When setting corporate
goals, its hard to imagine that a CEO would sit down with a
management team and say, Lets focus the companys time, resources
and energy to ensure that we give bad customer service. But you
sometimes have to wonder.
Delta Air Lines, a
company facing overwhelming financial problems, also found itself
facing evidence that a notable portion of its passengers felt they
were receiving inadequate customer service when speaking to its
cost-efficient call centers in India. The issue became a popular
topic on Web sites visited by frequent flyers.
reaction was, in many respects, extreme. They sent an online survey
to select frequent flyers asking if they were willing to pay a fee
to have their calls routed to a reservations agent in the U.S.
instead of India.
It was extreme in
its tacit admission that it was considering the continuation of
what was regarded as low-grade customer service if a passenger
wasnt willing to pay an additional fee. It further implied that
Delta might not be willing to shoulder customer service costs for
even its best customers.
To get to that
management philosophy, the airline must be convinced that desperate
times call for desperate measures. In 2003, Delta claimed a savings
of $25 million per year in moving its call centers to India. Though
this represented a savings of a little under a fifth of 1% of its
total operating expenses, that incremental savings cut its losses a
significant 3% (it lost $773 million rather than a potential $798
But I suspect Delta
will pay a much dearer price than the cost savings represent. Its
profitable, low-cost rivals are riding on a tidal wave of passenger
love (JetBlues slogan is We like you, too.) Deltas management, it
would seem, is playing into their hands.
The Wall Street
Journal is reporting that Delta is considering service extras such
as leather seats on long-haul routes, also at a premium price.
Something comfortable to sit in as you mull over your resentment
about bad customer service.
At the other
extreme, I recently met Marcello Pigozzo, CEO of Caribbean Clubs
International. This is the company that owns The Beach House in
Barbuda, a 21-room property aimed at the upper-tier of luxury
travelers. He is in the enviable position of putting customer
service at the center of his business, rather than viewing it as a
cost to be managed.
Every time a
customer has to sign his name or fill out a form, he is working --
doing something to make our life easier, not his, Pigozzo told me.
The guest is supposed to be on vacation -- we are supposed to do
He has extended
this philosophy into every aspect of the hotel that he can think
A guest doesnt
stand in line at reception because there is no reception -- guests
are simply shown their rooms by service ambassadors.
They leave clothes
to be laundered in a pile on the floor -- the staff sorts and
counts it. Guests ask for a drink, receive it, and drink it -- no
need to sign for it.
And if theres a
billing dispute? Pigozzo shrugs. We take it off the
In Pigozzos case,
market conditions allow him to act in an extreme manner -- he is in
a position to command a price that makes it possible to put
customer service first. Likewise, Deltas market conditions allow it
to act in an extreme manner that would not otherwise be thought
Neither, of course,
has to take the path each has chosen. Pigozzo could run a
profitable company with a little less attention to its customers.
And perhaps Delta could run a profitable company with a little