American Airlines To Compensate Customers In-Flight; 6 Reasons Why It's A Good Idea

Late last week, American Airlines announced a new program that allows flight attendants to instantly gift passengers miles in the event of in-flight inconveniences.

The endeavor is not necessarily novel.  Companies like Zappos famously empower frontline agents to compensate customers, and there is even precedent for “on-the-spot compensation” within the airline industry.

The endeavor is still admirable.  It still involves an organization in an industry notorious for poor customer service taking action to overcome that stigma – and delight its customers.  It still involves an organization that understands the value of a customer-centric approach.

While only travel companies can precisely replicate the American Airlines initiative, all organizations can channel the spirit of the approach.  All can empower their agents to independently resolve problems – and compensate customers – at the initial point of contact.

Those who pursue such a strategy will benefit from six realities:

Customer service is costly for the business

Yes, the customer experience is important.  Yes, the contact center is a “value center.”

Not all customer service is valuable, however.

Customer service is a costly pursuit.  It involves devoting time, energy and resources to an issue that very likely should not have occurred in the first place.

Worse, because the customer is already upset about having to jump through hoops to receive the service, the endeavor often has limited upside.  In many cases, the best for which a business can hope is to calm the customer down.  Creating positive value may be difficult, if not impossible.

By addressing problems on the spot, the organization avoids the very real cost of escalation.

Escalations are bad for the customer

Customers may have different tastes and preferences, but they largely agree on two realities:  time is money, and extra effort is undesirable.

Asking customers to devote extra time and energy to resolving a problem or inconvenience is a slap in the face to those realities.  It compounds whatever frustration they were feeling toward the initial issue.  It sends the message that the brand does not really value their business.

Customers who engage in the escalation will carry an added hostility toward the organization – ill will that the organization, it should be noted, may have a tough time eliminating even with a theoretically satisfactory resolution.

Customers may, alternatively, opt not to engage in the time-consuming customer service process.  This outcome is almost worse for the organization, as it will not even get the chance to remedy the problem.  The customer will harbor a negative perception of the brand, which can impact future business and advocacy.

By addressing problems on the spot, the organization eliminates the effort of resolving the problem.

Escalations are frustrating for the agent

For a customer-facing employee, few things are more frustrating than having to listen to an angry customer without having the ability to help.

When an organization requires a customer to go through an escalated customer service process, it puts agents in that exact, unfortunate situation.

The representatives become the face of the poor customer service effort – and sounding boards for the customer’s frustration.  These agents were hired to strengthen customer relationships, but due to business constraints (not through their own fault), end up hurting them.

Customers are angry, and the agents forced to interact with them are unhappy.  Nobody wins.

By addressing problems on the spot, the organization create a more harmonious environment for representatives.  They get to create positive moments with customers and, as a consequence, do their real job of building relationships.

 “On-the-spot gifting” promotes customer centricity

One of the most notorious customer experience challenges concerns the idea of “mixed messaging.”  Businesses promote a customer-first mentality but do not actually empower agents to put the customer first.  Their scripts, policies and procedures are designed with the goal of doing as little for (and spending as little on) customers as possible.

The American Airlines approach remedies that challenge.  By empowering agents to instantly compensate customers when things go wrong, leadership confirms its interest in walking its talk.  It sends the message that agents are supposed to be creating value for the customer rather than minimizing short-term cost for the business.

Agents will take this message to heart – and not just as it relates to offering on-the-spot compensation to customers.  They will know that the business truly believes in cultivating customer happiness and loyalty.  They, accordingly, will feel confident putting the customer first.

By addressing problems on the spot, the organization puts money where its mouth is – and confirms that it truly believes in doing right by the customer.

“On-the-spot gifting” is effective

Tales of restaurants bringing Porterhouse steaks to the airport or grocery stories delivering free food to customers are far and few between.

Most individuals have negative views of customer service.  They think of those times when they were put on hold for a while, bounced between a series of poorly trained representatives, and ultimately told “no.”

They don’t expect brands to deliver great experiences.

The “on-the-spot gifting” approach subverts that expectation.  It involves a brand showing immediate accountability.  It involves a brand demonstrating legitimate remorse.  It involves a brand delivering value to (and communicating respect for) its customers.

Perhaps most importantly amid today’s demand for “frictionless experiences,” it involves a brand actively working to reduce customer effort and inconvenience.

Customers will value this sadly rare perspective on customer service.  They will appreciate the gesture even though the gesture may not be extravagant.

By addressing problems on the spot, the organization confirms its respect for its customers’ time and emotions.

“On-the-spot gifting” is easy and inexpensive

For as valuable as the spot gifting approach is, it is decidedly easy and inexpensive.

The American Airlines system allows agents to quickly and easily credit customers with miles.

Those “miles” do not come with a particularly huge cost.  They technically have no “value” until they are used, and even then, their financial impact is cents-on-the-dollar.

The beauty of on-the-spot compensation is that the value comes from the gesture itself, rather than the cost of the gesture.  Customers appreciate being valued and respected; they are not looking at the situation as a “get rich quick” scheme.

It is for that reason that concerns about “abuse” are also unwarranted.  Customers are not necessarily going to fabricate claims for little rewards.  And even if they did (and even if agents were liberal with issuing those rewards), the financial hit to the business would be minimal.

And well below the financial benefit.

By addressing problems on the spot, organizations achieve customer satisfaction with little additional effort or cost.