Feeling Blue
You wouldn’t have to have read our piece last week on CPA Networks to know that they not only play a vital role in the performance marketing ecosystem, but that they often play a mixed role, sometimes good cop, sometimes bad cop. Also up for debate is the role of technology in the business, i.e., given that the tracking piece has become commoditized. One thing that no one questions though is the role that relationship management plays in performance marketing and how few have better service than the availability of account managers to their big clients. The service and the relationships between client and customer makes more of an impact than many might realize. It was something we were reminded of recently when talking to a loyal customer who switched companies. It was an affiliate, but he didn’t switch networks. He switched something else that affiliates use quite frequently – airlines. It’s a lesson not just for them but for any brand. And, if anything, CPA networks are certainly brands.
Our frequent flier, whose trips include the usual conference related jaunts plus several ad hoc meetings and more than a few long weekends away, found himself in the past year flying JetBlue. Frequent travelers from major markets will know the company, and their slightly irreverent branding, well. The company flies one of the newest fleets, has Direct TV in all seats, and similar to Southwest Airlines operates a classless cabin. The closest thing to first class comes by way of premium seats that have more legroom, available to purchase for a roughly 15% premium. They offer limited brand name snacks, and even have a page on the site titled, "Why You’ll Like Us." From offline to online, this is a company that obviously approached the airline industry with a clear vision of where they felt gaps existed in the pre-Blue product mix and a specific plan for making them stand apart. And, for the most part, they have succeeded.
Like every company, JetBlue has had some hiccups along the way, including a really challenging time during the 2007 holiday season with canceled flights and stranded passengers. They overcame the intense negative attention shone their way over that holiday season, and by an outsider’s perspective, the company looks like the model to follow for loyalty and differentiation, especially given that they don’t really play the price game. Interestingly enough, their business model shares much in common with the CPA networks minus the almost hundred million dollar start-up cost. It’s a commodity business that at the core gets you from point a to point b, which in the world of CPA marketing translates into offering a place to grab an offer and track performance. Essential to many commodity style businesses are incentives to get customers that much more attached and to increase the switching costs. They play a big role in travel.
JetBlue calls their rewards program True Blue. Unlike some other programs, their miles do expire. Rewards programs are a cost, so breakage makes sense. So too does a mechanism to recoup some of the cost in order to offer "lifetime" miles. For JetBlue users, that came if you happen to have their credit card and use it with specified frequency. Not that long ago, though, they changed over their program, and it appears that some of the old miles transferred but without the expiration. As a non-JetBlue regular, I don’t know for sure, but that was strike one against them from this client. He got the card and used it. Transfer those miles without the expiration. Point of contention number two came when he proactively moved his flight in anticipation of a storm that was to delay the flight. He paid the fee online, because he could not get through to customer service. When he called later to get some of the money back, like they did with the miles credit, they point to the terms and conditions.
Customer service at a company that size has its challenges. You have to make it scalable. Account management at a CPA network is much easier and personal. There is a one to one relationship between client and the company. At a large company, you need a framework, as you don’t want just anyone making significant financial decisions. And, that’s where things have broken down currently; with big companies not being able to act like the small companies can. If you are Time Warner Cable or a company that has a veritable monopoly on that particular service in a market, you can afford poor service; or, you lock people in to long contracts like cell phone companies do. Otherwise, you risk what happened with this traveler. He stopped flying. He said it felt almost like a breakup. He once felt affection, but it no longer feels returned. Lucky for him, this isn’t the prom queen. It’s now just point a to point b.
There are some interesting things happening with social media and companies like Rapleaf, who can help provide a more holistic view of a customer. Smart companies will use that data to know whether to escalate and how public their voice is. Smart companies know that customer service doesn’t just mean service; it means understanding the value of a customer. Commercial banks for example have the profit of every particular account calculated. Others could follow a similar path and use that, along with social data to come up with a score. Had Jetblue done that, they would have seen someone without any complaints a large earner. Instead, the one dimensional approach cost them future margin. Compare that with Zappos who knows good service keeps the emotional connection and people paying more than they could now, they become simply a low cost carrier. The brand to him is no longer more than the sum of the parts. Was he truly screwed? He certainly did not follow the terms and conditions to the letter of the rule, but all that matters is what it feels like. What is the price of loyalty? In this case, less than $500.
