United broke more than a guitar, it also broke Francis’s first law of competitive differentiation

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By Francis Moran

When baggage handlers for U.S. air carrier United Airlines manhandled and broke Dave Carroll’s beloved, custom-made, $3,500 Taylor acoustic guitar while he and his band-mates looked in impotent disbelief from inside the aircraft, and then refused to compensate him for it, the Canadian musician didn’t get mad, he got even. He wrote a song, “United Breaks Guitars,” posted it on YouTube and, nearly five-million viewings later, Carroll has become the lyrical poster-boy for disgruntled airline passengers everywhere and United is learning very difficult and expensive lessons about the power of the individual in the age of social media.

The key lesson United needs to learn here is that it broke much more than Carroll’s guitar. It broke the cardinal rule of customer service and it broke my first law of competitive differentiation. That law states that the only sustainable competitive differentiation for most companies in today’s economy is superior customer service. In an era where a technological advantage lasts only as long as it takes competitors to reverse engineer your product or leap-frog over it with an innovation of their own, and where a price advantage erodes just as swiftly as your competitors can off-shore their own manufacturing, keeping your customers happy is the sole long-term strategy you can employ to develop and sustain a sharp differentiation from those competitors.

In the challenging world of airline travel, where every operator goes to the same places at the same time for much the same price, it’s the only differentiator.

Canada’s WestJet Airlines, which used to be an upstart little operation out of Calgary, has stolen fully 37 percent of the domestic airline business right out from under the nose of the once-monopolistic Air Canada by emphasising and delivering on a promise to treat its customers better. Air Canada’s reputation for lousy customer service is so well established I have named my annual award for the worst customer-service experience of the year after the airline and one of its (surprise!) baggage people who displayed the same indifference that drove Carroll to song.

Superior customer service doesn’t mean nothing will ever go wrong, and you’ll never have a disgruntled customer on your hands. However, if you assume an orientation from the outset that says your customers will be well treated, it’s amazing how many fewer things will actually go wrong and how forgiving those consumers will be when they do. And when something does go wrong, superior customer service is all about setting it right again. It’s all about how you treat customers in good times and in bad.

When I awarded the 2008 edition of my “Air Canada-Harold McGowan Memorial Award for Truly Egregious Customer Service” to the Canadian online DVD-rental service Zip back in November, the post I wrote on our blog unleashed a fury of responses the likes of which I had never before or since experienced. I had to block most of them because they were simply frothing-at-the-mouth irrational and offensive. And they completely missed the point. My complaint was much less about my actual experience with the service, which, in my view, had deteriorated substantially over the few years I was a subscriber, and all about the utterly indifferent response I got from Zip’s customer-service people.

One more recent responder, whose slightly more reasonable comment I now wish I had actually allowed, told me I wasn’t the centre of the universe. How completely wrong. As a customer, I am exactly the centre of the universe since no company will have a universe without customers.

Taylor Guitars, by way of sharp contrast to United, offered to repair Carroll’s guitar for free and further capitalised with a YouTube video of their own directing viewers to their web site to learn more about how to protect your guitar when travelling.

The singer himself has shot to newfound stardom and is booking new gigs left, right and centre, and the world awaits the second in what he promises will be a trilogy of songs about his experiences with United. He has also turned down all new offers of compensation from United, saying it had its chance to deal properly with his complaint. (In fact, the second song promises to be all about United customer-relations agent Ms. Irlweg who, Carroll says, was the last person at United to tell him he would be receiving no compensation.)

And United? Well, the Times of London claimed the fallout delivered a 10 per cent hit to United’s stock price, costing its shareholders about $180-million. It would be nice to think a consumer backlash of this nature could cause that kind of real pain to an unfeeling global corporation, but the stock-price dive probably had more to do with lousy second-quarter results that were released as Carroll’s video was going viral. Still, the airline and its utterly indifferent front-line agents, whom Carroll names and shames in his catchy and witty song, have become the laughing stock of the world wide web.

Update: The second in Carroll’s trilogy of revenge hymns is now up on YouTube.

/// COMMENTS

One Comment »
  • Empowerment is the core of superior customer service | Francis Moran & AssociatesFrancis Moran & Associates

    August 28, 2013 11:09 am

    [...] We have a bit of a preoccupation with customer service here at Francis Moran and Associates, and we write about it a lot. It stems from my conviction that superior customer service is the only truly sustainable competitive advantage available to most companies. If you have a technology advantage, the next wave of innovation will leapfrog over you. If you have a price advantage, someone will eventually figure out how to do it more cheaply. But if you treat your customers like the kings and queens they are, you will prevail over the long term, and even more so if you are in a commodity industry. In fact, I feel so strongly about this that I call it “Francis’s first law of competitive differentiation.” [...]

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