Why Virgin Australia will be successful

I've posted recently about my experiences with Australia's two airlines and the contrasting customer service I've received on both. My business currently flies with Virgin after recently changing our policy of flying with Qantas. The poor service simply became inexcusable. But I'm not sure it is the fault of the staff, but more of the management. Today there was a quote from Virgin Australia CEO John Borgetthi, who said it is the airline’s crew who decide ultimately what passengers will experience. To me, that summed up the current differences between to the two airlines. This is what he said:

“We have consumer feedback, emails, random surveys but one of the most important elements of information is the crew because they see things every day and they know what works and doesn’t and what should be changed,” he said.

“The majority of the changes we have made have come from the crew.

“We talk about the cabin interior and making seats bigger and more comfortable, but above all I think what the people want apart from a smooth operation is service – a friendly, genuine, engaging service. And that’s something we have got and will continue to provide as we have but step up one more level, which we will,” he said.

For any company that really believes in customer service you must do exactly what John suggests you do - look after your staff, listen to your staff, but most of all empower your staff!

Outsourcing - better for who?

Yesterday the Westpac IT systems went down due to some air conditioning failures. Westpac were quick to point out that all of their hardware is managed by a third party (in this case IBM). From Westpacs point of view, they now have an opportunity to recover some of ther losses from IBM due to the service level agreements that they will have in place. However, I doubt any Westpac customers will have an opportunity to recover lost revenue or lost time or increased inconvenience.

It also brings into question exactly who benefits from these massive outsourcing deals that are done by larger enterprises. In my experience, they are highly competitive which means the organisations that win these contracts are operating on razor thin margins. The first thing they do is get rid of any "excess" staff. The next thing they do is make a risk assessment on the hardware that they "inherit" and see how long they can get away with not replacing anything. They then look at where they can possibly recover some costs by hitting the organisation, in this case Westpac, with change requests or contract variations that will keep the entire engagement in the black. The main beneficiary of all of this is Westpac themselves. They get a lower cost service and they get someone else to blame and cover costs if something goes wrong. A good friend of mine recently left one of the large outsourcing companies as the pressure was too much for him. His company had underbid to win the business and they couldn't take enough cost out to make it profitable. So he was constantly managing a customer that was almost always very unhappy.

If a large organisation (be they a bank or telco or any industry that serves consumers) really cared about their customer base then they would look to manage their IT with a customer focus, rather than with a razor sharp cost only focus. But perhaps the banking shareholders wouldn't like that.

Empower your employees!

Today I traveled on a plane from Sydney to Melbourne. I was flying with Virgin Blue (after recently moving all our business to VB from Qantas) and I had purchased my flight for around $70. All good! But it was a pleasant surprise when, just as the seat belt sign was turned off, the hostess came up and offered to shift me and my wife up to the front to sit in two premium economy seats! I'm a gold FF these days with Virgin, and that's how I was chosen for this excellent "gift" but it struck me that this had never ever occurred on any flights that I was on with Qantas, despite being a gold (and for the last 3 years Platinum) FF. So in 10 years holding the status of either Gold or Platinum with QANTAS, the only thing they had ever done for me was refuse me upgrades (despite me saying I would pay or use points). Many of those upgrade requests were even more infuriating when I would get on the plane only to discover there were empty business class seats - but for Qantas, rules are rules. It really goes to show how great you can male a customer feel by having a truly customer focused team on the ground. But the most important point from this story is to empower you front line people to make decisions that impact positively on your customers. This was something that I learned when I was working for PeopleSoft and, in my view, was one of the main reasons peoplesoft became the huge company it did.

So well done Virgin Blue and thanks for the upgrade. I think QANTAS has a lot to learn to ensure it remains the number one Australian airline.