guest experience? Are they not telling a customer that if you can make it by 7:00 PM, we will make it worth the trip?  Or does that mean that employees will leave at 7:00 PM and need to do all the store closing before that, effectively closing the store 30 to 45 minutes early?  The same way when we send a coupon out to a customer stating that it expires on June 30th, we do not decide randomly to stop taking it a week early so we can report accurately in the half yearly statement.  So why do we do this with store hours?

Closing early may be a great way to manage labor cost and reduce food waste and in a captive environment like an airport.  Hence the restaurant sales at the airport locations most probably will not be impacted by these practices, in fact the store may be more profitable as a result of this. But after this kind of “compromised guest experience” will the customer visit the brand outside the airport ever again? Was it worth losing all of a customer’s future business just to save 30 minutes of labor?  I think not.

MY SEARCH FOR FOOD (CONTD.): The story does not simply end here.  Still to come is my United Airlines flight from Dallas to Denver with my Taco Bell salad. You will be pleasantly surprised to learn how in an industry marked by cutting costs, one team member decided to stand up and provide a wow customer experience.

{The New Apple iPhone and Brand Insistence}

My daughter, my niece, and I woke up at 5:30 in the morning to get to Cherry Creek Mall on June 24th because the new iPhone came out.  Of course as a dad I did not want to miss the opportunity to get the first iPhone on the first day just to make my daughter smile.

We got to the mall at 6:15 and to my utter surprise, we were sitting in a line behind at least 100 people.  There were other dads and moms with kids, business professionals ready to go to office, young couples, people with colorful hair, and people from all walks of life standing or sitting in line. The Apple team was out walking around with bottled water, coffee, and breakfast from Einstein Bros Bagels. As I looked around I saw a few things in common among all of us. All of us either had an iPhone or an iPod in hand and some of us were sitting with Macs or iPads on our lap, but there was no one with a PC around. I am starting to understand that it was the coming out of the cult of iPhone followers. All of us could have waited for two weeks to get the new iPhone without any line or wait, but somehow all of us felt it was important to come out and show our support for the favorite “working toy” in our life.  Now that I get it, I am surprised that there was no one with their face painted; no banners or cheering.  I guess we, the iPhone gang, are a group of somewhat quiet introverts who were just happy to be there.

The store opened a few minutes before 7a.m. and iPhone sales started at 9a.m.  Even if I couldn't have gotten my iPhone that morning, I was glad I was there, out with my daughter and my niece, out with other members of the iPhone gang. I get it. This is what brand insistence is.  We were not there for a phone, we were not there for an upgrade, we were there to celebrate a way of life around our Macs, our iPods, our iPhones, and our iPads that we all discovered in our own ways. Marketing gurus may call it a brand insistence but to me it is truly a way of life.

{How a Lose-Win Strategy Can Help You Win Customers}

In the classical business model, we all say we want a win-win relationship. But is there such thing as a true win-win relationship? Isn’t there always an ending where one party feels that he/she could have gotten more?

But traditional marketers and operators as well finance team in organizations reject the concept of lose-win immediately.

Recently, when I was helping a few restaurant chains find the next big local store marketing idea, I suggested a series of micro-ideas. One of the micro ideas I proposed was:

A SIMPLE LOSE-WIN IDEA
Instead of approaching the high school athletic director and signing the school up for fund raising, why not target for individual students. Every high school student will arrive at the age when they are able to get their driver’s license. That means if we have two high schools in a trade-area, and each high school has a class of 150, then every year the restaurant has opportunity to “touch the lives of “ nearly 300 students in a very special way. So what was the recommended in store promotion? A student gets to eat for free with two friends on the week they get their first driver’s license.

WHY THE IDEA IS BRILLIANT (my personal opinion, of course)
This is a simple idea that needed no media dollars to promote. Successful implementation in the store is what one needs to spread this viral message.

Now why with friends? We all know that teens today move in herds, and there are hardly any occasions in which a teen goes and eats alone. Only giving the teen with a new driver’s license the free meal, and not their friends too, would fall in the win-win category and not lose-win, as the teen who eats free will be bringing business to the store as their accompanying friends have to pay. Teens will see through it and realize that this is another marketing gimmick, where, in other words, the store is promoting a much used buy one and get one free offer. That discovery completely takes away from the teen-connectivity to the offer.

Instead, an unconditional eat free with two friends offer is slightly bizarre in today's world, and the teens will be trying to figure out  the catch. There are no catches, and the no-catch part will make this deal an emotional connection for the brand.

So now that we have a teen with their two best friends enjoying a free meal at the store, the experience will be etched in the memory of the teen forever as “one of the cherished firsts in my life.” And in that cherished first memory, the brand gets planted in a unique favorable positioning.

REACTIONS

MARKETING GUY: How can I do this without capturing the information from teens? The promotion fails as students will come and take advantage of the offer. Effectively we will be feeding every school in the high school three times.
Marperations Response: Teens today build relationship on their very own terms. Instead of looking at the lost opportunity to collect teen information, this promotion is capturing a lifetime moment in the teen’s mind. The teen will think, “the day I got my first driver’s license, I ate free with my two best friends at restaurant xxx.” Isn’t that priceless?

OPERATIONS GUY: Can we do it at off-peak times only? I do not want more stress of ‘comping’ (meaning free food) during times when operations is stressed. Can't we do the new driver eats free IF a friend pays full price? And, what if 40 teens come the same week? That will really hurt that week’s sales.
Marperations Response: A celebration cannot have limitations. Offering this only at off-peak is very transparent, and teens will see that they are offered the special when the restaurant has surplus food. And the idea of friends paying full price is another way of doing BOGO (buy one get one free) offer and that is already there. That cannot be the gift for a special moment. And now about the unlikely event of 40 teens getting their license the same time, isn’t that a jackpot for the brand? The synergy of the positive energy will be more than individual teens coming on different days.

FINANCE GUY: This would result in a $15 loss or write-off per occasion. On an average we would feed every student in the high school nearly twice a year and that makes it nearly a $6000 loss. What is the ROI of the $6000 spending on LSM?
Marperations Response: Yes, ROI can be calculated very easily. All one needs to do is to calculate the lifetime $ that the teen will spend at different similar restaurants and then estimate how much this “special moment” will make the teen choose the restaurant. If this makes the teen spend $20 for just one month at the restaurant and assuming there were 200 students in the high school, every year this has the potential to generate $4000. And of course that is for one year. Hence the lifetime ROI of this well over break-even.

{Happy Team Members Make Happy Customers }

In one of my early projects in the corporate world, I built a team member satisfaction measuring tool for the company I was working for. As I built the questionnaire, I covered all areas from hiring to training, from on the job satisfaction to the role of the supervisor and compensation.  

Once the data was collected and broken down by region, I tried to correlate it to sales for each region but to my amazement, there was very low correlation. That seemed quite strange. Certain Senior Management members started questioning the need for the survey as it was not connected to the top-line key performance indicators of the brand. The reports generated on the project made their rounds among different regional VPs and then got put in their designated folders. I was quite bummed for not being able to provide the company with actionable data, or making the company feel that they can act based on the data.

Six months later, when I was between projects, I decided to run the correlations again. But this time I used current sales and compared it to team member satisfaction data collected six months back.  The results were simply astounding. The relationship was strong. Then I enhanced the model by putting monthly sales changes for the last six months and soon realized that the team member satisfaction data was a crystal ball, as it was the leading indicator of future sales.

I could not believe I missed this one. This was right in front of my eyes and I failed to see it. I remember growing up in India; my mother was a great cook. But on days she was upset, the food was not the same.  Of course my brother and I never complained, not because we did not want to complain, but complaints got us a few smacks on the head. In short, my mom, a great cook, could not cook to her full potential on days she was unhappy. So in order to get a great meal, our job was to make sure mom was happy, at least when she cooked.

That same lesson now was in front of me, on a bigger scale. I realized that only happy team members can make customers happy. Empowered by the new information, the team member satisfaction data found a new life in the corporation. As most of you can imagine, in the corporate world we judge today on yesterday’s sales, a trailing indicator. In that scenario, to be able to provide a system-wide and regional level leading indicator for sales is very valuable.

At the same I came across another piece of information. In most experience industries, nearly 70% of the reason for revisit (repeat sales) was the customer’s experience. The remaining 30% was marketing, branding, message and other factors.  And who controls the customer’s experience? The front line team members. Wow!  I realized we had information that would allow us to favorably influence the guest experience.

The next few months, I traveled to present the data to each region and would also do focus groups with team members to understand the drivers of the data.  Here are my top three big learnings:

1.   It is better not to ask what is wrong, than to ask and not do anything about it. 

Asking sets an expectation, and not doing anything creates an unfulfilled promise.  It is just like a relationship where earlier your spouse accused you of not asking him/her of how the day was.  Now that you asked and he/she is talking, you are accused of not listening (and not caring) as you were doing something else at the time.

Solution:  Within three months of collecting team member satisfaction data, all team members should receive the following:

a)      Top-line summary data so they feel included

b)      List of actions that will be taken

2.   Compensation is not the number #1 driver of satisfaction.

Of course fair compensation is necessary, and fair is defined by:

a)      comparable industry salaries

b)      salaries within the company

c)       incentives that reward performance

But what was more important on a day to day level was work place situations and interactions.

3.   Finally, team members worked for a person, not a company.

The data always has a strong correlation with how a supervisor treats a team member.  Hence when a team member decides to leave a company driven by dissatisfaction, the primary source of dissatisfaction is “how my boss treats me on a day to day basis.”

{Toy Story 2009: Where will America buy toys this holiday season?}

Let us take a stroll back in time to see how America has bought toys during the holidays in years past.

In the 1990s, Toy R Us was the category leader. The holiday toy sales started the weekend of Thanksgiving, with Toys R Us newspaper insert, in which America learned about the coolest toys of the year. Also in the newspaper insert was coupons for the hottest priced toys of the season. America used to wait in anticipation for the insert and then rush to Toys R Us. Toys for holidays was synonymous with Toys R Us. They were the information leader, the price leader and the “place to go” for toys.

In 1998 the toy industry had its first major shakeup. Internet was becoming more mainstream and America did not need Toys R Us to know what were the coolest toys of the year. Americans also did not need to wait till Thanksgiving to learn about the coolest toys of the year. And WalMart did the unthinkable.

WalMart realized that if toys can become a commodity, then the price leader will be the category leader. WalMart also realized the 80-20 rule, where 80% of the sales comes from 20% of the toys. In 1998, WalMart decided to extend its toy selection to carry top selling toys and discounted them right after Halloween, nearly four weeks before Toys R Us started their thanksgiving promotion. And when Thanksgiving 1998 came, a sizable part of the population had already purchased their toys. Toys R Us was ambushed.

At the same time, in order to grow the category, Toys R Us had launched Kids R Us and Babies R Us. Kids R Us eventually went out of business. Babies R Us still exists. But instead of trying to create three brands, Toys R Us should have focused on answering the question “Why Toys R Us?”

- Do you get toys that are exclusive to Toys R Us?

- Do you get toys released at Toys R Us before they are available anywhere else?

- Is the toy buying experience totally out of the world that kid must go there and no where else?

If it is none of the above, then a toy is a toy and buyers had no hesitation to go to the closest and cheapest retailer of toys. And WalMart had everything to gain as buyers went this direction. Another gainer from this has been the online retailers. For toy occasions that do not need an instant gratification, they started to become the best option.

In 2008, the toy war has gone to the next level. WalMart Announced in October its 100 Toys For Just $10 sales. Based on WalMart’s internal research, “70 percent of consumers report planning to start their holiday toy shopping before Halloween, and 2 out of 10 will have finished by that time,” (WalMartStores.com)  Toys R Us responded by “setting up 350 temporary stores and toy boutiques that will stay open during the holiday season, in many cases taking over shuttered retail space in shopping malls” (Wall Street Journal).  But what does this strategy mean? Is Toys R Us conceding the price war to the buying power of WalMart? Is Toys R Us trying to outplay WalMart by being the most conveniently located toy retailer? Even Toys R Us succeeds in becoming the most conveniently located toy retailer, they have to watch their marginal returns, taking into account the costs for the new 350 temporary locations. They also have to worry about branding. Will these new temporary locations be branded the same way as their regular stores or look like nameless pre-halloween retailers who pop up every year. If Toys R Us takes their eye of the branding, five to ten years from now, we will be telling our next generation about the magical toys store, with a cute giraffe as their icon, a magic land that simply became extinct.