Voices: the CMB Blog

Avis Budget Group’s VP of Customer Insights and Experience, Eric Smuda, sat down with CMB’s Judy Melanson to talk about Customer Experience, suppliers, and his work as a corporate insights executive.

Eric, it’s always fun to listen and learn from you. I’d like to start by asking a broad question: why is managing the customer experience important for Avis?

Managing the experience is critical for us—and critical for the car rental industry as a whole—because it’s the only way we can differentiate ourselves. The products we offer are identical to the products our competitors offer. We don’t have a location advantage because our competitors are immediately next door. There aren’t no-show fees, so customers are free to choose any company. It’s solely customer experience that differentiates us from our competitors and that drives growth.

Tell me a little bit about your job.

My role is to identify customer pain points and to design improvements in our customer experience. My team gathers and shares customer experience measurement data and marries that data with our operational, reservation, and financial data to really understand what, why, when, and where something is happening. This helps ABG define improvement priorities and get executive sponsorship, funding, and resources for those priorities.

How does your team interact with your end-users—both corporate and on-site?  

We want to drive macro change at a corporate level and location-specific change at a local level. One of our newer initiatives is the customer experience governance council, which includes all of North America’s senior management as well as key customer touchpoint owners.

My analytics team shares their findings with the council on a monthly basis. That way, the council can prioritize the projects we want to invest in. We then align executive sponsors, resources, and funding with those initiatives. This monthly meeting also gives us the opportunity to report back on progress made on previous initiatives.  We’ll share those insights with the marketing organization and communicate any changes we make with the customer base.

As you reflect back on the years that you’ve been at Avis, what are some of the changes you’ve made that have had the greatest impact on the customer experience?

One change that stands out is in rental rate price consistency (RRPC). We learned that when customers made reservations on our website, the site wasn’t accurately taking the daily rate, combining it with any add-ons he/she might have (insurance, car seats, GPS, XM radio, etc.), and then correctly calculating the taxes. So customers weren’t getting an accurate final bill. Now they do with the RRPC project, and we’ve seen a significant decrease in our pricing and billing complaints.

Price and cost are such important considerations in the purchase decision because they can be dissatisfiers, so that’s great.

Absolutely. We now know from our text analytics program that billing complaints are the biggest driver of negative Net Promoter Scores. The RRPC project has been one way we’re reducing those pain points and the number of calls going into our call center, and it’s had a large impact for our customers.

Another thing I’d like to mention is the rollout of the Select & Go experience to our top 50 locations. Some customers want to have the option of selecting another car if they don’t like the one we assign to them. This program was born out of that customer feedback. Customers can now receive a notification on their phone about which spot their assigned car is in, come see the car, and either take the assigned car or go to the Select & Go exchange lot where they can exchange the car for free. We also have an upgrade lot where they can decide whether they’re willing to pay $20 or $25 more to upgrade to another car class. This has been a customer experience improvement, and it’s also actually driven $3 million to $4 million in incremental revenue for the company.

That’s fantastic!

It’s a win for customers and a win for ABG. Another thing we know is that speed of service is of the utmost importance. We get more comments about speed of service in our text analytics engine than we do about anything else, so we’ve been taking a look at the entire rental process. We looked at over 100,000 customer verbatims and broke them down based on where they sit in the rental process or in the customer experience. We identified 20 projects we can complete to impact the customer speed of service at different stages of the rental experience. About half of those projects are active now, and customers should definitely look for significant upgrades over the next year or two in our ability to serve them more quickly.

I love that you’re addressing the customer needs more globally. You’re not making a touchpoint-by-touchpoint improvement, but rather an improvement about the customer’s need for speed across his/her entire engagement and experience.

I think that's the biggest philosophical change we've made over the last couple years as it relates to our customer experience program. Rather than looking at it as location-specific and driving change at the individual level, we’re now evaluating customer experience much more comprehensively. We look at macro issues at a division level that impact customers everywhere, and we start to fund and drive change in those identified areas.

What’s going to be different in customer experience at Avis in the next two years?

We’re working on a flight disruption service, which is relevant given the winter we’ve had in the Northeast. This service proactively reaches out to customers whose flights have been canceled and asks them whether they’d like to keep the car another day, turn it into a one-way rental and just drive home, and more. We want customers to know we can get them home or wherever they need to be.

Great! Let’s move a little bit more into research, tell me: what insights get you most excited?

Our program is constantly evolving as we bring in new brands and continue to evaluate our business. CMB was with us at the beginning of this journey, and you guys know that our customer experience program started with roughly 150 to 200 of our top airports.

We’ve also expanded it globally through our partners EMEA and Asia Pacific. The bigger growth challenge for us from a learning standpoint is adding the relationship view of the customer to the evaluations of the transactions they have with us. That will let us know not only how we did in Phoenix yesterday, but also how we’re doing across all of the interactions customers have with our various brands. So all of this growth we’re making in our customer experience measurement program is absolutely something I’m excited about.

As far as things that excite me, it’s really when we can dive down and understand specific customer pain points that affect specific types of customers in specific types of situations. For example, we know customer satisfaction is lower for certain types of trips vs. others, so when we can start to dig and combine that knowledge with other information like pricing strategies, billing strategies, and other policies, you start to understand why. Then, we can begin to have conversations with business decision makers and explain to them what things are getting in the way of the customer experience so they can reconsider and change those practices and policies. My passion is always trying to make things easier and better for customers, so what’s most exciting for me is the possibility of accomplishing that through those conversations.

You’re the customer advocate. There might be pricing or revenue objectives, but you can speak for groups of customers, which needs to be done in order to build engagement with the brand.

That’s always the big challenge: trying to balance customer needs against revenue and profit goals.

What would you tell market research vendors about how they can best support the decisions you need to make?

What an age old question! I feel like the supplier side has always struggled with understanding our business at a level at which they can help us drive business decisions and not just simply provide information. We want suppliers to provide context, combine the findings and the context with our financial drivers, and use all of that to help us make a more informed business decision. That’s a true partnership. That’s where I’ve had the most challenges with suppliers in the past. It’s also why I value working with your CMB team.

Can you talk a little bit about your relationship and partnership with CMB?

You understand our business as well as our management’s priorities. We have a great, trusted relationship—your guidance, partnership, and advice have been wonderful. You’ve transcended from being a vendor to being a very key advisor and trusted partner.

Got a market research question that you're just dying to have answered? Ask our Chief Methodologist, and he might tackle your question in his next blog!

Our latest Consumer Pulse report—a study of 2,000 leisure travelers—found that mobile, social, and online factors influence travelers very differently at separate stages of the hotel booking purchase journey.

We know travelers have a ton of information at their fingertips as they plan and book hotels for their vacations. The challenge for hotels is to decide how to align marketing budgets to best intercept potential travelers—delivering desired content on the appropriate device and through the right channels and partners.

For more information on how technology is changing the path to purchase download the full report here and see an infographic with a few of the findings below:

Download the full report.

For more on our mobile stitching methodology, please see CMB's Chris Neal's webinar with Research Now: Watch the Webinar

Judy Melanson is the head of CMB's Travel and Hospitality Practice. She just returned from a very leisurely trip to South Africa and Zimbabwe.

Stephanie Kimball is CMB's Senior Marketing Manager and created the infographic above. She can't wait for her upcoming trip to London, Amsterdam, Munich, and Prague!

Recently, the US Supreme Court heard an argument from frequent flyer Binyomin Ginsberg, whose membership in Northwest’s WorldPerks program was revoked, after he complained too often. While the practical and legal questions of enforcing contracts under the specialized application of airline deregulation are interesting, the question for us today is: does loyalty run both ways?  Any customer-facing employee of a loyalty program can probably name a handful of customers who regularly call to complain—about the service, the rewards, the benefits. They, like the people at Northwest/Delta, may feel that some of these customers contact them for the sole purpose of obtaining compensation. Should their frustration with these members lead them to take their points away, or cut them off entirely? 

Let’s look at the case of Binyomin Ginsberg:   

• He was a very frequent flier – 75+ times/year with top Platinum Elite status.  At $350/flight his annual value to NWA is nearly $30k.

• In 8 months, he complained 24 times about late and lost luggage and long delays. He didn’t complain to the flight attendants, gate personnel or pilots but instead to top managers in the corporate office of the frequent flier program. "I did exactly what they asked you to do," Ginsberg said in an interview with NPR. "If you have a negative experience, they want you to give them feedback."  And so he did — a lot.

• Ginsberg says he never asked for anything when logging his complaints; the airline reports he repeatedly asked for compensation, and that they tried to soothe the unhappy flier.  In 2007, Ginsberg was awarded nearly $2k in travel vouchers, 78k bonus miles and $491 for a lost bag. 

• And then he got the call telling him he was no longer a member of the program, that his miles had been confiscated and he’d been black-listed and would never be able to join the program again. 

• He was told he complained too much about the service and the airline has ‘total discretion’ in such matters. 

The case will be decided in the spring. In the meantime, here are some questions for you to ponder as you consider how loyal you are to your loyal customers: 

Do you solicit feedback from your members on their experience with your product/service? 

If you do, are you:

• Making improvements based on the feedback

• Communicating the improvement you’ve made

• Responding in a timely fashion to individuals who ask to be contacted

• Sharing results and verbatim customers comments with senior managers 

Take the case of AeroMexico, whose customer feedback surveys revealed the two biggest pain points impacting loyalty were on-time performance and delay management—hardly atypical for an airline, but the survey also revealed customers felt the airline’s staff lacked empathy in communicating delays. To fix this problem, the airline’s customer experience team recruited key executives to personally call customers who have experienced delays—the executives are coached to resolve issues and listen to the customer. And according to AeroMexico’s VP of Customer Experience, Eduardo Piquant, the innovative program has been a success: “We always start with an apology for the delay and then ask for feedback about what we can do better. In the beginning, people don’t believe it is the CEO or CFO or other senior executive calling. But when they realize this is a true company-wide project, the results are remarkable. And what we’ve found is simple: Customers just want to be heard.”  The airline estimates this approach has resulted in a win back of more than 3000 customers. 

Do you have a clear policy in place for compensating members for a bad experience?

For many companies, continuously improving quality standards and keeping customers satisfied are the key goals to maintaining a competitive position in the marketplace. But these intangible goals often can be difficult to achieve in practice and occasionally – for reasons within and outside your control – customers will have a bad experience.  And in the world of Trip Advisor and Facebook, these bad experiences and your corporate reactions to those experiences will be widely shared and will influence the decisions of other prospective guests. 

Assuming the corporate decision on compensation has been made and is appropriate, the actions associated with dealing with disappointed members (whether you compensate them or not) are the same:  

• Express gratefulness for their business

• Listen to complaints with empathy

• Clearly and consistently present the information on compensation policy

• Track the behavior of guests “post-interaction”– do they continue to spend (as they did prior to the problem)?  Or has the problem (and your recovery efforts) caused them to take their business elsewhere?

A compensation policy doesn’t get much clearer than Hampton Inn hotel’s 100% Satisfaction Guarantee. While the idea of a “No questions asked 100% guarantee” might sound outlandish, the policy has been a success since it was implemented nearly 25 years ago.  Years ago, Phil Cordell, the senior VP of Brand Management at the hotel chain described the success of the program: “...Compared to the more than $6 million in free rooms we’ve given away over the past decade due to invoking the Guarantee, we have been able to track more than $41 million in repeat business, a nearly seven-fold return. But more than just dollars and cents, we’ve converted unhappy guests into satisfied customers across the country, loyal to the Hampton Inn brand.”

Are you doing all you can to take care of your highest value customers?

One of the primary benefits of a loyalty program is the ability to track each customer’s spend so you can identify your most valuable customers. Calculating the percent of corporate revenue obtained from each membership tier puts their value in perspective. While every customer is important, from a revenue perspective, some customers are clearly more important.

If your loyalty program has tiers:

• Ensure your compensation policy recognizes and reflects the unique value associated with your top tier guests. Create an elite group of customer service reps to deal with your top tier guests and their challenges. 

• Conduct research to determine the share of wallet you get from members, and how much they spend with competitors. Ask questions to examine which competitors they use–for which occasions and why–to set strategies to concentrate their spend, and further build their value with your firm. 

• Closely examine the behavior of your top tier members to see if it’s time to develop a super-elite level. You may find a sizable group of customers who max out on your program, and then move their business to your competitor. 

Caesars Entertainments’ Total Rewards program, the largest casino rewards program in the world, has 4 distinct tiers. The value of a member at each tier is carefully calculated, and rewards and service aligned with value, this insight leads to smoother operations, better front-line service, and differentiated pricing. Joshua Kanter, Senior Vice President, Revenue Acceleration and Total Rewards, reports: “We have a ‘differentiated service model’ that’s keyed off of Total Rewards tiers. We strive to provide a great experience to every guest, including our entry-level Gold members but we also have special hotel check-in areas, shorter lines and exclusive lounges for our Diamond and Seven Stars members. And our VIP-focused organization engages with our most high-value customers individually. When a guest presents their card, every member of our front-line staff responds immediately with the level of service appropriate to the tier.”

So, can I imagine a customer who was so much trouble that he or she needed to be kicked out of their loyalty program? Sure, but the crimes committed would have to be much more egregious than too many complaints. Your loyal customers have made a commitment to you, they’ve shared their information with you, they’ve chosen you when it might have been easier to go with a competitor, and many have advocated for you with their colleagues, friends and family: doesn’t that deserve some loyalty in return?

Judy is VP of CMB's Travel & Entertainment practice and loves collaborating with her clients. She's the mom of two college students and the wife of an oyster farmer. Follow Judy on Twitter at @Judy_LC

Originally posted in Loyalty360

In early July, shoppers at Shaw’s, Albertsons, Acme, Jewel-Osco and Star were greeted at the door and asked to hand in their store loyalty cards. These chains, recently acquired by Cerberus Capital Management LP, all shut down their loyalty programs, focusing instead on everyday low prices and storewide sales.The move left some industry analysts scratching their heads, questioning why the brands would kill off decades old programs with millions of members. They pointed to the vast quantities of information that can be harnessed improve merchandising and marketing, and to customize products and messages. They hypothesized that the stores hadn’t invested in the data mining activities needed to extract insights. Perhaps…

Or perhaps the financial experts at Cerberus had done the calculation and determined that in today’s marketplace, the loyalty program – and its strategy and value– was standing in the way of profitable growth.

Think about it. What impact do the grocery store loyalty program cards you carry on your key chain have on your behavior?  Can you point to any benefit you’ve received beyond the ‘loyalty member price’ and coupons at check-out? Can you point to any special benefits you receive from your primary grocery store?  Or do you get the same level of benefits whether you spend $1 or $1000 per trip?

I think there are 3 compelling reasons these grocery stores don’t need a loyalty program to drive customer loyalty:

1. They need to compete with Wal-mart: These brands have to compete with Wal-mart and other warehouse stores offering EDLP (everyday low prices). To grocery and drug store shoppers, price matters!  And to sustain a business and drive profits at low prices, the brands need to focus on operational efficiency – not customer intimacy promised by a loyalty program.

2. They can take a local approach: The executives at these brands promise that analysis will be done at the store – not the customer – level.  Mining the data at the individual store level will, they theorize, provide plenty of data on what merchandise is important to shoppers and the impact of marketing decisions on spend. They also believe that taking a local approach – where store managers can make marketing and merchandising decisions – will enable stores to better meet customer needs.

3. They can focus on what matters to shoppers: Most customers are applauding the move to consistently lower priced products.  In addition, they suggest the brands focus on the basics – the features that drive their shopping decisions, including: (1) clean the store; (2) stock the shelves; (3) keep sufficient registers open to reduce check out time; (4) mark sale items clearly; (5) create a customer-focused culture.

In most locations, shoppers have many choices and in the absence of consistent delivery on these core elements, customers won’t shop at the stores, loyalty points or not.

“Sun setting” a loyalty program is not a low-risk decision. But program managers in every industry must be prepared to defend their programs by answering the following questions:How do you recognize and reward your most loyal and valuable customers?  How do you make participating in the program worth their while…and something they would miss if it were not present.

• If you ran a grocery store program, how would you treat the person who spent $1000 per trip? Would your first check-out register be for those with 10 or fewer items?  Wouldn’t you help the shopper get the items into their car?  Into the house?  Into the pantry? Do you really have to make them come to the store and shop? Do these customers get any special recognition in store?  Could they visit customer service to get a free cup of coffee or a piece of a new signature pastry when they enter the store?

What mechanisms are in place to grow the share of wallet from light shoppers?  What incentives and processes are in place to support your shopper’s goals and encourage them to spend a higher share of wallet with you?

• Could you look in my basket and make recommendations for recipes that my family might like?  Or like Amazon and Netflix, develop a recommendation engine (people who buy xyz also buy abc)?  Would you price match on identical items to prevent shoppers from fragmenting their baskets?

What has your organization learned from the data collected from the program?  Think about the tactical (e.g., merchandising, marketing) and strategic (e.g., location selection, branding, pricing) decisions supported and how you can get more value from the data you collect.

• Have you shared insights with store managers?  Your media partners/ad agency?  If not, schedule some meetings and connect data you have with what’s relevant to them. Today.

Consider what would happen if your loyalty program “went away?” Are you prepared to answer the question “Do you need a loyalty program to drive customer loyalty?” in a way that would satisfy your CFO?

• Get and communicate data on the value of your program, and how to drive additional value.  

It will be interesting to see the impact of Cerberus’ decision on the industry as a whole.  Will other grocers, to compete with Wal-mart, follow suit and disband their programs?  Or will we start to see some retailers ‘break away’ from the pack and to drive incremental behavior and true loyalty?

Where would you place your bet?

Judy is VP of CMB's Travel & Entertainment practice and loves collaborating with her clients. She's the mom of two college students and the wife of an oyster farmer. Follow Judy on Twitter at @Judy_LC

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