It is estimated that it takes 12 positive experiences to make up for one unresolved negative one. It’s a lot quicker and cheaper for an actual human being to just say sorry. And to find a way to make amends.
But getting there requires a focus not just on the customer but on your workforce too. Managing and learning from customer experience is becoming established. What companies have begun to understand better more recently is the role employees play in all of this. Again, my experience at JFK provides some insight.
It’s easy to feel for frontline staff fending off tired and emotional customers, but when they complain that they are powerless to fix problems at the coal face, agree with you that their employer’s booking system is unfair, but have nothing more to offer than a second measure of gin, you know the problem is more deep-seated than a poor customer experience.
It is hard not to conclude that airlines have simply judged that reputational damage is an acceptable price to pay for full flights. Maybe in the short term they are right. BA and Iberia owner International Airline Group’s revenues in 2023 were 15pc higher than in 2019, the last full year before the pandemic.
Announcing record profits two months ago, IAG did, however, acknowledge that it needed to “improve the customer experience” across its airlines.
Perhaps this goes some way to explaining why its share price is lagging the improvement in profitability. Then again, the airline industry is notoriously brutal. As Warren Buffett famously quipped: “If a capitalist had been present at Kitty Hawk back in the early 1900s, he should have shot Orville Wright.”
As ever, there’s more to investing than the numbers. To understand why there’s a mismatch between a company’s record profits and its languishing share price you have to ask around, gather other people’s experiences and learn from your own.
There’s a risk in extrapolating from your own interactions with a company, but there’s danger too in ignoring what’s plain to see.
Bill Gates put it well: “Your most unhappy customers are your greatest source of learning.”
Tom Stevenson is an investment director at Fidelity International. These views are his own.
