Smisek article on loyalty in Hemispheres Magazine
Feb 1, 2013, 10:34 am
#17
Join Date: Mar 2009
Location: SFO, LAX
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Posts: 234
I saw this on my flight yesterday in the just published February edition of Hemispheres. It's from the "CEO Letter" column:
Ultimately, physical assets like planes or facilities or clubs can get competed away. Loyalty, however, is an asset that’s much harder to compete against. It’s our job to earn your loyalty by consistently delivering good customer service.
(Bolding Mine)
So it appears that (on paper anyway) Smisek is saying that he "gets it" when it comes to loyalty.
I tend to view loyalty towards an airline and their FF program as a two way street - a contract if you will. I'll bring you my business and even recommend you.
Ultimately, physical assets like planes or facilities or clubs can get competed away. Loyalty, however, is an asset that’s much harder to compete against. It’s our job to earn your loyalty by consistently delivering good customer service.
(Bolding Mine)
So it appears that (on paper anyway) Smisek is saying that he "gets it" when it comes to loyalty.
I tend to view loyalty towards an airline and their FF program as a two way street - a contract if you will. I'll bring you my business and even recommend you.
That mentality is the root cause of their current problems IMO, they are sending a strong message to remaining customers that they prefer small short term gains through CC and TOD type activities, and this is amplified by their failure to end the culture war between sCO and sUA elements.
Last edited by UA900; Feb 1, 2013 at 10:41 am
Feb 1, 2013, 10:44 am
#18
Join Date: Aug 2007
Location: Chicago: ORD, MDW
Programs: United Million Mile Flyer, Hilton Silver, Marriott Gold, DL, AA WN
Posts: 514
Everything this regime has done, commensurate with the 'all elites are equal' mentality and the 'you're in' program and the anti customer hostility and the devaluations of mp to remove over entitlement and the transactional model in which loyalty has no impact on any outcome.
However, it seems to me that the current management defines "loyalty" in only one way = full fare customer (in F & C especially) and big spender on credit cards.
The amount time spent in seats in the air, years of flying on the airline, total amount of dollars spent on air fare, etc. does not mean anything - unless it is being spent on Full fare F, C, Y, etc.
Too bad for most of us!
Feb 1, 2013, 10:47 am
#19
Join Date: Jun 2005
Posts: 4,645
Reading between the lines and considering what actions have been taken by UAL since the merger vis-a-vis elites, loyalty to SMI/J means delivering a consistent product on a clean, reliable airplane.
In his mind, once you start delivering a consistent product the masses will flock to the airline because of that - and of course, the network. Jeff doesn't believe he must spend anything beyond funding a customer service training program for all customer-facing positions and painting airplanes to build loyalty.
Given the erosion of Mileage Plus perks (i.e. the comments by the CFO about "over-entitled" FFs), the SMI/J calculus does not factor in the loyalty built by offering a reasonable FF scheme for customers who spend heavily. If it does, it is only a marginal benefit that he would rather not pay for. He thinks the average FF will continue to buy if the plane is clean and the FA doesn't sneer at them.
We'll see how the next 12 to 18 months play out. I think UAL's operation will continue to be pressured to deliver a consistently good experience and the disregard for MP may [hopefully] be SMI/J's undoing because the HVF will continue to attrit away to other carriers.
In his mind, once you start delivering a consistent product the masses will flock to the airline because of that - and of course, the network. Jeff doesn't believe he must spend anything beyond funding a customer service training program for all customer-facing positions and painting airplanes to build loyalty.
Given the erosion of Mileage Plus perks (i.e. the comments by the CFO about "over-entitled" FFs), the SMI/J calculus does not factor in the loyalty built by offering a reasonable FF scheme for customers who spend heavily. If it does, it is only a marginal benefit that he would rather not pay for. He thinks the average FF will continue to buy if the plane is clean and the FA doesn't sneer at them.
We'll see how the next 12 to 18 months play out. I think UAL's operation will continue to be pressured to deliver a consistently good experience and the disregard for MP may [hopefully] be SMI/J's undoing because the HVF will continue to attrit away to other carriers.
Response: Competitors are offering clean, safe, and reliable transportation too. Just FYI. That is not a competitive differentiator nor is it a customer retention strategy.
Last edited by FlyWorld; Feb 1, 2013 at 11:06 am
Feb 1, 2013, 10:57 am
#20
Join Date: Jan 2006
Location: Arlington, VA
Programs: UA 1K, AA PLT, SPG PLT
Posts: 1,612
So, let me get this straight:
1. One minute, Jeffy Jeff is talking about how great the 787 is and how it will change UA - with many videos and print discussions (same CEO column crap) about it...
II. There is rumblings about how UA is going to reach out to try to 'win back' business travelers without ANY mention of doing anything new or trying anything at all on an actual strategy of doing this...
C. Then, this February article, obviously after he's learned that their entire 787 fleet is shut down, writes about how the planes aren't that important and it's the staff and customer service that is the most important?
This guy has no clue at all, and obviously is running the airline down the drains...as for almost all clues since 03 March 2012!
-jeremy
1. One minute, Jeffy Jeff is talking about how great the 787 is and how it will change UA - with many videos and print discussions (same CEO column crap) about it...
II. There is rumblings about how UA is going to reach out to try to 'win back' business travelers without ANY mention of doing anything new or trying anything at all on an actual strategy of doing this...
C. Then, this February article, obviously after he's learned that their entire 787 fleet is shut down, writes about how the planes aren't that important and it's the staff and customer service that is the most important?
This guy has no clue at all, and obviously is running the airline down the drains...as for almost all clues since 03 March 2012!
-jeremy
Feb 1, 2013, 11:08 am
#21
Join Date: Aug 2006
Location: US
Programs: AA/UA/DL
Posts: 2,773
Now, his point is to improve the customer service while reduce on board service????
I don't get it???
I don't get it???
Feb 1, 2013, 11:10 am
#22
FlyerTalk Evangelist
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these guys are clueless.
Every day they're screwing over their 'loyal' passengers by offering ToD to nobodies. The awful CO-style customer service, rapidly degrading 'premium' dining experience, / and burn mentality to the FFP, Gold, Plat and MM's all say "go away".
If they were interested in trying to use the loyalty program to get people flying them again, there would be one of those mileathon like promos. But no, that's too expensive for $misek. The anecdotes about sales reps parachuting in with upgrades and e-certs just indicates that they are out of ideas.
Every day they're screwing over their 'loyal' passengers by offering ToD to nobodies. The awful CO-style customer service, rapidly degrading 'premium' dining experience, / and burn mentality to the FFP, Gold, Plat and MM's all say "go away".
If they were interested in trying to use the loyalty program to get people flying them again, there would be one of those mileathon like promos. But no, that's too expensive for $misek. The anecdotes about sales reps parachuting in with upgrades and e-certs just indicates that they are out of ideas.
Feb 1, 2013, 11:15 am
#23
Join Date: Jan 2008
Location: SF Bay Area
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Note he didn't say they earn loyalty by giving out undeserved benefits to deadbeat overentitled elites. He thinks he can earn loyalty by just offering "good service". I guess he thinks he's offering a product that customers will actually come back for on its own merits. Maybe the kettles who win the upgrade lottery and fly cross country on a TOD will remember their last experience and try UA again, but I think they're more likely to choose the cheapest flight just like the time before.
To get physical assets competed away you have to be competitive in the first place. UA is not. UA's got a long way to go to get anywhere near that.
And anyway, the whole premise of the article is fatuous. Service levels can get competed away just like physical assets, and frequent flyer benefits are a form of service he completely ignores (but that's his filter). UA found a model that worked, more or less . . . we put up with inferior service and subpar physical assets (especially international) in exchange for a pretty generous frequent flyer program. I think he's mistaken if he thinks he can undermine the benefits we received for flying on UA a lot and replace it with razzmatazz. But what do I know? I'm no CEO, I'm just a very experienced consumer of air travel.
It's easy to delude yourself way up in that boardroom, and on UA flights when you get fawning attention everywhere you go. Not everybody gets the "CEO" experience when on a UA flight. Although when you put it in quotes, maybe we all do . . .
Or even small spender on credit cards. You can get almost all the benefits of gold by spending $95/year on a MP Explorer card. Once you've paid the annual fee you don't have to spend a dime. As they say, "you're in".
As a disclaimer, I'll admit that I've gotten a Hilton card for the sole purpose of getting gold status for a similar fee, but it has virtually no effect on my stay patterns. It just saves my having to pay for internet and breakfast. If these guys think they're making money doing it, I don't see how. At least in the hotel case it's the chain collecting money at the expense of the individual hotels. I wonder if hotels get reimbursed for internet uses when I get it for "free"?
To get physical assets competed away you have to be competitive in the first place. UA is not. UA's got a long way to go to get anywhere near that.
And anyway, the whole premise of the article is fatuous. Service levels can get competed away just like physical assets, and frequent flyer benefits are a form of service he completely ignores (but that's his filter). UA found a model that worked, more or less . . . we put up with inferior service and subpar physical assets (especially international) in exchange for a pretty generous frequent flyer program. I think he's mistaken if he thinks he can undermine the benefits we received for flying on UA a lot and replace it with razzmatazz. But what do I know? I'm no CEO, I'm just a very experienced consumer of air travel.
It's easy to delude yourself way up in that boardroom, and on UA flights when you get fawning attention everywhere you go. Not everybody gets the "CEO" experience when on a UA flight. Although when you put it in quotes, maybe we all do . . .
I agree that loyalty is what a frequent flyer program is all about.
However, it seems to me that the current management defines "loyalty" in only one way = full fare customer (in F & C especially) and big spender on credit cards.
The amount time spent in seats in the air, years of flying on the airline, total amount of dollars spent on air fare, etc. does not mean anything - unless it is being spent on Full fare F, C, Y, etc.
Too bad for most of us!
However, it seems to me that the current management defines "loyalty" in only one way = full fare customer (in F & C especially) and big spender on credit cards.
The amount time spent in seats in the air, years of flying on the airline, total amount of dollars spent on air fare, etc. does not mean anything - unless it is being spent on Full fare F, C, Y, etc.
Too bad for most of us!
As a disclaimer, I'll admit that I've gotten a Hilton card for the sole purpose of getting gold status for a similar fee, but it has virtually no effect on my stay patterns. It just saves my having to pay for internet and breakfast. If these guys think they're making money doing it, I don't see how. At least in the hotel case it's the chain collecting money at the expense of the individual hotels. I wonder if hotels get reimbursed for internet uses when I get it for "free"?
Last edited by iluv2fly; Feb 1, 2013 at 1:34 pm Reason: merge
Feb 1, 2013, 11:22 am
#24
Join Date: Jun 2005
Posts: 4,645
Or even small spender on credit cards. You can get almost all the benefits of gold by spending $95/year on a MP Explorer card. Once you've paid the annual fee you don't have to spend a dime. As they say, "you're in". ... If these guys think they're making money doing it, I don't see how.
Feb 1, 2013, 11:24 am
#25
Join Date: Feb 2008
Programs: 6 year GS, now 2MM Jeff-ugee, *wood LTPlt, SkyPeso PLT
Posts: 6,526
This appears to be a new set of talking points throwing around the buzz works "loyality" and customer service. Jeff had this weird response on the 4Q call:
"It's a combination of things, it's not just the on-time performance and you need to be reliable and different levels of reliability above 80% have diminishing returns but it's really also its many different factors, it's also very important as the customer service and which is why we’re focusing so heavily on customer service this year as you know I mean you all fly. A good customer service can take even a delayed flight or a flight where there is an issue on board the aircraft a broken piece of IFE (ph) or something.
And good service can turn that into a really good flight, you can also have a perfectly on-time flight on a brand new airplane everything works and if you’re not getting good service it's going to be a crappy flight. So you know we’re also focusing very, very heavily on customer service both at the airport, on contact center agents with flight attendants and I think that’s and I think you can see that in our improving customer satisfaction scores and I believe those scores will continue to improve."
But given that they are further cutting BF meals and have made no changes to enhance the soft product, I think that this is all just buzz. They think if they can get their staff to smile more people will magically come back for the Jeff McMuffans.
I can't understand his concept of loyalty. That what he said was carefully written by some flack shows how out of it they are. Mentioning "loyalty" given how unhappy so many FFers are (and they know this) is just rubbing salt into the wounds.
100% agree. ^
I think he wants to have an airline (1) with DLs level of redemption awards/free trip benifits (2) lower quality/expense service and soft product than Delta (3) fewer upgrade than DL,and TODs, (4) a lower level (as said on the 4Q call there are diminishing levels of returns over 80%) of reliability than DL, and (5) sell it to folks due to network and a new plane (787) packed to the hilt with passengers. Competitive posturing or loyalty does not play a part in the calculations UA is making.
I see no plan to get folks back other than discounting corporate accounts and giving travel managers freebees. UA is going to ride it out and hope things magically get better. 
"It's a combination of things, it's not just the on-time performance and you need to be reliable and different levels of reliability above 80% have diminishing returns but it's really also its many different factors, it's also very important as the customer service and which is why we’re focusing so heavily on customer service this year as you know I mean you all fly. A good customer service can take even a delayed flight or a flight where there is an issue on board the aircraft a broken piece of IFE (ph) or something.
And good service can turn that into a really good flight, you can also have a perfectly on-time flight on a brand new airplane everything works and if you’re not getting good service it's going to be a crappy flight. So you know we’re also focusing very, very heavily on customer service both at the airport, on contact center agents with flight attendants and I think that’s and I think you can see that in our improving customer satisfaction scores and I believe those scores will continue to improve."
But given that they are further cutting BF meals and have made no changes to enhance the soft product, I think that this is all just buzz. They think if they can get their staff to smile more people will magically come back for the Jeff McMuffans.
I saw this on my flight yesterday in the just published February edition of Hemispheres. It's from the "CEO Letter" column"
(Bolding Mine)
[Mods - I pasted the entire column assuming that sourcing from a free UA publication would be OK on the UA forum. If not please edit as needed]
So it appears that (on paper anyway) Smisek is saying that he "gets it" when it comes to loyalty. Perhaps this is in response to lagging PRASM or maybe it is in line with what we've been hearing about increasing focus on customer service.
I tend to view loyalty towards an airline and their FF program as a two way street - a contract if you will. I'll bring you my business and even recommend you to my friends and coworkers so long as you treat me well and reward me well. Clearly that balance is starting to change across the industry. Hopefully this is a sign that he really does "get it" and will start to make changes that we actually do like.
(Bolding Mine)
[Mods - I pasted the entire column assuming that sourcing from a free UA publication would be OK on the UA forum. If not please edit as needed]
So it appears that (on paper anyway) Smisek is saying that he "gets it" when it comes to loyalty. Perhaps this is in response to lagging PRASM or maybe it is in line with what we've been hearing about increasing focus on customer service.
I tend to view loyalty towards an airline and their FF program as a two way street - a contract if you will. I'll bring you my business and even recommend you to my friends and coworkers so long as you treat me well and reward me well. Clearly that balance is starting to change across the industry. Hopefully this is a sign that he really does "get it" and will start to make changes that we actually do like.
Loyalty isn't driven by 'customer service', per se, in my opinion. It is driven by delivering a product, and added benefits that have value to the consumer.
The bolded statement sounds like further validation of everyone is equal. Frankly, the gap I am feeling with ToD's and etc isnt a customer service issue, it is an overt devaluing of the things to which we ascribe value.
The bolded statement sounds like further validation of everyone is equal. Frankly, the gap I am feeling with ToD's and etc isnt a customer service issue, it is an overt devaluing of the things to which we ascribe value.
Reading between the lines and considering what actions have been taken by UAL since the merger vis-a-vis elites, loyalty to SMI/J means delivering a consistent product on a clean, reliable airplane.
In his mind, once you start delivering a consistent product the masses will flock to the airline because of that - and of course, the network. Jeff doesn't believe he must spend anything beyond funding a customer service training program for all customer-facing positions and painting airplanes to build loyalty.
Given the erosion of Mileage Plus perks (i.e. the comments by the CFO about "over-entitled" FFs), the SMI/J calculus does not factor in the loyalty built by offering a reasonable FF scheme for customers who spend heavily. If it does, it is only a marginal benefit that he would rather not pay for. He thinks the average FF will continue to buy if the plane is clean and the FA doesn't sneer at them.
We'll see how the next 12 to 18 months play out. I think UAL's operation will continue to be pressured to deliver a consistently good experience and the disregard for MP may [hopefully] be SMI/J's undoing because the HVF will continue to attrit away to other carriers.
In his mind, once you start delivering a consistent product the masses will flock to the airline because of that - and of course, the network. Jeff doesn't believe he must spend anything beyond funding a customer service training program for all customer-facing positions and painting airplanes to build loyalty.
Given the erosion of Mileage Plus perks (i.e. the comments by the CFO about "over-entitled" FFs), the SMI/J calculus does not factor in the loyalty built by offering a reasonable FF scheme for customers who spend heavily. If it does, it is only a marginal benefit that he would rather not pay for. He thinks the average FF will continue to buy if the plane is clean and the FA doesn't sneer at them.
We'll see how the next 12 to 18 months play out. I think UAL's operation will continue to be pressured to deliver a consistently good experience and the disregard for MP may [hopefully] be SMI/J's undoing because the HVF will continue to attrit away to other carriers.
I'm wondering if the talk is even the appropriate talk to be honest.
He's said some things that acknowledges a level of deficiency; but will it actually address the loss of business flyers that are a core part of UA's revenue (besides trying to get corporate customers back)?
He's said some things that acknowledges a level of deficiency; but will it actually address the loss of business flyers that are a core part of UA's revenue (besides trying to get corporate customers back)?
Feb 1, 2013, 11:24 am
#26
Join Date: Dec 2007
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Wirelessly posted (Mozilla/5.0 (iPhone; CPU iPhone OS 6_1 like Mac OS X) AppleWebKit/536.26 (KHTML, like Gecko) Version/6.0 Mobile/10B143 Safari/8536.25)
So why'd you give my F upgrade to a kettle?
So why'd you give my F upgrade to a kettle?
Feb 1, 2013, 11:24 am
#27
Join Date: Sep 2003
Location: NTTB
Programs: UA Plat, Marriott Plat
Posts: 4,649
Smisek doesn't get it. He's let this airline unravel and when PRASM takes a hit, he comes running back. He rambles about network and fleet, but with respect to loyalty and customer service - he has no vision.
He walked by me a couple days ago on Adams St (across from Willis Tower) and I'm kicking myself for not engaging him on these issues. I didn't feel compelled at the time I saw him because I gave up on United about two years ago and have since flown American exclusively. In hindsight, I would have liked to engage him on a professional level.
Feb 1, 2013, 11:25 am
#28
Join Date: Jan 2008
Location: SF Bay Area
Programs: UA 1K MM, Marriott Life Plat, various others of little note
Posts: 2,763
Feb 1, 2013, 11:25 am
#29
Join Date: Oct 2006
Location: ANP
Programs: UA 1k, Marriott Plat, HH gold, Avis/Hertz Pres
Posts: 1,408
Now, his point is to improve the customer service while reduce on board service????
I don't get it???
I don't get it???
hahahahahahahahahahahahahahahahahahahaha
Im sorry Ill take LH with crappy customer service (UA now) over UA anyday due to the hard and soft product..
you sir mr CEO guy are a MORON!
Feb 1, 2013, 11:44 am
#30
FlyerTalk Evangelist
Join Date: Mar 2010
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Last month, we awarded $125,000 to our first set of 16 winning co-workers. The 16 corresponding customers who nominated them also won some great prizes, including roundtrip tickets and frequent flyer mileage awards. During the first nomination period, customers submitted more than 9,000 nominations.
UA transports about 150 million passengers every year. Even with bribing customers with prizes to recognize good service, only 9000 nominations were received?
Some possible reasons:
1) The recognition process is garbage and difficult to use
2) There are not many staff members providing good service (either due to attitude, tools, or policy)
3) UA has such a poor relationship with their MileagePlus Members that no one is interested in participating.
I tend to vote for all 3.