April 11, 2008

I rarely come to the defense of the airline industry. However, this week’s massive schedule disruptions at American Airlines and other carriers were entirely unnecessary, and not their fault.  The chaos was the result of a petulant Federal Aviation Administration, embarrassed over recent revelations of poor oversight.

Last month, CNN reported the Southwest Airlines had failed to make mandated repairs and inspections on their fleet of several hundred Boeing MD80 aircraft (formerly built by McDonnell Douglas).  CNN also reported that FAA inspectors had turned a blind eye to the violations.

The FAA was publicly humiliated.  In response, they fined Southwest and announced a crackdown against any other carriers not in compliance with aircraft maintenance directives.

The specific maintenance issue with MD80’s involves a wiring bundle in the wing wheel wells.  The fear was that the wire bundles might shift during operation, become chafed and create a spark too close to the wing’s internal fuel tank. The FAA discovered that ribbon ties were 1 ¼ inches apart, rather the one-inch spacing as directed in a maintenance bulletin.  The FAA ordered immediate inspections and repairs.

The airlines requested a little leeway in order to avoid massive schedule disruptions. The FAA refused, ignoring the fact that feared chafing of wires in the wheel well wire bundles had never been reported on any MD80 aircraft—some more than twenty years old.  A normal inspection schedule would have taken three to four weeks. The FAA’s intractability forced American and other carriers to cancel thousands of flights at a cost of millions of dollars and immeasurable inconvenience to the traveling public.

The FAA’s backlash against the airlines was misplaced. The agency is underfunded and doesn’t have enough inspectors to cover the number of airlines and aircraft in American skies. The real blame belongs with an Administration that has slashed FAA budgets and sold off parts of the air traffic control system to the lowest bidder.  Instead of lashing out at air carriers who had been given a “wink-wink,” the FAA leadership should have found the courage long ago to demand enough funding from their bosses in the Transportation Department to perform the safety tasks required to keep all of us safe in the skies.

Instead, an embarrassed FAA leadership threw a tantrum, thousands of flights were cancelled, and tens-of-thousands of travelers were stranded.

March 27, 2008

“Who’d you talk to?” It’s the favorite question of customer service agents hoping to put you off. If you can’t name names, the implication is that you’re not telling the truth or that you haven’t done your job as a consumer.  In the least, it puts you on the defensive and changes the focus of the conversation from their mistake to your "faulty" memory.

One of the easiest ways to keep the focus on the problem rather than the process, is to become a good note-taker. On every call to a company—to customer service or sales—get as much information as you can, including:

• Date and time of the call
• Agent’s name
• Agent number or extension
• Return phone number
• Call center location
• Any agreements discussed

Be sure to write down any additional personal or company information that the agent might volunteer in the conversation.

Good note taking will help you present yourself as a conscientious, formidable consumer they are better off not ignoring. And, the next time you’re asked who you talked to…

“On March 4, 2008 at 9:45AM, Pacific Standard Time, I spoke with David White at extension 3451. He had just returned from a trip to Florida with his wife and six year old daughter. We had a nice conversation in which he promised my $200 refund by the 19th. Unfortunately, that hasn’t happened. Can you please check on it? And, by the way, what’s your name?”

March 25, 2008

I’m often asked, "Why don’t companies treat their customers better?"

As any businessperson can tell you, customers are important because they’ve got the money.  This fact led to the basic business premise that "the customer is always right." Meaning, that whatever a customer wants--within reason—you give it to her to make the sale. You might have to sacrifice a little in the short-term, but in the long-term you’ll have net sales gains from repeat business.

So what happened?

Here’s the quick version... an accessible stock market, the tech crash, a Draconian business model and global fiber optics. “What?” You say. I’ll explain.

In the late 1990s, online trading created a new population of small investors who were generally not as patient as traditional brokers and institutional traders. At the same time, the tech revolution created a huge group of stock option holders who had a large part of their net worth tied to their company’s share price.

Then, the bubble burst. To please antsy investors, beleaguered CEOs propped-up short-term results by slashing staff. But they couldn’t cut at the front end where sales were made. They had to trim at the back, where they took care of the customers they already had. Didn’t they worry about losing all their loyal customers? No.

Just a few years earlier, a cadre of Ivy League economics professors had begun promoting a new business model called “churn,” touting the idea that you could actually boost the bottom line by offloading customers who called customer service. They calculated that the average customer service call cost twenty bucks, but that the same customer could be replaced for only four dollars in marketing expense. Simply… it had become more profitable to ignore you than to take care of you.

The customer service knock-out blow came with the bankruptcy of a little-known company named Global Crossing that had created the world’s largest fiber optic network—which was auctioned-off for pennies on the dollar. Cheap fiber meant that worldwide long-distance calling rates plummeted. Suddenly, it was less expensive to call India than Indiana. Cash-strapped companies replaced expensive in-house customer service departments with low-cost contract call centers on the other side of the globe. It didn’t matter that the new “representatives” didn’t have any experience; all they had to do was read off a screen.

So, how’d we get here? Short-term views led companies to slash staff. Economists claimed customer loyalty didn’t matter. Global economics and off-shoring of jobs eliminated experienced in-house agents.

It’s not all bad news though. In an upcoming journal entry, I’ll tell you why things are going to get better and why you’ll be able to take part of the credit.

March 20, 2008

Two stories I’ve been working on this week contrast two extremes of corporate citizenship and customer relations.

Story one involves a major cruise line that couldn’t see its way to even a partial refund to husband-and-wife AARP members who had a less-than-ideal $8500 cruise experience.

The second story is about a relatively small laser hair removal clinic that, despite having a rock-solid signed contract, made the decision to refund $5,000 to an AARP member whose business had been severely damaged in a tornado and who needed the money for rebuilding expenses.

Why did the smaller service company decide in favor of the consumer and the corporate cruise giant did not?  The different outcomes may confirm what we already suspect, that as companies grow they often lose touch with the kind of personal service and corporate compassion that made them winners in the first place. Profit margins and bottom-line thinking overshadow the “customer is always right” attitude more often found in startups.

However, the rules of the marketplace are amazingly democratic, applying equally to global cruise line and feisty new franchise. We’ve seen corporate icons like Woolworth’s, Pan Am and Bear Stearns forget where their roots were planted and topple into extinction. Conversely, more attentive companies like Starbucks, Costco and Apple thrive, proving once again that excellent customer service can be the foundation of financial success.

The overarching question is... over time, do all companies have to suffer the same fate? Is corporate callousness as inevitable as death and taxes?

As George Santayana declared, “Those who don’t learn from history are doomed to repeat it.”

Or, in the words of Warren Buffet, “It takes twenty years to build a reputation, and only five minutes to lose it."

March 19, 2008

Here’s a common problem solved. Whenever there’s trouble with a product or service, the first thing you’re always asked for is the receipt. Then… you have to dig, or search, or hope that you put that tiny piece of paper in some obvious place.  Quite often, it’s nowhere to be found.

You’re not alone; everyone has trouble keeping track of receipts. The biggest problem for me used to be how to store them.  They are irregularly shaped pieces of flimsy paper that just didn’t fit anywhere.  I tried filing and envelopes and stapling them to larger pieces of paper. Nothing worked well and it all took lots of time.

Then, I discovered a couple of simple tricks that really helped me manage the puny paper chaos.

For big purchases—over $100—I staple the receipt to the inside cover of the owner’s manual and then store all the manuals together on a single shelf in the utility room. The key is just keeping all the manuals in one place.

For the majority of purchases which are less expensive, I use a Receipt Box. This is just a banker’s box from the local office supply store that I park on the floor of my bedroom closet. Any time I have a receipt, from the grocery store, coffee house or the dry cleaner; it gets tossed into the box. 

I know what you’re thinking.  After just a few months, there are going to be hundreds of receipts in that box. How would I ever find the one I need?  It turns out to be surprisingly easy. If I’ve got a product to return, I just dive into the box.  Even when full, it’s never taken me more than a few minutes to find the appropriate receipt. It also doesn’t take much time to become expert in telling which slips are from the super market, auto parts store or the electronics shop. In the end, I may have spent five minutes searching, but that’s small change compared to the hours I might have spent actually filing all those shopping shreds.

At the end of the December, I just put the top on the box, label it and store it. After a respectable period of a few years, I toss out the receipts and use the box again for the current year.

The Receipt Box works because we rarely have to look at all the receipts we have stored. We usually only need to find one in the many, and not very often at that. It’s a simple solution to a nagging problem that will save you time and money.

March 18, 2008

You need to be careful if you plan to clean out your garage with an online sale this spring. While Internet classified services such as Craig’s List have made seasonal de-junking a whole lot easier, police departments across the country--in towns large and small--have reported burglaries and break-ins related to online listings. Apparently, some prospective shoppers can really be crooks just checking out your home.  

How do you protect yourself? 

1. Don’t let buyers into your home.
2. Use your garage as a showcase for large items. 
3. Take small items to a public location.
4. Get payments in cash.
5. Don’t give personal information to purchasers.

This journal is the place where I let you know about what’s happening in the consumer world in real-time. You can check here for consumer alerts, action items and my comments about how different events may affect your consumer rights and opportunities.

If you see something that you think I should include in this journal or if you have a personal story to share, feel free to write me at On Your Side and tell me about it.  I am particularly interested in situations where consumers successfully fight back against unfair treatment or where companies are taking advantage of consumers.

From time-to-time, as part of my research for the column and other stories for AARP, I will also be asking you questions about your specific consumer experiences in particular industries or situations. I hope you will share them with me. Nothing will be published or posted publicly without your permission.

-- Ron Burley, AARP "On Your Side"