Switch Hack

Interesting to see that BA has attributed its nosediving fortunes of late to the rising fuel prices. Those of us with longer memories might possibly be tempted to add that, what has become universally known as ‘The T5 Fiasco’ could have had something to do with it. Particularly when you contrast these stats with easyJets’s news that their passenger stats have risen by 20% to 4.1m.

It will be a bitter pill to swallow for BA, particularly for those directors that just a few months ago were toasting boosted annual profits and big fat bonuses. The trouble is that there are good profits and bad profits – and BA are starting to see the difference.

Bad profits come from measures taken to create short term 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’s all about expectation management; if you charge a premium for service you have to deliver it. You can’t give a Ryanair level of service and charge a lot more. You have to remember that customers have a choice and in a recession, where everyone has less money to spend, we expect more.
 
A national institution like BA should place far more stock in developing the mood the public associates with it. Bonuses should be dealt out in the context of customer service scores – not the FD’s. Bosses should only pick up bonuses if and when 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 and found that Emirates and P&O provide the most highly recommended experience to travellers, with a net promoter score of 32. And BA? Well, last year, BA flew in for 9th position with a NPS of just 11.

It really is simple. If your customers are happy and recommend you – you make profits (and your planes don’t take off half empty). This could be the crucial difference between easyJet and BA. Put customers first and the rest will follow.

Another day, another gloomy profit announcement from the High Street.  This time it’s electrical retailer DSG, the company behind Currys, Dixons and PC World, which said its profits were down a third from last year, to £205 million.  Admitting what us customers have known all along, DSG’s Chief Executive John Browett highlighted that customer service in its stores was often poor, and this was one of the reasons for falling profits.  Pledging his commitment to reviving fortunes at the company, Browett has promised a fresh new look for stores and a crack down on poor service levels.  Not everyone is convinced (the City for one) but does the success of the retail industry really rest on customer service and will attentive staff with exemplary product knowledge really pull the industry out of the crisis it has found itself in?

 When there is a consumer boom you can get away with poor service, but in a downturn the customer is much more discerning and every pound spent is precious to them – they want to know they are getting value for money and this simply isn’t happening at DSG’s outlets.  Take Dixons for example.  You would be very hard pushed to find anyone who had more than a superficial knowledge of the products and you certainly wouldn’t walk out proclaiming the virtues of the retailer.  Now difficult trading conditions are upon us and there is little customer loyalty and no service differentiators for Dixons. Our research on advocacy and profitability shows quite clearly if you have low advocacy then poor profitability will follow and what’s more this effect is only exacerbated in a downturn.

 We can only take it as a positive sign that DSG’s new Chief Executive is going to concentrate on providing a new and improved direction of service.  But he must acknowledge that customer service is not something you can turn around over night. You can’t simply install ‘custserve V2.0’, push a button and walk away.  Browett must go back to basics and understand his customer and their expectations.  We don’t have time to trek down to the High Street every time we want to enquire about a new product and the retail industry must respond by re-focusing its attention on multi-channel, personal communication with the same level of high service across all touchpoints. 

We are of course still some way from an official recession, but it is commonly accepted that a country of consumers can spend their way out of a tough economic period.  Browett has a difficult task ahead if he is to hold on to his customer base and encourage them to part with their cash, but he is heading in the right direction and where better place to start than by teaching his shop assistants some basic manners.