Why beating your customers won’t help beat the competition (part 3 of 3)
This is part three ( part one, part two) 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.
There’s an unexplainable division between Customer Service and Marketing departments. When I used to work for a large airline, not only did Customer Service and Marketing not communicate with each other, they had no idea what each was doing, and were located in two separate buildings, 20km from each other. To me that’s wrong. If marketing’s goal is to acquire customers and grow revenue, how is customer service not an incremental part of it? What about customer retention, customer insights, referrals? How about identifying who your most profitable customers are? It’s as if Marketing’s ROI is easier to measure than that of customer service, hence, it gets a different treatment.

Look at the marketing funnel: as soon as a customer is acquired, the service and overall experience she receives is what determines how she will convert, how many times will she come back, will she tell her friends and family to sign up, etc.
It is 6 to 7 times more expensive to acquire new customers, than it is to keep existing ones. Instead, concentrating on the customers who are of highest value and already in the funnel provides a number of opportunities, like up selling and driving referrals. All this increases the overall LTV of your customers.
McKinsey reports that 70% of purchases are done based on how the customer FEELS they’re being treated.
And as we’ve seen with United, bad customer service reaches twice as many people as the praise for good service. So your effort essentially has to be twice as much on exceeding customer expectations than on simply meeting them.
Consumers are already telling us that they’re looking for a greater experience: American Express Surveys reveal that 3 in 5 Americans said that they would try a new brand if the experience is better. That’s 59%, not-so-loyal customers.
What does all this mean to travel? It means that experience is of crucial importance to the success of your business. And I’m not talking about patching up your funnel — I’m talking about building a customer-centric culture and experience in your brand, product and service.
The next thing is setting up and aligning your interaction and reputation channels. Simply put, interaction channels are the ones where your clients talk to you and come in contact with your brand. Those could be email, social media, face to face, phone, your website. Reputation channels, are the ones where customers share their experiences with the rest of the world — Trustpilot, review boards, facebook, twitter, bloggers, vloggers, etc. Are all these channels aligned in consistently maintaining the same message? Consider this in the context of travel and how powerful it could be.
What many of us tend to forget is that travel is still a big deal for most people. They are often excited, curious, nervous, anxious — they actively look for information, read reviews and request guidance. And after their trip, and going back to my earlier point of travel being experiential — they want to share it, show it to their friends, write reviews, etc.
The customer experience also has a direct impact on your sales model: the poorer the experience, the more effort and resources you’ll have to spend on your outbound sales, the more expensive your acquisition costs. Versus, a positive brand experience, where your reputation does a lot of the heavy lifting for you. There are companies, which rely almost entirely on an inbound sales model. Sure, we often hear of things like inbound marketing, but this could also be reputation and customer service driven.
At ClaimCompass, we built an API which we offer for free to our partners to monitor their flights so we can proactively notify their passengers when their flights are delayed or cancelled, so they can get some money. We’re currently talking to a major industry player who was an inbound lead. When we first spoke on the phone, he said “I’ve heard a lot of good things about you guys, so let’s talk business”. Note that we’re not the first company out there, we’re not the largest or the best funded, but in this case, our reputation outweighed everything else.
If we fast-forward and assume you’ve achieved something like a PMF — what’s your next goal? To scale. The point is to come up with a growth system, and stick to it. Something interesting happens when you do that: all of the sudden, you no longer look at Customer Service as a troubleshooting device. All of the sudden, the care for your customer is also about growth. It’s about retention, it’s about feedback, it’s about customer development, even.
So whether or not we make it, will depend on how well our growth system is set up and how well we’re executing it. And I’m sure it’s no secret to anyone in the room what that is: identifying high-impact areas, designing experiments, validating what works and what doesn’t, running these experiments as fast as possible and sharing the learning with everyone in your organization. I can’t stress how important that last point is — keeping everyone on the same page. Have you ever wondered why when you speak to some of the people at the car rental company or the airline sound like they hate their jobs, and they hate you even more? Well, that’s because it’s probably true: most of the time their jobs really do suck: nobody cares about them, nobody talks to them, they are completely disengaged from the rest of the company and feel like they have no contribution. But that’s not what a customer-centric company does. That’s not what Amazon, Zappos, Apple, Virgin Atlantic, WestJet or Southwest do.
“If we can arrange things in such a way that our interests are aligned with our customers, then in the long term that will work out really well for customers and it will work out really well for Amazon.”
Jeff Bezos
This paradigm shift will also have a direct impact on your KPIs and the metrics you track. Take online travel, for example. Traditionally, conversions are measured on a look-to-book ratio, which is cost-centric. One alternative could be measuring conversions on a revenue-per-search (post conversion), which is much more retention oriented and gives a better insight into the value of the customers vs. simply their volume.

So, we’ve moved through these slides and we’ve moved through time, from the age of manufacturing, the age of distribution, age of information and we’re now (I believe) in the age of the customer. The customer is ever so empowered and informed, which calls for a new set of customer-centric principles for growth:
providing remarkable experiences, responding to change, being conscious of individuals and interactions, being data-driven, running experiments, collaborating with customers, being transparent, rapidly iterating, gathering and implementing feedback and breaking out of silos.
Note how many of these are directly impacted by the quality and involvement of your service efforts.
Now, some of you may have recognized this set of principles as something called Agile Marketing, but that, I’ll leave to you.
