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science of CX

 

 

CX Connoisseur, Steve Pappas, shares his insights on how to turn your customers into loyal brand ambassadors.

Known for his relentless pursuit of all things ‘customer’, Steve knows how to help your business and create experiences that customers respond to.

Listen to Steve’s insights. Learn to grow and accelerate your business.

Learn more: www.scienceofcx.com

Steve Pappas (00:03):

You’re listening to the Science of CX, a podcast that hopes to inspire business owners and leaders to learn new techniques and turn prospects into customers, and turn customers into raving fans. My name is Steve Pappas. I’m known for my relentless pursuit of all things customer. Across my career and also in my six startups, I’ve had to learn how to make decisions in business that customers really respond to. Let’s spend some time together and help your business soar, grow and accelerate.

(00:39):

Well, welcome everybody to another episode of the Science of CX. I’m Steve Pappas, your host. Today we’re going to have another interesting show. We’ve covered a lot of areas of customer experience, we’ve covered a lot of areas of retention, loyalty to the customer, but you know what we haven’t done? We haven’t actually talked about loyalty programs. I thought it was important that we go down the path of really discussing what loyalty programs are and what the big companies are doing, like airlines especially.

(01:14):

We went out and we found Mark Ross Smith, who is an absolute expert around the area of loyalty programs, especially in the travel business and what the airlines are doing and quite frankly, how they’re keeping their customers loyal as much as possible, even through the pandemic. We’re going to talk about a lot of areas and I think you should just sit back and relax, because we’re really going to cover the A to Z around loyalty metrics, what does the airline use in their programs to measure loyalty, what are the KPIs that really serve the needs, how they tap into the subconscious mind of their passengers or their customers, all of these things are important. No matter what business you’re in, whether you are a brick and mortar business or you’re an online business, these types of things can really help you in your day-to-day business. Help me welcome Mark Ross Smith to the show today and we’ll get started just in a minute with him. Mark, thanks for joining us.

Mark Ross Smith (02:25):

It’s great to be here, Steve. That was a very generous introduction.

Steve Pappas (02:28):

Well, I didn’t want to tell people that you took one flight and now you’re an airline loyalty program experience guy out there. You’ve got an incredible pedigree and knowledge set in all of these areas. From our time we’ve talked and I know because I’ve been in that business. I can really empathize with everything you’ve gone through to get the data, get the information. The company you built, StatusMatch, we’re going to talk a little bit about it, as well as your newsletter too and the Travel Data Daily.

(03:01):

But let’s get started first with a little more about yourself. I’d like to open the floor to you to just give a little background as to how did you get here today and give us your background that led you to the Travel Data Daily, as well as building StatusMatch, because I think how we get into something or our path to something usually carves out how we approach it, and how we build a business, and how we take care of our customers, and things like that. I’ll leave it to you.

Mark Ross Smith (03:35):

When I was 10 years old… There is a legit story here. My parents used to get a magazine in the mail every week. This is in the ’90s when there was a thing, I’d come home after school, I’d open it up before my parents would see it and there’d be advertisements for airlines in there. Full page, double spread, full color, big high-res photos of airlines flying to Hong Kong, or Taiwan, or wherever.

(04:01):

I used to rip these pages out of the magazines, they’d put it on the walls in my bedroom. For many years when I say the walls, I mean my walls were plastered in airline stuff. There was a lot of magazines that were ripped open and my parents didn’t really like that, because the other pages that I ripped out, they’d miss half the articles they actually subscribed to, so kind of started there.

(04:22):

I was destined to be in the travel business. Let’s fast-forward a few years, I had a social network business in Australia. As part of that I was flying all around the world, advanced conferences, meetings, all sorts of just businessy stuff, got to meet people. I was flying probably 120 flights a year all over the world. I loved it. Obviously I loved flying and travel in general. I was really made it to an ultra Uber VIP status. At the time I was flying mostly Qantas and the One World Alliance.

(04:57):

When you get certain level on the airline, suddenly management want to know you a little bit more because he’s spending so much money and it’s like, “Oh, who’s this guy, AKA, how can we make sure he continues spending and spends more?” They want to know a few things about you. I’m not talking about what’s your favorite drink and do you like a bloody Mary before takeoff. It’s more the where does flying, what are the preferences? Has he got the right credit card? This kind of stuff.

(05:21):

I really got interested in this and what I found is talking to management, I found that there’s a bit of a disconnect. They were asking questions of me as a frequent flyer, as a traveler that were coming from the perspective of it’s almost like they didn’t know a lot of things or they were innocently asking. I thought this is a bit odd. How did they not know that when aircraft changes from this 777 to an A340, this is back in the day to A340 a seat change. How do they not know this stuff? I’m an ultra geek.

(05:50):

Anyway, ended up moving to Hong Kong and being a VIP one airline, I then approached Cathay Pacific, biggest airline there and I said, “Pretty big customer over here. I want to start flying. You guys know I’m based here now. It makes sense me to move my business. Can you give me a status match? Which is loosely the idea is, I’ve got this elite status with one airline and if you give me the equivalent on your airline, I’ll shift my business across to you, because I don’t want to start from the bottom.

Steve Pappas (06:17):

Exactly.

Mark Ross Smith (06:18):

They said no. Then I asked a Singapore Airlines in the region, they said no as well. I thought this is not right. Why would you not want a new high value customer that’s ready, willing, able to spend a lot more than a lot of other people? Put into perspective, if you’ve got a gold or platinum status and a elite status on airline, you’re in the top 2% of commercial air travelers globally already. If someone’s able to spend 20 grand, 30, 40 with my business, I mean heck you spend 50 bucks with me, I’m going to reply to your email in a minute.

(06:50):

That was really the moment when I thought I’ve been a customer for so long on airline, maybe it’s time I got into the business in working in airline, because I love this stuff. Maybe I can fix some of these problems from the inside. This is a big, big dream. That’s when I started Travel Data Daily, my blog and I started writing just thought leadership pieces about here’s what airlines could do to make more money out of this. Here’s how you could create more loyal passengers. Here’s how you could create better customer experience. Here’s how you could do X stuff that wasn’t out there and I thought that airlines should know.

(07:23):

I started that. I started attending events, like all the aviation events around the world. Again, I’ve not working for an airline, or hotel, or travel agent, or none of that background at all, just being a customer, a legit customer that’s spent way too many nights in hotels, way too much time flying in metal tubes, because there’s no university for this stuff. There’s no customer experience degree that you can get… Or there might be now, but there wasn’t back then. The best way in my mind to learn this stuff was to be a customer. To actually go through it, go through the pain, your own money, go through the highs and lows of it.

(07:58):

Long story short, got experience there and then was tapped on the shoulder to run Loyalty at Malaysia Airlines and went there for a while, ran the loyalty program there, got great insight from the inside, tried to fix some things. Very difficult obviously, airlines are very slow. Even with an entrepreneur startup type mentality from the inside, still very difficult. After that, left, started statusmatch.com, which really was to solve my original problem of helping airlines acquire high value customers and providing a great experience around that.

Steve Pappas (08:31):

I mean, it’s interesting what you went through to get to where you are. I spent many years traveling hundreds of thousands of miles, walked from one gate to the other, or I’d get driven from one gate to the other, or if it was an overnight flight, I’d be taken to where the showers were and things like that. But the second that I stopped traveling as much, the airlines didn’t even want to know who I was. They didn’t give me the time of day afterwards when I fell out of favor with them.

(09:06):

But I never thought about status matching, because I probably could have in many cases. I think what you’ve built is an interesting approach that a lot of travelers get fed up. They get fed up with an airline, even though their VIP status level. They get fed up because of one thing or another. Either they can’t use their system-wide certificates, they can’t get the flights that they want, they can’t get the vacations that they want or whatever the case is, but because of the amount of loyalty points they’ve got built up, they find it hard to move. It’s almost impossible for them to move.

(09:46):

I think the airlines understand this. What you’re doing is a bit disruptive, because the traditional way it’s always worked is airline grabbed you and they figured they’re going to hold you for life as well as your family and you never leave. But you’re giving people an opportunity to see what it’s like somewhere else. Does that make sense?

Mark Ross Smith (10:09):

You’re totally right, but is the grass always greener on the other side? Not necessarily, keep that in mind. Every day, all around the world, people move cities, countries change jobs. There is a big group of people that legitimately need to find new airline loyalty programs, hotels as well. This is really common. I’m talking thousands of people every day. There’s a lot.

(10:32):

The world’s getting smaller in that regard and sometimes it doesn’t make sense for you to continue being loyal or just blindly spending with one airline. Sometimes it makes sense to have a backup airline. Not all airlines fly everywhere. Even some of the big three global alliances, sometimes you just can’t get a flight with an airline in those. Or sometimes the flight is 10 times more the cost and you’re like, “Well I’m not paying a thousand dollars for that where it should be a hundred.”

(11:00):

Some of that makes sense if a backup program. That’s where StatusMatch comes around. Status match as a concept, as an idea has been around for at least 35, 40 years. It’s like it’s not a new thing. The earliest status match we can find was actually from 1986, someone said a fax to American Airlines and said, “Hey, I fly a lot with United, what can you do for me?” I think they hooked him up. That was the earliest version of this and the customer experience around people basically begging for a status match.

(11:29):

If you’re spending a lot of money there, you should be begging for this kind of stuff. It should be a very seamless process. I mean, if I’m running an airline, I would want it to be seamless process. I want to take in as much of these new customers that are wanting to try something else as possible. I’d make it so, so easy, that it’s just like two clicks and we’re done. Effectively that’s what we created. Two or three clicks and you’re done, built a logistics tech platform around it that links into all the right areas of airlines and hotels.

(11:55):

It’s basically the customer experience I wanted. Pretty much just built that and showed a bunch of airlines and we’ve been live couple of years now, nearly a couple years and we’re signing up airlines all the time. We’ve probably status matched probably 15 different airlines in the last year or so, helping people get there.

(12:15):

People are really grateful as well, because there’s some airlines, you send them an email and you say, “Hey, can I get a status match,” or think he moved my business, or “I’ve just moved to this country, I’m getting new credit cards. My company lets me fly whoever I want.” Makes sense to fly with this airline because maybe you’re moving to somewhere like Singapore where it makes sense to shift your business to Singapore Airlines, just because they go everywhere from there. You move there. If you are moving countries or your company sends you from one country to another, you’re probably making decent money. You know what I mean? You’re in that level where you’re doing all right. You might have moved your family as well, which means you’re going to have trips back home every year, maybe two a year kind of thing.

(12:55):

You’re going to travel more. You need a credit card in that local country. You want them to get the co-brand credit card, which has made airlines a lot money in the last couple of decades. Really it’s about just bringing that experience that I’ve always wanted and helping airlines roll that out on mass.

Steve Pappas (13:13):

It’s interesting, because a couple of questions, though. What happens when people sign up? Let’s say they go to statusmatch.com and they sign up and they want to move. I can imagine whether they’re moving countries or even in the states, they might have lived in Dallas and of course they would be an American Airlines customer and maybe they moved to Atlanta and all of a sudden American’s not as much there, but Delta has a hub in Atlanta, so it might make sense for them to move just because they’ve moved a thousand miles away or 800 miles away or whatever it is, it might make sense. But what happened? They go onto your site and you said there’s two clicks, but what happens behind the scenes with the airlines and yourselves?

Mark Ross Smith (13:57):

Okay, so there’s actually, well two clicks. Registering takes one. Register for free, punch in your loyalty [inaudible 00:14:02]. You go, “I’m American Airlines, here’s my number, I’m platinum member.” Punch it in. it basically scours for opportunities for you. It’s like, “Here’s what we could do for you,” because we don’t work with every airline. it’s tricky. Sometimes we don’t work with Delta, so it’s Delta, if you’re listening, kick me up. Someone like Frontier, for example, we work with them. You could go through and you could go through a bit of a process there.

(14:25):

We validate, you have status with American Airline, it’s real, it’s valid. You pay a fee and then we send that out via APIs and stuff to the airline and you’re upgraded within a couple of days kind of thing. Then you can start booking your flights with that airline. You can start earning miles the other airline, get the credit card. You’ll do all the right kind of behavior that this other airline wants you to do, because they’re giving you something that otherwise might take 20, 30, 40, 50, a hundred flights to achieve.

(14:51):

The logic is the airline’s giving you some status. In return, you’re going to sense a business. I mean, that’s why you would do it in the first place anyway. That’s really quite common. This is really common for people that moving cities, changing jobs, that kind of stuff.

Steve Pappas (15:05):

Obviously there are some airlines that probably say, “Gee, we really don’t want to do that.” But in the end, I would imagine if their competitors are working with you, it really makes sense for them to jump on board. At some point they’ll realize that they need to do that. It almost feels like they front load their loyalty program. They’re giving you something in advance of you earning it and you still have to earn it for the following year, I would imagine.

Mark Ross Smith (15:37):

Yeah, exactly. You need to earn it on merit the following year. Sometimes airlines will run a challenge. They might give you, for example, a gold status for sixty, ninety, a hundred and twenty days. In that time, you’ve got to do X number of flights or sectors or spend. If you meet that criteria, they’ll extend it for another year. It’s an easy way to get into the program, without having to go the full hard slog of a hundred flights. It’s prorated based on the time. That’s a common way to get people in as well.

Steve Pappas (16:05):

Aside from the fact that people have moved, what are the other reasons people want to change status to another airline? Is it mostly on the perks that they can get, the perks for themselves, their family or their ongoing comfort while they’re flying? Because I’ll tell you, for me, status was the perks of flying. It wasn’t really the fact that I wanted to go to Hawaii with the family, because we would buy that. It was the fact that I like to arrive wherever I’m going, a lot fresher than if I had to sleep at an overnight flight in a very narrow, tight seat. I’m getting no sleep whatsoever and I’m going to be worthless the next day.

Mark Ross Smith (16:54):

Exactly. Funny story, actually. Know someone that would take a red eye flight and then go back on the return flight the next morning as their hotel and they’d effectively sleep in coach as the hotel to get back [inaudible 00:17:06]. Do not recommend this, but you’re right, there’s a lot of perks that come with these elite status levels. Airlines give out these perks, because you’re spending a lot of money. You’re a great customer. You’re in this top 2-5% of global travelers.

(17:22):

That percentage of travelers represent somewhere between 30 and 40% of total ticket sales for an airline. It’s a huge chunk. It’s a custom base you’d need to look after. That’s just them buying airline tickets. There’s this whole other business that loyalty programs have around credit cards and how you earn miles from credit cards and banks effectively buying miles off the airline, putting in your account. That alone, forget about selling tickets for a second, just the credit card part alone is multi-billion dollar business for airlines. It’s absolutely incredible.

(17:54):

To your point with status, why do people do it or why do airlines do it? It’s the number one way to unhook someone from one airline. If you’re dead set on flying with one airline, you got to think about what’s going to get you to switch or try another out. Just try another out. Just try one time. You don’t have to move everything, just try one flight. What would it take to do that? Loyalty members tend to spend more on tickets. They’re in business class, first class, they’re in a high yield economy or coach seat. They’re buying the add-ons if there’s some, because they understand the value of these things. They’re checking all the boxes, they’re the best customers you can get.

(18:29):

What does it take to unhook them? These people already have priority check-in. They’ve got lounge access, they’ve got priority boarding, free bags, they’re treated pretty well. They got a bit of a cruisy life. The way to get them over to new airline is to provide them with that cruisy life over here as well, hence a status match.

(18:49):

It’s what we’ve seen. It’s just the fastest, easiest, cheapest way for airlines and hotels to unhook a customer from one brand to another. There’s a multitude of reasons why airlines would do this. Generally, if you’re launch a new route to a new country or a new area, you’d want to try and grab some people, and some population in that area that have status.

(19:09):

In the last couple of years, in pandemic times, there’s something like 50 something new commercial airlines that have started up. You got all these new startup airlines and they’re looking for customers. They got a loyalty program going, they run a status match and suddenly they can capture some customers from the big guys who have millions and millions of elite members around the world. It’s a pretty easy way just to capture new business, where you don’t have to do discounts and the traditional marketing type stuff.

Steve Pappas (19:37):

Let’s take it more to the customer experience for a moment, if you will, because I think that what you just touched on, how do you unhook a customer from one company to the next, or one vendor to the next, or one store to the next, or one restaurant to the next? I mean this is an important point for any business listening, that how can you get a customer a new especially high value and potentially high loyalty customer to unhook themselves and just try you? Try your business and then of course wow them and gain their trust and their loyalty moving forward. What does it take to get the first one in the door?

(20:25):

Is it some type of a loss-leader? Is it some type of an incentive? As you said with the airlines, they probably don’t have to discount things, but it’s not about the cost necessarily, it’s about everything else that goes around it. I want to challenge our listeners a little bit if they can think about what would it take to unhook a diehard loyal fan from one company to bring them over to yours? I’ll leave it there for a second. Let folks think about that one, because I think we just talked about it in the airline business, but that probably is an exercise every business person should be doing and figuring out, “Well how do we get that? How do we acquire that customer? How do we get them to just try us?”

(21:13):

Let’s go down the path a little bit more about these airlines and the levels of customer experience that they’ve been exhibiting. We know that the levels with airlines have gone up and it’s gone down. What are you seeing out there right now for customer experience within the airline business? Is it becoming just a commodity? Is it becoming a bus in the sky or are some airlines really doing the right things and trying to get it right out there?

Mark Ross Smith (21:44):

I think now, demand has come roaring back for a bunch of airlines in the last 3, 4, 5 months kind of thing. On one side is some struggles from airlines, how do they ramp up operations? How do they do all the stuff they used to do pretty well? How do they get that going again? There was a lot, lost a lot of stuff in pandemic, some airlines. They’re trying to hire people as fast as they can again. Training people, especially think cabin crew for a second, because I have a soft spot for cabin crew, because they’re sometimes the last line of defense for an airline. You book your flight, you check in, you do all that stuff, and then you’re finally sitting in the seat and you’ve got a cabin crew in front of you. It’s like the last chance you’ve really got to speak to someone that represents the airline about anything that’s happened in that experience that day.

(22:33):

They cop a lot really. Kudos to all the cabin crew out there, because they do a fantastic job. I’ve always thought, “How could airlines empower these cabin crew more? How could they help them do more to not just be like a service recovery mechanism for the airline for that experience that day, but how could they create really magical moments? How could they do more?”

(22:55):

Everyone has this little thing in their head, this thought, this memory of a really absolutely brilliant, the best travel experience they’ve ever had. Everyone’s had at least, well hopefully at least one in their life. It might be from when you’re really young, everyone’s got this ideal perfect example of this one time I flew from blah to blah and this happened, and this happened, and it was just perfect. That’s the story you tell everyone. You’re like, “Gee, isn’t that airline really amazing?” Based off this one great experience, you’ve forgotten about the 300 terrible flights you’ve heard of that airline.

(23:27):

Generally, you don’t talk about how amazing this airline is because they always take off and land on time and how operationally it’s amazing. Generally, it’s about the customer experience, about the engagement, it’s about interaction you had with a staff member. It’s about how… I talk about these things as what I call yugen moments. Yugen is an ancient Japanese term of the subtle and the profound. This is when you don’t have a word to describe these things.

(23:52):

For example, it’s the moment when the sun is rising, you’re looking over the horizon, the light just shines in your eye, there’s first two seconds, it’s really kind of magical moment. It really invokes this emotion within you. Those two seconds that your brain’s trying to interpret, that’s the moment. That’s that magical moment. I think about how could airlines capture more of this? How could they create more magical yugen moments for passengers on board?

(24:18):

Airlines actually don’t, maybe not now, but they actually do it. They sometimes do it really, really, really well. It’s things like the airline is calling boarding for the flight. They say, “All our platinum first class passengers, welcome to board now,” and the only platinum member on board and you stand up, you go to the line and you bolt past 300 other people that are waiting to board as well. They scan your board, “Welcome back,” and you’re like, “Wow, this is why I’m loyal to this airline, because I just walked past everyone else and I get to board first and yes, there’s going to be space for my overhead locker.” It’s just two seconds. That’s all it is. It’s a feeling you get for two seconds. You ask for a Coke or something on board and the flight attendant comes back and they give you two.

(25:05):

These are such small things, insignificant. If you were to ask airline management what is most important in terms of what drives loyalty, they would say price, network, lounges, all this kind of stuff. When really, it’s about these small moments, these small moments added up over and over, like positive moments repetitively. This is delivered by people, real customer experience stuff.

(25:29):

That’s why I have a lot of tremendous respect for cabin crew, because they’re delivering this stuff. Most people when they talk about cabin crew, especially in my part of the world in Asia, they talk about how cabin crew is so amazing at their jobs and how they can turn what might be a average or poor experience in flying into a really amazing experience, just through this human touch, through these small, small, small moments. I think there’s a really big opportunity for airlines to really nail this and get more of these small moments happening, to create more, if I call it magic in people’s lives when they fly.

Steve Pappas (26:02):

I think about all the times I’m flying lately. I’m happy when I get a full can of soda, not just the little plastic cup with four pieces of ice in it, which means there’s about three ounces of liquid and after you’ve had the nine pretzels in that tiny little bag, it’s not quite enough to actually quench your thirst from the dryness of the pretzels. I guess my question is, “How empowered is the cabin crew of most airlines?” Some of these airlines must be on such a tight budget that they can’t afford snacks more than nine pieces of pretzel or they can’t afford to give the full can. Do you see where I’m going with it?

Mark Ross Smith (26:50):

You can hear everyone listening to this going, “Yeah, that’s me. I’ve had that too.” By the time you’ve eaten through your nine pretzels or your four nuts in that packet, the cart’s gone past your row and there’s 50 other rows behind. You’re like, “Oh, I can’t really ding ding and come back to me. I want another packet.” Or some airlines might have the audacity to say, “That’d be $5 for another packet of pretzels.”

(27:10):

Cabin crew are pretty creative, I think, because they deal with a lot of passengers, they’ve seen a lot. They travel around the world, they’ve seen different cultures, different types of people. They see how different types of people interact. They’ve seen people on the flight going to the honeymoon. They’ve seen people on a flight going to a funeral last minute. They’ve seen people in very different emotional states over and over and over for many years. They’ve seen it all.

(27:34):

One good example, is that it’s your birthday and the cabin crew know about it. You might have seen things on Instagram, people post photos like, “Oh look, I’ve got this cute card front from the cabin crew. They’ve all signed it, “Have a great birthday on flight,” and signed by the captain. It’s like, “Oh, that’s kind of nice.” This is just them being creative because they don’t have the resources to do something really, really cool. This is my dream thing. I would love to see… You know Mr. Beast on YouTube?

Steve Pappas (28:03):

Yeah.

Mark Ross Smith (28:03):

I want to see Mr. Beast team up with an airline and create videos, create something really effing amazing that just blows everyone’s minds. If anyone listening knows Jimmy, get in touch, because I think this would be really, really good. WestJet used to do some of this stuff. Remember the old Christmas videos?

Steve Pappas (28:23):

Yeah, I do.

Mark Ross Smith (28:25):

They were really amazing, really great vibe, fantastic customer experience. It puts WestJet top of mind. You’re like, “Wow, if they do that for random people with this kind of thing, what are they going to do for me?” It seems like the airline cares. It seems like it’s a different vibe to the rest of the airlines that I’m used to flying, which give me three nuts and don’t want to fill up my Coke for the rest of the flight.

Steve Pappas (28:49):

It’s something because I think back to when I owned a charter airline and we used to do Boston to San Juan… That was back when Eastern left the market and American didn’t have enough inventory, our approach because of my CX background, but our approach was we picked them up at their house. That’s the last time they had to touch their bags. We had a transportation company as part of it, obviously we had all the ancillary services under this banner, got them to the airport. We used one of the common lounges to get them all together, even if it was with their families, got them onto the plane. This is pre iPads and iPhones. We even had things for the kids to do, things for the parents to do. We had games the whole time. We chose the menu, we chose the specialty drinks that were being served on board and we also flew two hosts on every single flight.

(29:50):

One host was responsible for kids that they would hand out coloring books, crayons. We did arts and crafts. There were all kinds of things, nothing messy but still things that kids could do. Then we had someone on board that was either able to tell jokes or could entertain folks. We used to get people that came out of improv or people that came out of comedy clubs and things like that. But they were still the host or hostess of those flights. Then the next time they saw their bags, they were waiting for them in their rooms.

(30:23):

We had a different approach with the charter airline. Maybe I’m just hypercritical of airlines these days with my stories of the nine pretzels and the two ounces of drink, but that’s the way a lot of the main US airlines feel like they’ve gone. It’s because of the add-ons that they’ve brought in. I mean, if you want a free seat, it’s going to be a middle seat in the back. You have to pay for that window seat. You have to pay for that aisle seat. You have to pay to be forward, you have to pay more if you want a bulkhead seat. You pay for your bags, you pay for your overheads.

(31:03):

It’s gotten to the point where, as I’ve polled a lot of people that travel, it’s not as fun these days. How do we get the fun, the experience back into traveling? I think it’s the travelers that are putting up with it. The travelers have not revolted against it. The airlines are saying, “Well okay, we can get the $800 for that seat that we used to charge $354 and with all the add-ons and people still fly. We’re still getting full flights.” It’s not like during the pandemic where you might have been one of 30 people on a flight, but how do we get the fun back into travel? The fact that people say, “Wow,” people say, “That was a great trip, a great flight.” I guess that’s where I’m wrestling with where the industry itself has gone.

Mark Ross Smith (31:58):

First thing that comes to my mind is haven’t these people flown Emirates?

Steve Pappas (32:02):

Probably not.

Mark Ross Smith (32:04):

Talk about showers in the sky and stuff like that.

Steve Pappas (32:06):

Practically apartments too.

Mark Ross Smith (32:08):

Actually reminds me of that advertisement from 2016, maybe, Jennifer Aniston and Emirates. She’s walked back into the coach and she said to the flight attendants, “Where’s the onboard lounge? Where’s the shower? I need to get ready.” They’re like, they laugh and they say, “This is not Emirates. Ha, ha, ha, you’re dreaming.” Then she wakes up and she’s like, “Oh, it’s all a dream. Oh, thank goodness I wasn’t on that airline.”

Steve Pappas (32:29):

We’ve all seen the videos on YouTube of Casey Neistat, taking an Emirates or taking Cafe Pacific, or something in first class and videotaping and vlogging all about it. Nobody vlogs about the back of the plane. It’s a different experience.

Mark Ross Smith (32:46):

Would anyone watch it, though? The guy sitting in the middle seat on a 12-hour flight with two screaming babies next to him. What a great flight that would be. Airlines have largely been cost driven. The last, I want to say 30, 40 years, reduce costs, reduce costs. You had deregulation at that time. You had all sorts of stuff happening. Before that, think about who used to run airlines, ’50s, ’60s, ’70s, that kind of thing. Mostly hoteliers. They were the people that got into higher roles.

(33:12):

You think about hospitality training and what that involves what you go through, it’s service oriented, more service and less financially focused. Whereas these days, it’s kind of switched. It’s now highly financially focused. How do we deliver these results for the next quarter? How do we do this? How do we do? They’re all just companies, all this kind of stuff.

(33:33):

It’s more about cost reduction than how do we provide more value and then charge more. If you think about, I don’t know if you saw American Airlines the other day as getting rid of first class, I think internationally from their fleet. If you think about today in the world, there’s more money exists today than ever before in human history. You would think there’s more people out there that have more money than ever before. Admittedly there’s more people are dying as well, so keep that in mind, but there’s definitely a section of the world that have more cash than ever before.

(34:08):

Look at private jets, the industry is going really well right now. The demand is there for a good product and airlines are cutting it away, chipping it away, they’re removing first class, they’re going where they think the demand is and they think it’s people paying less, price driven people, when actually, I think it’s exactly the opposite. People will pay for value, so why not put more value in there?

(34:29):

I think there’s a bit of a disconnect here also, because if you think about typical staff member at an airline and management, they’re really not customers of their own product. They work at an airline, they’re at a desk, they’re at an office all day, they’re not out there flying around the sky. What it means, is when it comes to decision making, they’re talking to their friends that fly a lot, or the board members, or someone else that’s related around the business, flies a lot that isn’t surveys, focus groups, all this kind of stuff, because they don’t inherently understand it from a frequent fly perspective.

(35:05):

More people at airlines, especially in management like above a certain level… If you get a C in your title starts with the C something a bit controversial, I think you should have this part of you keeping the job, you should have to earn elite status on merit using your own money in your own time. This would be really interesting, because it would force these people to go out and do the 5,000 fights a year, maybe force it in economy class as well. That would be interesting. They’d start seeing things.

(35:32):

But more interestingly, they’d see things, they’d whip out their phone and text their PA and say, “Hey, we need to fix this. This is a big problem.” Because they’re seeing it and they’re feeling it for the first time they’re feeling, they got the emotional pain of going through only having nine pretzels in the packet. They go, “We need 10. We should be giving two drinks to each passenger, because the cabin crew are complaining,” whatever it is. They’d fix their own problems. They don’t need to survey a million people, they just need to fix their own problems and they’ll be fixing it for the rest of the world. Like magic.

Steve Pappas (36:01):

I think you’re right. Those of us that are old enough that flew in the ’70s, the 747s that used to have either a lounge in the bubble or a lounge in the back. Yes, those were the days where they were still smokey on flights, but you had a lounge. Even if you were in economy seat, once you reached altitude, you could get up, you could go to the lounge and you could buy a drink and that’s fine, but you could sit in a comfortable chair, you could kind of get a little bit of air for a moment and not be squashed in and then go back to your seat when necessary.

(36:40):

All of the perks that the main airlines, that was TWA at that, I remember I was flying then, as well as the training level of Pan Am for their cabin crew, which they pretty much wrote the book on customer service as well as loyalty programs. I mean, they were one of the first to even start them. A lot of that’s gone. Airlines are being treated like buses in the sky. Many of us don’t like being on buses and many of us don’t like being on buses with wings.

(37:15):

We should challenge our airlines to say, “You’ve got to put some of the fun back into travel, not try to keep shrinking the seats and shrinking the seats and shrinking the seats.” Especially American Airlines, come on. America is a fairly obese country. If you look at the average size or the average weight, we have big meals. We’re bigger than most countries, yet the seats are smaller than almost everybody. I mean, yes, I’m sure if you fly inside of Europe or Orion Air is still pretty tight, but for the most part, they’re not even satisfying the basic needs of the personas of the customers, the types of customers.

(37:58):

If they made it a little bit more easier to breathe or even open up your laptop. If someone is a little bit larger, you can’t open up your laptop on your tray, because there’s just not enough room to type. It’s the little things that people think about. Maybe yes, if you have enough status, yes you’re going to be sitting in the business class up ahead and it’s a little different. But I think they’ve got to start really listening to their types of customers and offering something a little bit more.

Mark Ross Smith (38:35):

I totally agree. I think the willingness to pay for a great product is absolutely there. Actually domestic US, I’d like to see a business or first class only airline. Just ditch economy altogether. Just don’t charge crazy for it. Charge something like about what first class is domestically right now, maybe a little bit less, somewhere in the middle. Let’s call it premium economy. Fill the aircraft out with that. It’s like if you want to fly economy, Americans over there, go for it. Enjoy your basic economy.

(39:00):

But over here we do things differently. All business class, I think that would do really well, because you’d be less used to fill as well. You don’t need to sell 150 seats on flight, you just need to sell 50. Charge a premium for it. You could put money into it. You could have better meals, better service, faster wifi, less people using it. You’d have less resources in general stuff that you’d be wasting on each flight. You might need to load a few more bottles of wine. Charge properly for it. Just create great loyalty program around that. Start attacking other airlines on the loyalty front, which of course was where a lot of the money is these days in terms of valuations. Gee, that’s two great nuggets of advice I’ve given out today on.

Steve Pappas (39:41):

Yeah, I think if an airline grew up with a premium economy or better mentality and gave a little more space, not just the seat size, but the space between seats. Front and back and left and right, if they could offer that with a few more perks, charge 20, 25% more, need 25% less bodies on that flight to make it worthwhile, I think it would be a winner. I really think you’re onto something there.

(40:14):

We’ll leave it to you to contact your airlines to try to give them that idea. Meanwhile, I’m going to say thank you, because this has been a really great conversation, but I’m wondering whether or not we can leave our listeners with any kind of an exercise, a little bit of a homework assignment? Can we give them something to think about when it comes to loyalty programs for their own business or when it comes to providing better customer experience, wowing them, surprising them and delighting them? Anything we can leave them with for them to think about and maybe work on?

Mark Ross Smith (40:49):

I think earlier you touched on really good. How could you create that huge moment, that really powerful moment that invokes some kind of emotional response or trigger in the customer? It’s not just a smile and a thank you for coming back, something just a little bit extra that they weren’t expecting, something they may not necessarily pay for, something doesn’t have to cost anything or a lot. Just something, just a little bit extra.

(41:14):

I think Starbucks has a whole Reddit forum, I think on people talking about how they’ll misspell your name intentionally so that you’ll go talk about it and put on Twitter and Instagram and stuff, and “How could you not spell Steve? How did you mess that one up?” That is almost one of those moments because you’re like, “Oh, I’ll go back again. What are they going to do next time?”

(41:32):

It’s a bit of a game. Do they understand there’s a T in my name? I think how could you get people talking about your brand in a really positive way? It could be really quirky, could almost be cheesy, because if people talk about it, it means they’re thinking about it. It means they’re thinking about it, hopefully in a positive way. If they talk about it, they’re telling their friends about it. These are all good things for your business and your brand. That’s definitely worth thinking about. How could you invoke that emotional thought trigger in people’s minds?

Steve Pappas (42:01):

Perfect. That sounds great. Well, let’s let people know where they can go to get more information. Obviously they can follow Mark Ross Smith on LinkedIn. They can head over to statusmatch.com just as it sounds. S-T-A-T-U-S-M-A-T-C-H.com. If you’d like to get the newsletter, go over to traveldatadaily.com and learn more about the airline and the loyalty business and see where that takes you in the future. Mark, thanks for joining us today. This has been a real great conversation. I’ve enjoyed myself. This has been great.

Mark Ross Smith (42:33):

It’s been fabulous, Steve. Thanks for having me.

Steve Pappas (42:35):

Well, that’s another episode of the Science of CX, everybody. Contact us on our website, www.scienceofcx.com. As I said to you earlier, how can you unhook a customer from a competitor to come over to your company? Mark said, “How can you create that moment? How can you create that huge moment, that wow moment and get people talking about your brand?” Let us know what you think, love to hear from you. If you love the content that we bring to you every single episode, please feel free to drop us a little review over wherever you get your podcasts. Until we meet again, please stay safe, stay healthy, and do take care.

(43:16):

You’ve been listening to the Science of CX. My name is Steve Pappas. I really hope you’ve enjoyed this episode. If you have, the highest compliment that you can give us is to subscribe, rate and review the Science of CX. Thanks and we’ll see you in the next episode.

(43:52):

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