Hotelling's Law and Why We Occasionally Root For The Underdog

[Update 3 : Frustrated Air Travelers Avoid 41 Million Trips - Economy Takes $26.5 Billion Hit]

[Update 2 : BJ Cook from SuggestionBox.com reached out to me and has offered me a promo code. Lane Becker from getsatisfaction.com has also left me a comment. It's great to know that these companies want to help make a difference.]

[Update 1 : Great post by Andi Gutmans (from Zend) on Customer Support 2.0 . While it captures the 'how' of Customer Support with tools available today, I think (bigger) companies still need to know how to address the 'why'.]

I'm sitting here at O'Hare, just a few feet away from a man in his mid-40s screaming his lungs out at this gate agent. He and his son are trying to fly back home to the south, but they got bumped off the flight for whatever reason. This flight agent is no different from the others I've seen deal with these kind of situations. I was watching this exchange very very carefully out of pure interest. The passenger tried being cordial - the agent didn't respond. And I say that matter-of-factly because most agents respond, but are down right rude. In the scale of desired responses, I'd rate a non-response higher than a response that is rude. The passenger tried screaming. Where in some cases angry squeaky wheeledness gets you what you want, in some other cases you get treated worse. And that's what happened here. Soon enough, the supervisor shows up and teams up with the agent asking the passenger to "calm down". I don't know about you, but when someone asks me to calm down, I lose it. Anyhow, (fortunately for him) this passenger realized soon enough that nothing was going to come out of this back and forth. He is helpless, like most of us would be in that situation. By far the worse feeling in the universe. But what's this passenger going to do for the humiliation he has suffered? Write Customer Service? What's he going to get out of it? A few thousand frequent flier miles as a 'sorry'? Is that going to suffice? And this isn't just about this particular airline, this is about every major air carrier. They're too big to care. We are at their mercy. We pay up-front, and there's nothing we can do if what we expect for service is not up to par.

These agents are not incentivized to care. That's the bottom-line. Any CEO can tell you what the second perspective of a "Balanced Scorecard" is (Customer Perspective/Customer Satisfaction). Some companies do something about it, but from my experience most times what they seem to be doing is flawed. And although the goal (to want to satisfy customers, retain them and have them spread the word) is noble, the execution doesn't happen because it is next to impossible to quantifiably measure turnover from improved satisfaction. So this high level goal vaporizes on its way down to the worker bees. The only logical solution is to incentivize customer facing agents to be cordial. But given the state of affairs of some of these airlines, I don't know if we'll see a whopping turnaround anytime soon.

I (personally) haven't heard one human being ever say anything bad about Virgin Atlantic. And this leads me to the title of this post. While Virgin Atlantic is only somewhat of an underdog in the US (granted it has a huge financial backing by a billionaire), it is definitely growing to be one of the most preferred airlines in the US. Why? Because everything about the airline warrants perfection and smooth execution. Virgin Atlantic gives us beautiful choice. And Virgin Atlantic is not doing anything unique as far as what they are offering with their flight routes - Hotelling's Law.

Through my friend Kurt, I've gotten to know Ryan Stewart. Ryan recently wrote about his perils about getting deleted from teh interwebs (aka Google ;) Scary indeed. Ryan is a very practical no-nonsense kinda guy. He wants there to be a genuine competitor (in Microsoft) in the search space because Google is the leader in the search space. And if you read Ryan's post, what you'll see is that because Google has grown to be as big as it is (in the time it has taken it), Google has setup several first lines of defense in order to truly identify the signal from the noise when it comes to feedback. But when there is genuine signal, it takes a long time to get noticed. And that leads to customer dissatisfaction. In this particular case, Matt Cutts, who in my opinion is one of the sharpest humans around, reached out to Ryan. But not every big company has a Matt Cutts.

What I've come to learn is trying to be a big fat monopoly is just plain old-school. What recent history has taught us is that there is no winning in the long term if you start your company off by thinking you want to be a monopoly. The bigger the company gets, the lesser the company will be able to listen or care. Eventually customer satisfaction will drop, and this will force new players to rise who will cut in to market share. So unless you're looking to make an extremely quick buck with a ridiculously impressive product, there is nothing you can gain by starting off by wanting to establish a monopoly.

So the question is , will we ever be satisfied with products or services from large companies? It's really hard to say. If a big company can create a great product, they don't have to worry about customers being dissatisfied, right? Google Search (somewhat contrary to what I wrote in the previous paragraph) is a great example of a great product. It's not often that I hear about dissatisfied Google Search users. I think Microsoft also has done tremendously well in certain areas. Our developer program is very well received. On the other hand, I can't tell you of the number of times I've heard from friends and family about issues they've had with Windows, but don't know where to turn. Do I want you to have a choice? Yes. But do I want you to pick Windows because I want it to be the best OS for you? More so. I'm not giving up on products or services from large companies yet. In fact, a good majority of the electronics, clothing, peripherals etc. I own are manufactured by large companies. Besides, human instinct wants us to go with a company that is large and trusted.

There is no such thing as a good deal. My word of advice : if you genuinely care about service, you are going to have to pay the premium. Would the passenger I'd mentioned about be treated the way he was if he were a first class passenger? What I've come to learn is that if something sounds like a good deal monetarily, it's very likely that you'll have to make up for what you've saved, in other ways.

I really hope getsatisfaction.com takes off. Getsatisfaction.com is taking BBB to the next level. I really hope getsatisfaction.com has some grand plans to work with big-big companies to force them to listen.

On a final note, I encourage you to read "The Importance Of A Competitive Search Market" - one of Arrington's best posts.

"ai"
[photo : flickr/bangdoll]