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Grading on a Curve

Posted by RichardOwen Aug 23, 2010

I was being shuttled to a hotel near Chicago’s O’Hare airport the other evening when I couldn’t help but notice United Airlines billboard proclaiming their status for on time performance:

United.jpg

 

Oddly, the next day I read the following headline:


US Air cruises to top service rank” from TheSunNews.com, of Charlotte. Looks like everyone is a winner!
But there are a few serious lessons to be learnt in the application of goals and data and these data points serve as a timely reminder. First, all comparisons are relative. United defines it’s competitive set very clearly – “America’s five largest global carriers”. If they are correct in that assumption – and their customers really see that as the choice they have – then this is a valid claim. If their customers are actually selecting from either a larger US pool of choices – for example Jet Blue – or from an international airline such as British Airways, then the comparison is pretty meaningless. Net Promoter Score works essentially the same way. Companies who outstrip their defined competitive set gain market advantage, comparisons with non-competitors don’t make a lot of sense. Of course, if your definition of competition is more driven by marketing considerations than reality that your customers experience, watch out.


The second lesson is choice of metric, and here United has made two choices. The first was to focus on on-time arrival, which one presumes is one of the biggest drivers of customer loyalty and success in the airline industry.  I have no reason to doubt this. But I am suspicious of the definition of the metric.


Those of you who fly a lot will notice that your flights tend to get in ahead of schedule when they leave on time. As the Wall Street Journal pointed out, some of this is due to airlines increasing the “block times” that they base their schedule on. Pad the block time, improve the metric. Is this good for the consumer?


At some level, yes. Better you make your connection as a result of buffering than miss it because there is a more “honest” schedule. However, does it really represent a good performance measure or is it the triumph of good marketing over good customer experience?


It’s natural for marketing to want to build on a good story and I’m not suggesting firms should not do that. As long as it doesn’t confuse them as to the real state of their operations. I have no reason to believe that United is internally driven by external metrics and every reason to hope that they focus on meaningful measures as they make business choices. But it’s natural, for example, that when you see a firm touting “90% customer satisfaction” in their advertising (as many do) that you become concerned that they become consumers of their own advertising mythology.


On a more optimistic note, and by contrast, we increasingly see a number of firms evoking word of mouth marketing directly in support of their advertising campaigns. State Farm, Tempurpedic  - firms who are making their advertising strategy a call to referential marketing presumably understand two important lessons: customers trust word of mouth more than advertising, and you must be pretty confident in your NPS to make it a lynchpin of your campaign.

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