POINT OF VIEW FEBRUARY 2013

Transcription

1 Aviation, Aerospace & Defense POINT OF VIEW FEBRUARY 2013 DRAW THE HASSLE MAP OF FLYERS TO TRULY UNDERSTAND THEIR JOURNEY VIEWING TRAVEL THROUGH THE EYES OF CUSTOMERS LEADS TO BETTER BRAND LOYALTY, LOWER COSTS, AND HIGHER REVENUE AUTHORS Olivier Fainsilber Max Kownatzki Many airlines have worked hard to make the passenger experience as smooth and seamless as possible. Airlines created priority security and boarding queues for top customers. Luxurious boarding processes save firstclass customers long waits. Frequent-flyer lounges feature showers, buffets, and personal workstations. Airports have improved dining and retail options and upgraded seats in gate areas. Security providers have coordinated with regulators to implement fast track clearance processes using the latest biometric technologies. Wi-fi is nearly omnipresent, even if it s not always free. These improvements have led to greater customer satisfaction. However, even privileged high-value customers feel harried during travel. Many of the improvements create an aura of convenience rather than address the core issue. Air travel can be a huge time-waster, with many anxiety-producing uncertainties and associated hassles. Resolving those hassles is the key to increasing brand loyalty and sparking word-ofmouth recommendations.

2 In Demand: Creating What People Love Before They Know They Want It (Crown Business; October 2011), author (and Oliver Wyman Partner) Adrian Slywotzky describes the many benefits of identifying and easing the emotional hot spots in customers lives. Identifying hassles requires seeing the world through the eyes and emotions of your customers. That requires discipline, as few aviation executives experience what their customers do. Much as auto executives never have to buy a car through a dealership, airline executives are shielded from the inequities of modern travel by red-carpet treatment. Mystery customers are more often focused on verifying compliance of airline personnel with established procedures than on discovering hassles. Without knowing what irritates customers, it is impossible to build a service that will delight them. To identify hassles, it is imperative to follow customers and connect their experiences to their comments on social networks and their complaint letters. The depth of flyer frustration is reflected in an Oliver Wyman survey of 450 global frequent travelers. Air transportation itself, getting from point A to point B, is perceived as reliable, with very few respondents citing missed connections or cancelled flights. Most problems occur before or after flight, when delays arise without warning or explanation. Flight delays remain a prime customer pain point, with more than 40 percent of those surveyed citing frustration. Imagine working comfortably in an airport lounge (if you are lucky), being told it is time to turn off your computer and head to the gate, and after rushing to finish up your work, you find the flight is delayed by 20 or 30 minutes. While delays are unavoidable and often acceptable (passengers don t mind time spent checking a plane s gear for safety reasons or avoiding a major weather system), passengers emphasize that managing expectations by providing reliable departure times would alleviate frustration. Other major pain points are excessive queues at security and customs checkpoints and long pedestrian commutes to boarding gates, highlighting hassles with other touch points in the aviation service chain. (For more detail, see Exhibit 1: Air Travel Irritants of Global Frequent Travelers.) Exhibit 1: AIR TRAVEL IRRITANTS OF GLOBAL FREQUENT TRAVELERS Long security queues Long boarding queues Departure delays Long walks on arrival Limited overhead storage Pre-departure delays On-ground delays Long customs queues Flight cancellations Missed connections Missing special meal Missing bag 0% 10% 20% 30% 40% 50% 60% 70% 80% Source: Oliver Wyman analysis Copyright 2013 Oliver Wyman 2

3 These complaints are from frequent global travelers, who often have access to airport lounges, early boarding, and first-class seating (and typically carry their luggage on, which is why lost luggage ranks so low). Sadly, these travelers are overwhelmingly unsatisfied by the way most airlines address their problems. Mitigating customer hassles should be a top priority for all players in the air travel supply chain. Why? Satisfied passengers are much more likely to choose the same airline for their next flights. Each successful instance of hassle resolution builds brand value, bolstering customer loyalty. We live in an electronic fishbowl, where people hear about errors instantly. Just as a single unresolved hassle poisons the entire transaction, solving one hassle produces a satisfied customer with the potential to reach thousands of flyers instantly. Some air travel service providers do a good job of identifying and solving hassles for some travelers, but these are typically isolated, ad hoc examples. Most providers have yet to adopt holistic, platform-based approaches to systematically identify customer frustrations. Once problems are identified, innovative solutions must follow to create a truly dynamic aviation product that encompasses the entire customer experience. But creating a functional product, no matter how good, is just table stakes in today s marketing battles. Your goal should be to create a magnetic product that inspires excitement and wordof-mouth recommendations. There s a simple formula for this: M = F x E. Magnetic equals great functionality times great emotion. People love magnetic products and love to talk about and recommend them again and again. Some airlines are clearly magnetic, inspiring emotion and positive word of mouth, while other airlines flying the same routes with the same planes are perceived as tedious or uncomfortable. MAPPING PASSENGER HASSLES The path to creating a magnetic product starts with the hassle map. Surveys like ours offer helpful guideposts, but people often don t express their real feelings in surveys, and the questions may not uncover the full range of irritants. It s much better to question customers in person and let them talk. It s even better to watch and listen to them complain as they are being compromised by shoddy service. After hundreds of interviews in different locales and consumer categories (e.g., corporate, budget business, frequent leisure, occasional leisure, etc.), you can create a process map of the steps customers take as they travel and lose control of their time. Providers in other industries have assessed their customers hassles and engineered solutions to create seamless processes. Nespresso, a maker of espresso coffee machines and espresso pods, transferred the luxury of high-quality coffee from the coffee shop to the home or office. In so doing, Nespresso transformed customers perspective from I have to go to a café to get a good cup of espresso, to, Delicious espresso in my own kitchen, with the press of a button, perfect every time. The ability to streamline mass-market consumer experiences and to consistently deliver high-quality results created a truly magnetic product that brings not only higher customer satisfaction and increased loyalty, but also higher economic returns. Copyright 2013 Oliver Wyman 3

4 Progressive, a US car insurer, tackled the iterative process of insurance-funded automobile repair. The hassle map below describes the traditional way of doing business: Locate a repair shop Negotiate repairs and rates Search for rental car File insurance claim 3-way debate of repair cost (insurer, customer, mechanic) Monitor repairs Pick up car might have to repeat previous 5 steps Here s the new, streamlined process map, minus the hassles: Bring car to Progressive service center Concierge arranges everything Receive rental car on site Pick up car Looking through a hassle map lens, we can see examples of how the aviation industry has engineered solutions to relieve customer frustration. For example, a new laser-guided, autonomous, rail transportation system in London s Heathrow airport has changed the customer s perspective from I have to locate the car hire shuttle stop, walk there, ride the shuttle, then walk to the counter before renting a car, to, I get a fun ride in the pod just outside of customs to the car hire desk. Here s the old hassle map of clearing customs at Heathrow and getting to the rental counter, which typically requires a 15-minute trek: Clear customs in terminal Locate correct car hire shuttle embarkation point Walk to correct car hire shuttle embarkation point Ride shuttle to car hire destination Walk to counter Rent vehicle The re-engineered solution streamlines the process into an efficient four steps and cuts the trek to 34 seconds: Clear customs in terminal Enter pod and select desired car hire destination Arrive at correct counter Rent vehicle Some airlines have improved the in-flight experience. Virgin America has transformed on-board dining from I have to eat only when the trolley is brought around, to, I can order food on my screen whenever I get hungry. The liberating dining experience has streamlined on-board dining, increased consumer choice, and boosted revenue. Lufthansa offers a deluxe car service to its top-tier frequent flyers to ease the stress of between-flight travel. The service collects passengers when they land and drives them, in Mercedes and Porsche vehicles, directly to their connecting flights. There s no need to re-enter the terminal. While the service doesn t directly raise Lufthansa s revenue, it certainly makes for satisfied travelers, who are more likely to recommend it to others. Copyright 2013 Oliver Wyman 4

5 RE-ENGINEERING SOLUTIONS Creating hassle maps has helped players in multiple industries identify problems and develop streamlined processes that reduce costs and increase revenue. Highlighting each step in a given process allows us to identify touch points with different players in the aviation service ecosystem, and that provides the information to re-engineer existing processes and define new customer value chains. The main goal for all players in the aviation industry should be to respect customers time and give them more control over what is inevitably a dynamic, unpredictable environment. To get started on developing a hassle map, ask yourself some basic questions: Have we followed customers through the airport? Have we spoken with customers about their experience? Do we understand how travelers feel when they face delays? Have we timed how long each step in the flying process actually takes? Have we tested ideas submitted through complaint letters? Do we have systems in place to communicate delays as early as possible, through SMS or Twitter? How much unnecessary time do flyers spend in airports, and what can we do to shorten that time or make it more palatable? Do we have systems in place to help delayed travelers get fast-tracked so they won t miss tight connections? Charting hassle maps allows aviation service players to resolve frustrations for premium and mass-market passengers alike, and to revamp the customer experience from ho-hum to magnetic. Copyright 2013 Oliver Wyman 5

6 About Oliver Wyman Oliver Wyman is a global leader in management consulting. With offices in 50+ cities across 25 countries, Oliver Wyman combines deep industry knowledge with specialized expertise in strategy, operations, risk management, and organizational transformation. The firm s 3,000 professionals help clients optimize their business, improve their operations and risk profile, and accelerate their organizational performance to seize the most attractive opportunities. Oliver Wyman is a wholly owned subsidiary of Marsh & McLennan Companies [NYSE: MMC], a global team of professional services companies offering clients advice and solutions in the areas of risk, strategy and human capital. With 52,000 employees worldwide and annual revenue exceeding $10 BN, Marsh & McLennan Companies is also the parent company of Marsh, a global leader in insurance broking and risk management; Guy Carpenter, a global leader in risk and reinsurance intermediary services; and Mercer, a global leader in human resource consulting and related services. Follow Oliver Wyman on Oliver Wyman s global Aviation, Aerospace & Defense practice helps passenger and cargo carriers, original equipment manufacturers and parts manufacturers, aerospace/defense companies, airports, maintenance, repair and overhaul organizations, and other service providers develop value growth strategies, improve operations, and maximize organizational effectiveness. Our aviation practice has completed projects for airports around the world, including air service development, benchmarking, commercial revenue improvement, organizational design, operational improvement, and privatizations. The firm represents clients in all areas of aviation. Oliver Wyman also offers a powerful suite of industry data and analytical tools to drive key business insights through For more information on this article, please contact: Roger Lehman, Practice Leader roger.lehman@oliverwyman.com Olivier Fainsilber, Partner olivier.fainsilber@oliverwyman.com Max Kownatzki, Partner max.kownatzki@oliverwyman.com Copyright 2013 Oliver Wyman All rights reserved. This report may not be reproduced or redistributed, in whole or in part, without the written permission of Oliver Wyman and Oliver Wyman accepts no liability whatsoever for the actions of third parties in this respect. The information and opinions in this report were prepared by Oliver Wyman. This report is not investment advice and should not be relied on for such advice or as a substitute for consultation with professional accountants, tax, legal or financial advisors. Oliver Wyman has made every effort to use reliable, up-to-date and comprehensive information and analysis, but all information is provided without warranty of any kind, express or implied. Oliver Wyman disclaims any responsibility to update the information or conclusions in this report. Oliver Wyman accepts no liability for any loss arising from any action taken or refrained from as a result of information contained in this report or any reports or sources of information referred to herein, or for any consequential, special or similar damages even if advised of the possibility of such damages. The report is not an offer to buy or sell securities or a solicitation of an offer to buy or sell securities. This report may not be sold without the written consent of Oliver Wyman.