I came across an interesting article with Sir Colin Marshal from November/December 1995. Despite it being almost 30 years old the interview, I think the struggles BA mentions are still struggles they have today. The interview is a long read, it's about 20 minutes to read. Have included some snippets in this post.
https://hbr.org/1995/11/competing-on...n-marshallHBR: How can a large competitor such as British Airways differentiate itself in a commodity services business that is so cutthroat?
Sir Colin Marshall: You’re always going to be faced with the fact that the great majority of people will buy on price. But even for a seeming commodity such as air travel, an element of the travelling public is willing to pay a slight premium for superior service. They are the people we’ve been trying to attract and retain as customers. We don’t just mean people who fly business class, first class, or the Concorde. Many service companies ignore the fact that there also are plenty of customers in the lower end of the market who are willing to pay a little more for superior service.
It all comes back in the end to value for money. If you can deliver something extra that others are not or cannot, some people will pay a slight premium for it. I want to stress that when I say “slight,” I mean precisely that. In our case, we’re talking about an average of 5%. On our revenues of £5 billion, however, that 5% translates into an extra £250 million, or $400 million, a year.
In industry after industry, companies seem to be competing mainly on cost and price. That certainly seems to be the case in the U.S. airline industry. What do you think of this approach?
I think it is flawed. Most of the major U.S. airlines have not been very innovative or creative. Compared with international flying anyway, the flying experience in the United States today is pretty ghastly. We’ve conducted extensive research with USAir and have very strong indications that many people in the United States are willing to pay a premium not to be treated like cattle. They want to be respected and rewarded for their business—and not just with frequent-flier miles, which have become a commodity, a price of entry into the market. We think we—through USAir—could revolutionize the U.S. airline industry and create an entirely new section of the industry. USAir is beginning to implement this strategy with its new Business Select service.
But our research shows that customers now take the basics for granted and increasingly want a company to desire to help them, to treat them in a personal, caring way. Fulfilling those desires is the centrepiece of how we wish to orchestrate our service.
For instance, we ask our crews not to load up passengers with food and drinks and then disappear—not for cost reasons but so we can create additional personal contacts with the customer. According to our research, just seeing crew members creates higher customer-satisfaction levels. Other airlines pile on the food and drinks so that their crew members don’t have to go back.
The goals are: “To provide overall superior service and good value for money in every market segment in which we compete” and “to excel in anticipating and quickly responding to customer needs and competitor activity.” These corporate goals have, in turn, been incorporated into our customer service department’s mission statement: “To ensure that British Airways is the customer’s first choice through the delivery of an unbeatable travel experience.”
When we found that many long-haul travellers felt poorly when they arrived at their destinations, we began our Well-Being in the Air program to help passengers combat fatigue and improve their circulation. It consists of healthful meal choices and a video demonstrating exercises that customers can perform in their seats. That’s relatively small. But we also designed a whole new service—our Sleeper Service—for First Class customers flying long routes: They can eat a real dinner in the lounge before boarding and change into “sleeper suits” (pyjamas) on the plane. Upon arriving in Britain, they can use our arrivals lounges, which are a major innovation.
Our research revealed that they thought that airlines, including British Airways, took their money and dumped them without a care. In other words, we were not filling a value-driven need.
With packaged goods, you can pull something off the line to test it periodically, and adjust it if there’s something wrong. A packaged-goods business has the most incredible market data available to it. It knows how it’s performing by store, even by positioning on the shelves in the store. That kind of reliable information is just not available in our industry or in service businesses generally because a service business is dealing with people’s impressions and feelings. They don’t actually buy an object; they buy an experience.
On top of that, a customer may have a bad experience because of circumstances outside our control—a flight delay caused by bad weather, for example, or problems with air-traffic control. As a result, it is often difficult to know if a complaint is the result of an isolated event—perhaps one crew just having a bad day—or a systemic problem.
It helped me realize that instilling a brand culture is very important in a service business because a service business is all about serving people, who have values, ideals, and feelings. It helped me realize that we needed to see the product not simply as a seat but more comprehensively as an experience being orchestrated across the airline. That orchestration was the brand.
We recognized that delivering consistent exceptional service was not enough—that service brands, like packaged-goods brands, need to be periodically refreshed to reinforce the message that the customer is receiving superior value for the money.
How does refreshing a service brand differ from refreshing a packaged-goods brand?
For consumer products, refreshing the brand may only require different labelling. But refreshing a service brand so the customer will really recognize the change requires something major. It can’t be something superficial such as changing the colour of the menus.
We also don’t wish to alienate those customers who choose to pay for First Class or Club by degrading the brand. Conversely, upgrading people out of World Traveller would not add value to that service and would detract from our ability to focus on the needs of those customers, which are very different from the needs of those who travel Club.
We also are trying to learn from customers by tapping a source of information that many service companies do not exploit fully: customer complaints, suggestions, and compliments. We have transformed customer relations from a defensive complaint department into a department of customer champions whose mission is to retain customers. (See p. 113,“Championing the Customer.”) Our goal is to make BA as approachable as possible and to respond to customers as quickly as possible, which again fits into our value-driven customer strategy.
If you react quickly and in the most positive way, you can get very high marks from the customer. Recovery matters as much as trying to provide good service, since occasional service failure is unavoidable in a business like ours.
We try to make it clear to employees that we expect them to respond to customers on the spot—before a customer writes a letter or makes a phone call. It’s an important focus in our training.
In addition, we expect senior managers to attend the customer-listening forums regularly, to take calls or at least listen in on calls that come into the customer relations department’s Care Line, and to discuss with our customer relations people the causes of and possible solutions to customer-service issues.
Employees need to understand why shareholder return is important, and shareholders need to understand the necessity of investments that produce a long-term payback. Customers must understand that in order to satisfy their needs ever more effectively, we need to have an enduring relationship with them.
From the customer’s perspective, the quality and value of the product are determined to a great extent by the people delivering the service. We therefore have to “design” our people and their service attitude, just as we design an aircraft seat, an in-flight entertainment program, or an airport lounge to meet the needs and preferences of our customers.
We also are working on a joint approach to information technology, which should provide the underpinning for a greater uniformity of customer service. For example, Qantas is switching over to BABS, British Airways’ reservation system; USAir and BA are combining their frequent-flier databases; and we’re exploring taking similar steps with TAT and Deutsche BA. This technology integration will allow us to share information on customers and costs, which will then allow partners in the network to take a network perspective when they make decisions about investments ranging from aircraft purchases to catering.
Our multinational combine will be able to be at the forefront of technological development, whether in the introduction of new large aircraft to succeed the existing jumbo jets or in the implementation of advanced ground-handling systems that will render the check-in queue, the delays in clearing immigration and customs, and the unseemly scramble for baggage upon arrival things of the past.
For example, some of British Airways’ North Atlantic routes have been flown by leased USAir aircraft painted in our livery, and operated by USAir pilots and cabin staff wearing our uniforms and delivering the authentic British Airways product.
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So, it was a good "interview", I enjoyed it, although it wasn't really an interview. Sir Colin was just given some free PR.
