Why beating your customers won’t help beat the competition (part 2 of 3)

This is part two (part one here) of a talk I gave at the 2017 Travel Tech Con in San Francisco. I am very humbled to have had a chance to join the discussion alongside with some of the greatest industry leaders, such as Travelport, Amadeus, Skyscanner, JetBlue Ventures, Hipmunk and many more.

Alexander Sumin
Jul 22, 2017 · 4 min read

Now, I started out by saying that this wasn’t going to be a tribute to bad airline service, but maybe I lied a bit. I love it when airlines screw up. We built ClaimCompass as a platform to enable passengers to get some money when their flights are delayed, cancelled or overbooked. We’ve had tens of thousands of passengers turn to us for help, and so far in 2017 alone, we’ve had claims for over $3M. Note that our clients are in a sense somebody else’s clients — they turn to us after an unpleasant experience with the airline, which most of the time won’t even talk to them. This has taught us a lot about the importance of customer service and what we can do with it.

Airline service used to be the benchmark for all service. You were treated nicely, always got a meal, never had to pay to pick your seat and people even used to dress up for their flights. So essentially, airline service did this:

For those of you, who are not familiar with this image — this is a passenger, who got dragged down the aisle, after United overbooked the flight. Now, you may say that this was an isolated event that just saw some light because of social media. Okay. Let me just flip through a few headlines here, all from the past month alone.

and my favourite

A simple sentiment analysis of tweets to major US airlines shows that negative sentiment outweighs both — neutral and positive sentiment, by almost twice as much. For those of you who follow the airline industry closely, you may have read that consumer satisfaction in the airline industry has hit an all time high. That’s true. Last year, the American Consumer Satisfaction Index for the airline industry was up 4.2%. However, it still ranks at the bottom one third when compared with all other industries. People were more satisfied with the service levels at banks, data roaming services and hospitals than with airlines.

So there’s some work to be done here, and I think that’s the first high-impact challenge.

The second is marketing and user acquisition. How do you grow, how do you scale in an extremely uncertain environment? And that’s not only a challenge for startups, but for most businesses today. This is a graph by James Currier, which illustrates two things: first, new marketing channels are appearing at a much faster pace, and second — they are also decaying at a much faster pace.

What used to work 2 or 3 months ago, doesn’t necessarily work today. In fact, I’m almost sure it doesn’t work. And that’s particularly brutal in the travel space, where not only Expedia and Priceline — who together have something like 60 million in ad spend per year — but virtually everyone is after your audience: they have the money to travel, they are big spenders and are well connected. That’s the second challenge.

So, with all that I’ve said so far, there are just two simple points that I’d like to make:

  1. The dichotomy between service and marketing does not exist
  2. Success depends on the establishment and execution of customer-centric growth process
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