BA
So BA’s annual results are in and all is looking rosy. Profits for the year up to 31st March stood at £883m up 45% on the previous 12 months. But look closely at the gleeful exec board, look behind the champagne and streamers and you’ll see a hint of something a little less joyful in the back-patting boardroom. That, my friends, is the deep-seated, rather uncomfortable awareness that there are good profits and bad profits.
We all know it. Bad profits are measures to create additional profit to the detriment of long term shareholder value. Bad profit means you get a customer on a plane, but you neglect to worry about that customer’s impression of the brand. It is all about expectation management; if you charge a premium for service you have to deliver it. You can’t give a Ryanair service and charge a lot more. You have to remember that customers have a choice and in a recession, where we all have less money to spend, we expect more.
A national institution like BA should place far more stock in the mood of the public and bonuses should be dealt out in the context of customer service scores – not the FD’s. They should pick up bonuses if the net promoter score of the business has increased. The net promoter score of a business measures how much customers would recommend the business to other people on a scale of 1 to 10. A score of 9 or 10 makes them positive promoters. We did some recent research within the travel industry Emirates and P&O provide the most highly recommended experience to travellers, with a net promoter score of 32. Virgin also ranks among the top three with a NPS of 27. Companies who have higher net promoter scores make more money
And BA? Well, last year, BA flew in for 9th position with a NPS of just 11. I wonder BA would sit after the T5 fiasco? Next year, BA would do well to focus on what its customers think and then the bottom line will do pretty well anyway.
Tags: , BA, British Airways, profits
