Last week I had an interesting meeting with an airline CEO, whom I had coached into the universe of Customer Experience Leadership (CEL) some time ago. As we were both on vacations, we could afford the luxury to have an inspiring outdoor open-ended breakfast.
We went straight to the key question I knew the CEO was concerned about: how to differentiate his carrier from two fierce competitors that were always prepared to eat his lunch in the same, highly price sensitive markets.
He knew about the principles of Customer Experience Management (CEM), but after a couple of years he had come to the conclusion that customers only wanted cheap tickets and that employees could hardly be motivated to go “the extra mile” in an environment of outsourcing and downward pressure on salaries.
I knew that I could not come up with simplistic solutions. We took a dive in the pool to refresh our minds before starting to discuss his options.
To make a long story short, here are the three most important conclusions we reached:
1) Time has come for true people-CEOs
Decades ago, when safety was no longer an added value and deregulation started to put competitive pressure on the legacy carriers, the time of the “CFO-CEO” had come, replacing many old-school “pilot-CEOs”.
Today, the cost-reduction screw hardly allows any further substantial turns. The “CFO-CEOs” must give way to the “people-CEO”!
Neither pilots nor CFOs will lose their importance, but they are no longer the driving force behind the airlines of the next decades. In today’s “experience economy”, an organization must be able to produce highly specific value propositions for every customer.
However, VP Customer Experience roles are still created typically somewhere in the marketing or customer service limbo, without real power nor a mandate to change the organization.
In consequence, the evolution from Customer Experience Management to Leadership, is crucial. The CEO must be in the center of this Copernican change that puts the people (employees and customers) in the center of the corporate universe. Who else will produce the value, which customers want to buy? Who else will pay our bills?
My friend agreed to elevate the Customer Experience role to a C-level role under his personal and active sponsorship.
I recommended him to headhunt a very senior yet innovative executive with a high social and emotional IQ, not excessively conditioned by the airline industry’s inherited “truths” (those dogmatizing about what “cannot be done”).
2) Avoid the marketing trap
Marketers have a genetic predisposition to overpromise. Intelligent marketers know that expectations need to be managed actively. However, I shared with the CEO my experience that the best CMOs perform even better once they team up with a “Chief Customer Officer”, e.g. in a matrix organization.
Many “new generation” airlines have become very marketing driven companies. While this frequently provides some temporary relief from the commoditization threat, the value perceived by the customers (=expectation less actual service quality) frequently declines quickly. This is exactly what CEM/ CEL is called to revers by building bi-directional bridges to the customers and to “Operations”.
To avoid misunderstandings with his current, admittedly brilliant, CMO, we agreed to introduce the changes gradually, creating first a CEO staff position for the new CEL chief, set to be converted in a new C-level department once the CMO buys in. We both understood that CEL will not work if deployed against the traditional power cores of the organization.
3) Reinvent business partner relations
We both agreed that the global airlines of the future would be highly “virtualized” entities that subcontract everything, except their core competencies. These would include customer and investor relations as well as brand management, following the pattern set by other industries (such as the telecoms, which do not even operate their own networks).
However, the CEO complained about the difficulty to deliver a consistent branded experience throughout all touch-points of the customer experience journey as subcontractors, such as handling agents, do not share the same service culture.
There is no excuse for not managing actively the customer experience related processes and KPIs when working with a partner.
We agreed that this cannot be delegated or the purchase department – it’s CEL that puts everything into a context. We decided that the CEL chief will responsible for delivering all “moments of truth” in accordance to the expectations set for every segment, across all internal or external service providers.
CEL comes at a cost, but there is no such thing as “Return on Nothing”. However, the ROI on CEL can be spectacular: Doing it the right way will allow the airline to collect fare premiums, larger wallet shares and longer customer life cycles, higher ancillary product sales and free marketing through soaring NPS figures.
A final word on Technology:
Surprisingly, there are still few major airline IT systems that have integrated CEM/CEL into their DNA. Obviously, the proposed changes need IT support. CRM must become smarter to provide real-time service touch point support. Reservation systems must be connected more efficiently with loyalty programs to predict what the customer really values (and therefore is prepared to pay for). I am aware that new or improved solutions are not far off and will help the CEL chief to do his or her job.
Conclusion: are you aware of the cost of not making Customer Experience Leadership a driving force behind your corporate leadership and change projects?