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The Business Lesson from the United Airlines Fiasco

By now, you’ve probably heard about Dr. David Dao, the man violently dragged off of a United Airlines flight after he wouldn’t give up his seat to make room for United crew members.

Dao suffered a concussion, a broken nose, and lost two front teeth in the ordeal. In the aftermath, United suffered as well. The video ignited a firestorm of public backlash on Twitter that ended up dropping the value of United’s stocks. After a series of botched apologies, the airline finally promised to re-examine and change their policies on involuntary seat removals.

Certainly, a lot of bad things happened here. United’s overbooking policies were bad. What happened to Dr. Dao was terrible. And the cold, dismissive apology that United offered as its first response was tasteless.

Much has been made of all of these things, and deservedly so; these are mistakes worthy of consideration and correction.

Just as worthy of consideration, though, is the underlying mindset that contributed to the fiasco – a focus on cost efficiency at the expense of customer experience.

Here’s the thing: what happened to Dr. Dao didn’t actually happen on a United airplane. The incident actually took place on a plane owned and operated by Republic Airways.

When the Focus on Efficiency Goes Wrong

That’s right – United outsourced the flight that Dr. Dao was denied a place on.

Republic is a regional carrier that handles about a thousand flights a day for many of the major airlines, including United.

This may surprise average airline customers, but it’s a common practice. Major airlines use regional carriers because it’s cheaper for shorter flights. Pilots and flight attendants for regional airlines like Republic are paid less money and are given less training. Ultimately, outsourcing these shorter flights benefits the bottom line of bigger airlines.

Now, there’s nothing wrong with cost efficiency – customers appreciate low costs, too. The problem comes when the focus on operational or cost efficiencies overrides the customer experience.

In this case, Republic Airways wasn’t hired as a partner to deliver a great customer experience.

They were hired simply to accomplish a task: get customers from point A to point B as cheaply as possible.

And with Dr. Dao, they failed in spectacular fashion.

But the final responsibility does not rest with Republic—it rests with United.

United Airlines either put little, if any, effort into working with Republic Airways to ensure continuation of a good customer experience.

Or maybe they just don’t care that much about providing a good customer experience.

Balancing Efficiency with Customer Experience

It would be foolish to imply that efficiency is in conflict with good customer experience, or that outsourcing in and of itself is problematic. Quite the contrary—and our innovation group has frequently helped several aging-space clients be intentional about how they balance customer experience with technology partners.

But let’s take a look at an example most people are probably familiar with: Amazon.

Amazon is a great case study of how to outsource to a vendor that is inferior at their job, and still deliver a superior customer experience.

That vendor is the USPS (the United States Postal Service).

Cheaper than UPS and FedEx, the inferior USPS is still a strategic part of Amazon’s ability to deliver on their promise of free 2-Day Prime shipping.

Amazon is fully aware that USPS is inferior, which is part of the reason they’ve invested in creating a support system that delivers an amazing customer experience, with customizable notifications and updates on shipping and delivery.

Besides, Amazon is not resting on its laurels—it’s unlikely Jeff Bezos will be entrusting USPS to deliver by drone for his company!

Why You Should Take Customer Experience Seriously

Customer Experience may sound squishy to some, but when considered properly, it can be a real business differentiator.

In fact, Accenture Strategy recently released research showing how companies who create a differentiated customer experience can achieve “between 3.5 percent and seven percent higher revenues” which they attribute to distinct approaches to innovation, product development, and solution development.

Lest I’ve scared you off from outsourcing any portion of your customer experience, let me assure you there are ways to effectively do so. For instance, at Immersion Active, our innovation group has a unique method of mapping the customer experience, which analyzes the most important “jobs” a customer is trying to do, and uncovers opportunities for differentiation.

We use this “job story mapping” approach to help companies create a prioritized roadmap to an optimal customer experience that balances:

  • Company processes and staff
  • External vendors and partners (ask me about the distinction sometime)
  • Technologies that are both proprietary (internally developed) and outsourced

Will your company be a United or an Amazon?

Look, no company is perfect. But as technology becomes more ubiquitous, customer experience will become an even greater differentiator. It’s no small task, but my bet is that the companies who are best at customer experience—by integrating the right processes, technology, and partners—will be the ones who come out on top.

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