How Not to Vex Your Best Customers

Why do companies so foolishly alienate the consumers who generate high profits? It's easy to please them instead

By Harold L. Sirkin

Some corporations seem to go out of their way to antagonize customers—even their best ones.

To avoid raising prices, a number of consumer-products makers have chosen to reduce quantity: A half-gallon carton of ice cream a few years ago became a quart-and-a-half carton, facial tissues were reduced in size so they now “rattle” around in oversized boxes, a 13.5-oz. box of crackers turned into a 12.25-oz. box of crackers, and so on. Do they think customers are stupid and won’t notice?

The airlines are among the worst offenders, almost seeming to work hard to make interstate bus travel look elegant.

The economics of an airline work like this: A small number of “premium” fliers pay five to 10 times the price of the cheapest ticket. Getting just one or two more premium passengers on a plane can make the difference between operating the flight at a profit or a loss. You’d think airlines would do everything they can to win full-fare customers and keep them happy.

Not so. Consider the story of a major European airline that in June of this year decided to limit first class and business class customers to just 8 kilograms (approximately 17.5 pounds) of carry-on luggage for each of their two bags. As one of the airline’s ticket-counter agents quietly told me, this didn’t happen arbitrarily. The airline realized that the bags of their U.S. customers typically weigh 4 to 5 kg empty. By setting the weight limit at just 8 kg, I was told, “we are making all of our U.S. customers check their luggage.” Practically speaking, the carrier is forcing even its best customers to check their bags, making them spend valuable time waiting around at baggage carousels.

Misinformation From Above

The airlines argue that high fuel costs and larger volumes of luggage dictate their policies. But the 50 or so premium customers on board a wide-body aircraft with 300 or more seats are not the ones causing “weight and balance” problems.

Another argument revolves around safety: concern that a heavy bag could tumble from an overhead bin and hurt someone. Again, this sounds more like an excuse than a reason. Of course a runaway 15-kg bag could seriously injure a passenger. But accidents of that nature rarely happen. If airlines considered them a serious threat, all would have banned carry-on bags long ago.

My guess is that this airline changed its baggage policy to accelerate the boarding process so it can fly the plane longer hours—with little or no regard as to how it affects customers, including its best ones. Airline management probably thinks passengers don’t care or won’t switch, just as the purchaser of a downsized box of wheat crackers or facial tissue won’t mind.

In truth, the management of this airline hasn’t done its homework. More than 10 years ago, another major European airline tried this very game, limiting the weight of carry-on bags to 8 kg. The policy lasted three years, during which time significant numbers of first class and business class passengers defected to competitors. Faced with this stark reality, the chief executive officer rescinded the policy and took out ads in every major newspaper in the carrier’s home country to apologize to premium customers for the unnecessary inconvenience.

I expect that in a few years—after audits show that it’s flying more low-paying customers and fewer high-paying customers—history will repeat itself and airline No. 2 will find itself eating humble pie, too.

While many corporate executives have bought into the “less is more” philosophy, others recognize the harm that this backhanded approach to customer “service” can do to the brand and company  profits. Rather than tempt customers to leave, these companies are enticing them to stay.