21 Oct 2002  Research & Ideas

The Parable of the Bungled Baggage And the Unhappy Customer

Sometimes a seemingly harmless corporate decision such as a budget trim can lead to big problems elsewhere. HBS professor W. Earl Sasser tells what happens when budget constraints and customers collide.

 

Editor's Note— Late-arriving luggage proved to be a parable about customer service for Harvard Business School professor W. Earl Sasser. In this excerpted transcript from a new video CD presentation, Sasser discusses how a seemingly harmless budget trim upended an airline's plan to pamper its best customers. Sasser's presentation is part of the Faculty Seminar Series sold through Harvard Business School Publishing.

One of the companies I've had chance to work with is a large global air carrier. And working for an air carrier is really great, the chance to fly first class...

At some point, I had to give a presentation to their top management group. I was going to give the presentation right at the airport. First class flight from Boston to that location. It was really a great meal, great service. Everything was perfect.

As we pulled into the gate, the plane (was) met by someone on the ground. The person said, "Would Professor Sasser meet the special service agent?"... I was feeling a little uncomfortable because I was going to talk about customer service and customer focus and these folks were really sort of showing me stuff I'd never seen before. They were doing a really outstanding job, so it was like, "What am I going to tell these folks?"

It told me a lot about the pressures of an organization, and the discontinuity between making budget and not making it.
— W. Earl Sasser

We got into the golf cart. We went through customs...We took my passport and just sort of waved it. We were down in baggage claim in about ten, twelve minutes. And I said, "Wow, this is unbelievable." So I asked the woman, "This service that you're giving to me, do you give to other folks?" She said, "Sure. We have a frequent flyer program, and this frequent flyer program identifies our very best customers. And our very best customers often fly one or two times a week. Now, you're not in that category of frequent flyers, but because you're talking with the top management group, you're in that category for the day."

Now, first thing, is it okay to discriminate in favor of your best customers? Can you use that information? You're not bothered by that? She was trained to handle this service. She was pumped because she had degrees of freedom. She could have rented a limo, written a ticket for another airline if that was necessary. Anything it took to satisfy this customer at the very top end.

So, I kept quizzing her about this and it was obvious that they'd done a lot of homework. They understood the value of this customer to them. After about twenty minutes, I ran out of things to talk about, and the bags still hadn't arrived. The first-class folks had just come down, and I had expected the bags to be there when the first-class folks arrived. The standard would probably be that when first class arrives, have the bags there.

Coach people came, no bags. Now we're all waiting, and it takes an hour before the bags arrive. I'm a little upset because I need to get on with my presentation, getting checked out and so forth. But, I'm a little happy too, because now I have something to talk about. And so I'm holding this little story in my back pocket waiting for the appropriate time in my presentation.

As I did my presentation, I started talking about the service bookends. The first encounter and the last encounter are where the people really remember—the service bookends. And as I started describing what had happened to me, I was very accurate. I told about everything. Up until this point, the faces were looking up, all the executives were looking me right in the eye. And I started telling this story.

Once I got past that it was a great flight ... and I started waiting in baggage handling—the eyes—no more eye contact. It's all gone. After the presentation people came up to talk to me. There was a person just standing over to the side. When the last person finished, this person walks over and said, "I'm responsible for baggage handling at the airport."

And I said, "I'm sorry that I told exactly how it happened. I didn't make anything up. I thought you should know that ... it's very complicated when you're in the airline business, because there's so many interactions on the trip. Some of them the airlines control, some of them not. But that last interaction can have a big impact. I just wanted to drive home that point. Sorry, if I caused you any problem."

He said, "I'm not surprised it happened."

I said, "What do you mean, you're not surprised?"

He said, "This is the last week of the month. This is the last month of the quarter. I have deliberately understaffed baggage handling to make budget."

Now, what about that? He said, "I deliberately understaffed baggage handling to make budget." First question is, did this person make budget? Probably did. Probably it is a cost center, and I suspect this person was rather close to either meeting or not meeting budget.

And it also told me a lot about the pressures on an organization, and the discontinuity between making budget and not making it. Not making it even by a little bit is bad. Making it is absolutely great. And therefore, this person did something because they were close... What's the implication of this behavior? Does it have any consequences? Economic consequences? What are they?

Would someone who was on that airline this time would consider flying another airline the next time he or she had a chance to fly?

Most likely.

Baggage handling. That's not going to affect my revenue, right?

Whose revenue is that revenue that I've lost? It's my best customer.

Excerpted by permission from the transcript of "Why Customers Matter," Copyright 2002 by the President and Fellows of Harvard College.

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