The Performance Guarantee from British Airways

Oh, flying over the oceans, seeing the clouds below while the quiet buzz of the airplane engines keeps its hypnotic effect on the passengers… what a beautiful sensation of lightness and comfort…

www.ba.com/sleepwellguaranteed

Ok, now down to business. Today we will talk about the aviation industry and about one initiative I found publicized on this week’s edition of “The Economist”.

British Airways (BA) is now pushing a “Sleep Well Guarantee”: wow, what a concept.

How do they dare risk that people can take advantage of them and claim that the night was spent having nightmares and with the eyes open wide watching the ceiling? Would this initiative from a crazy marketer inside BA bring the colossus of world aviation in the brink of collapse? And, most importantly, should I use my BA miles before they fold?

I think we can literally sleep tight… the Guarantee is architected in a very clever way, helping both BA and the customers: our beloved BA will not go bankrupt because of it.

Basically, they promise a free upgrade to First Class on your next flight if you are not satisfied with the quality of sleep in Business (ups, the “Club World Business Class” as they call it).

Now, for the “risk” of giving away a Free upgrade to First, let’s see what BA gets in the deal:

• Increased willingness of prospects to prefer them: ehi, after all I noticed it. If I had the choice between BA and Air France, all things being equal, which one would I purchase? BA, of course! They took away the risk from me (Risk Reversal, as we described in the “Office Max” posting few days ago). If Air France would tell me “Monsieur, our Classe Affaire (Biz class, I would guess) is as good as BA, we don’t need to guarantee it”, I would say “Very well, au revoir Air France then. Hello BA!”.,
• They get something incredibly important: feedback from a dissatisfied customer. This is a very precious commodity in today business world. To give you a better perspective on how difficult is to get feedback from disgruntled clients, here are some interesting statistics regarding unhappy clients from a study done by the Research Institute of America for the White House Office of Consumer Affairs:
• The average business will hear nothing from 96% of unhappy clients who experience rude or discourteous treatment.
• Only 4% of unhappy clients bother to complain. For every complaint you hear, 24 others (6 of which are “serious”) go not communicated to the company – but not to other prospects or clients

• And this is hardly difficult to understand: we can easily relate to this… when is the last time that, if the food was not satisfactory at a restaurant, we took the pain to get in touch with the manager via email, phone, fax, smoke signals, flying pigeons to let him/her know about the worrying trend of the quality of the food at his/her establishment? Well… probably never… we vote with our feet: we just go somewhere else. And we take with us the very precious comments and insights about the potential cancer that is eroding the profit of the restaurant…

• Hence, from BA it’s a very smart idea to pay a small price (an upgrade to First Class) for such a precious opportunity: getting the opportunity to talk with a client that otherwise would leave the company forever
• They are not even risking to lose the potential money of the upgrade… if we read the small print, the upgrade is “Subject to availability”: basically “Sir, we will give you a seat that otherwise would go empty anyway”. They are not promising to give up a paying customer upgrade…
• They can stop the initiative at any time. There is no law that says that once they start, they cannot stop… if too many people take advantage in bad faith, just to damage BA, the company can stop the initiative just pulling the website down.

This initiative falls into the category of “Catalytic mechanisms”, very eloquently described in the fine article of Jim Collins “Turning Goals into Results: The Power of Catalytic Mechanisms” published by Harvard Business Review (for more information, click here). Basically this mechanism forces the organization (BA) to notice a failure in their operations because it creates an incident that cannot go unnoticed. In their reporting systems, that request for Free Upgrade will bubble up in the statistics and they will know that one extra person was unhappy. Then they can decide whatever course of action they deem appropriate to deal with the problem at the source.

I am at the Tokyo Narita airport now waiting to board an American Airlines flight. I will be in business class, but AA does not have a guarantee… I can only say “I wish I was on BA to sleep tight”

Au revoir, a la prochaine,

M in Tokyo