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Imagine any organization faced with a crisis. Its stock price is down, employee morale is low and customers have lost confidence. Airlines and hotels are no different right now, given the way things stand. As consumers, we often underestimate our own power to vote with our wallets. If you’re unhappy with government bailouts or the way certain airlines are managing or mismanaging refunds, then it’s up to us how we chart the path forward.

Corporate Culture

On the other hand, airline and hotels have a great opportunity to make amends. However, a lot will depend on really who takes power and calls the shots. Will the corporate communications department be told to make sure that they ride this crisis without suffering a major blow to their reputation? Or will top level leadership take stock and ensure that the way forward is to change the corporate culture of these companies.

Harvard Business Review sums it up nicely in at the end of this case study on changing corporate culture. It shows why especially certain legacy airlines are having a tough time to change.

And remember that culture change only happens when people take action. So start there. While articulating a mission and changing company structures are important, it’s often a more successful approach to tackle those sorts of issues after you’ve been able to show people the change you want to see.

Politicians and CEOs are well trained to speak in public. They always sound correct as they talk about protecting small businesses or workers’ rights. However, how often do we see these policies in action?  If things still remain the same despite taxpayer funded bailouts, is this a crisis of leadership or corporate culture?

Quarterly Profits v/s Customer Lifetime Value

People start businesses so that they can make a profit. Without a profit motive, there wouldn’t be a good enough incentive to run a business. However, we’re seeing far too many companies being short sighted and focusing on the next quarter as opposed to real long term customer value. However, when a business cares only about the numbers, customers always end up as low priority.

Customer Lifetime Value or CLV is simply defined as the long term purchase value a customer brings to a business once a business invests enough in keeping him/her a loyal customer throughout the customer’s lifetime. Airlines and hotels spend a lot of money on customer acquisition costs. They offer lucrative promotions, co-branded credit cards and seasonal deals. However, how many really care about CLV? CLV is a concept that goes beyond customer acquisition. Airlines and hotels that focus on CLV going forward end up discovering something unique.

Firstly, customers who feel they’re taken care of by the business often stick around even when the business faces a few bad days. Secondly, customers are more likely to give a company a pass when a thing or two goes wrong if they feel that the business in general cares for its customers.

Making Amends

So how will Airlines and Hotels ensure that they thrive in a post Covid19 era? If they truly focus on CLV, they’ll have to first get a few things right:

  • Ensuring and communicating clear refund and cancellation policies
  • Providing elite customers with excellent customer service during this time
  • Increasing front line workers’ and customer service agents’ pay and benefits in order to first make sure they’re taken care of. If employees feel taken care of and have a positive attitude at work, they’ll pass on the positivity to each customer they interact with. Customers will see this in the form of superior customer service and build loyalty with the airline or hotel chain

We’re already seeing a wave of customer complaints in the way brands are handling this crisis. United is a prime example of a company that has irked some of its most loyal customers. On the other hand, Delta has handled it better. Hilton has done a much better job in communicating with its customers. They’ve walked the talk by also relaxing points and free night certificate expiration policies. Others brands have simply been cagey and are offering refunds and waivers based on a each customer’s situation.

The Pundit’s Mantra

The airlines and hotels that will not just survive but thrive in a post Covid19 era will be the ones that think beyond customer acquisition and quarterly profit motives. Once the customer enters to the door, what steps do we take to keep his/her business? When things go wrong, how do we take care of our most loyal customers? If we’re communicating our value proposition and USP to the market from a communications standpoint, how do we ensure that this gets implemented at an operational level?

Running any large business is tough and the travel industry is no different. However, Covid19 presents a two-fold opportunity. Firstly, organizations need to rethink about how they operate and plan for a crisis. Those who will re-emerge out of this crisis will be the ones who truly revamp the way they work and become more customer centric.

Secondly, customers need to start voting with their wallets. In certain cases, you may be a hub captive and may not have much of a choice. However, as customers, we need to start paying attention to businesses who truly respect paying customers. I’ve mentioned in earlier posts that like any relationship, loyalty is a two way street. If a company does right, we should applaud them and given them repeat business. If a company kicks you to the curb in tough times, we should make sure we switch our business.

Which airline or hotel chain do you think will emerge stronger out of this crisis? Let us know in the comments section.


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