Harvard Case - Preferred Customer Service at US Airways
"Preferred Customer Service at US Airways" Harvard business case study is written by Umit Akinc. It deals with the challenges in the field of Operations Management. The case study is 13 page(s) long and it was first published on : Jan 1, 2013
At Fern Fort University, we recommend that US Airways implement a comprehensive customer service strategy focused on improving operational efficiency, enhancing customer experience, and leveraging technology for greater personalization and responsiveness. This strategy will involve significant changes in the organization's operations strategy, supply chain management, information systems, and service management.
2. Background
US Airways, a major American airline, faced challenges in customer service and operational efficiency. Despite efforts to improve, customer satisfaction remained low, and operational issues like delays and cancellations were frequent. The case study highlights the airline's struggle to balance cost optimization with customer experience.
The main protagonists of the case are the US Airways management team, particularly the CEO and the head of customer service, grappling with the need to enhance customer service while maintaining profitability.
3. Analysis of the Case Study
The analysis of the case study can be structured using the Service-Profit Chain framework, which emphasizes the link between employee satisfaction, customer loyalty, and profitability.
Internal Service Quality: US Airways faced issues with employee morale and training, leading to inconsistent service delivery. This was further compounded by a lack of information systems and technology to support employees in providing timely and accurate information to customers.
Employee Satisfaction: Low employee satisfaction resulted in reduced productivity and a lack of motivation to go the extra mile for customers. This was evident in the high employee turnover and the lack of engagement in customer service initiatives.
Value Creation: The airline struggled to create a consistent value proposition for customers. This was evident in the inconsistent service quality, lack of personalized offerings, and limited options for addressing customer concerns.
Customer Satisfaction: Low customer satisfaction was a direct consequence of the issues mentioned above. This was reflected in poor customer reviews, increased complaints, and a decline in customer loyalty.
Profitability: The lack of customer satisfaction and operational inefficiencies negatively impacted profitability. This was evident in the airline's financial performance and its struggle to compete effectively in the market.
4. Recommendations
To address the issues highlighted above, we recommend the following:
1. Operational Efficiency and Customer Experience:
- Operations Strategy: Implement a lean manufacturing approach to streamline operations and reduce waste. This involves identifying and eliminating non-value-adding activities in the production processes and logistics chain.
- Supply Chain Management: Optimize the supply chain by implementing Just-in-Time (JIT) production and inventory management strategies. This will reduce inventory holding costs and improve responsiveness to changes in demand.
- Technology and Analytics: Invest in information systems and technology to improve operational efficiency and customer service. This includes implementing an Enterprise Resource Planning (ERP) system to manage operations, analytics to track performance, and digital transformation initiatives to enhance customer interactions.
2. Customer Service Excellence:
- Service Management: Develop a comprehensive service management strategy focused on customer experience. This involves establishing clear service standards, training employees in customer service skills, and implementing quality management processes to ensure consistent service delivery.
- Customer Relationship Management (CRM): Implement a robust CRM system to collect customer data, personalize interactions, and track customer journeys. This will enable the airline to understand customer needs and preferences better and tailor its service offerings accordingly.
- Employee Empowerment: Empower employees to make decisions and resolve customer issues quickly. This involves providing them with the necessary training, resources, and authority to handle customer inquiries and complaints effectively.
3. Innovation and Differentiation:
- Product Development: Develop innovative products and services that enhance the customer experience. This could include offering personalized travel packages, providing in-flight entertainment options, and implementing loyalty programs that reward frequent flyers.
- Digital Transformation: Embrace digital transformation to create seamless customer experiences. This includes developing mobile apps for booking flights, managing travel plans, and receiving real-time updates.
- Sustainability: Integrate environmental sustainability into operations to appeal to environmentally conscious customers. This could involve reducing fuel consumption, implementing recycling programs, and promoting sustainable travel practices.
5. Basis of Recommendations
These recommendations are based on the following considerations:
- Core competencies and consistency with mission: The recommendations align with US Airways' mission to provide safe, reliable, and affordable air travel. They focus on improving operational efficiency, enhancing customer experience, and leveraging technology to create a competitive advantage.
- External customers and internal clients: The recommendations address the needs of both external customers and internal clients. They aim to improve customer satisfaction while also creating a more supportive and rewarding work environment for employees.
- Competitors: The recommendations consider the competitive landscape in the airline industry. They emphasize the need for innovation, differentiation, and a customer-centric approach to compete effectively.
- Attractiveness ' quantitative measures if applicable: The recommendations are expected to improve profitability by reducing operational costs, increasing customer loyalty, and driving revenue growth.
- Assumptions: The success of these recommendations depends on the airline's commitment to change management, employee engagement, and investment in technology.
6. Conclusion
By implementing these recommendations, US Airways can transform its customer service strategy and achieve sustainable growth. This will require a shift in organizational culture, a commitment to continuous improvement, and a willingness to embrace technology and innovation.
7. Discussion
Other alternatives not selected include:
- Outsourcing: Outsourcing some customer service functions could reduce costs but may compromise quality and control.
- Mergers and acquisitions: Acquiring smaller airlines could expand the network and customer base but may create integration challenges.
Risks and key assumptions:
- Resistance to change: Employees may resist changes to their roles and responsibilities.
- Technology adoption: Investing in technology requires significant resources and may face implementation challenges.
- Competition: Competitors may implement similar strategies, requiring US Airways to constantly innovate and adapt.
8. Next Steps
To implement these recommendations, US Airways should:
- Develop a detailed implementation plan: This plan should define specific goals, timelines, and resources required.
- Communicate the strategy to employees: This will build buy-in and ensure that employees understand the rationale for change.
- Monitor progress and make adjustments: Regularly track performance indicators and make necessary adjustments to the strategy.
By taking these steps, US Airways can transform its customer service strategy and achieve its goal of becoming a leading airline in the industry.
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Case Description
Repatriation of the previously off-shored call center operations of the US Airlines was being completed in the summer of 2011. Reservation Director of the East Region considered this to be an opportunity to high quality and faster service to the "preferred customers" by establishing a preferred customer desk at the Winston-Salem Center. The headquarters has asked the director to provide an in-depth analysis of the proposal's costs and benefits before it can be approved. The wider question of the case is to cogitate whether this initiative has merit. Is it likely to provide enough advantages (both quantifiable such as shorter average wait times and non-quantifiable such as the perception by the customers of the service quality) to justify any additional personnel costs? The call centers operate 24/7 and experience varying call volumes. This causes the required number of agents to economically achieve some targeted average wait times to greatly fluctuate during each time increment (e.g., each hour). Therefore the case, more narrowly, focuses on the challenges of (1) the fundamental trade-off between wait times and agent utilization; and (2) scheduling of the start times of the standard 8-hour shifts to provide adequate coverage during each period. The Instructor's manual provides extensive analyses based on multiserver queuing models and linear programming of these technical issues. In addition, the case provides rich opportunities to discuss human resource strategies and their role in securing competitive advantage.
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