Classic Airlines Marketing Solution
A study of the Classic Airlines scenario reveals problems within the organization including customer dissatisfaction with customer service, a decline in customer loyalty and problems with employee job satisfaction and retention. Without resolution to the problems faced by Classic Airlines which have resulted in finanacial losses bankruptcy may be inevitable. Resolution or at the very least improvement for some of the customer service issues identified within Classic Airlines including limited redemption options for frequent flyer miles earned by Classic Club member, limited direct flights, and the timeliness of scheduled flights can is possible. The enhancement of departments within Classic Airlines such as integrating their IT department with the customer service department would prompt improvement in the CSM system. In addition to improving customer service, this change would also serve to empower employees providing increased job satisfaction and employee retention. Declines in customer loyalty can be addressed by Classic??™s partnering with other airlines and travel service related providers allowing more direct flights, improved flight timeliness and increasing the Classic Rewards member??™s frequent flyer miles redemption options.
The decrease in the redemption of the frequent flyer miles earned by Classic Rewards members indicates a decline in customer loyalty. As shown in Classic Airlines Exhibit A (3), [Classic Rewards members earn miles by purchasing eligible tickets on qualifying flights. Members earn one point per flight-mile with a minimum of 500 miles per roundtrip, and a maximum of 2500 miles per roundtrip. Members can also earn miles by staying with one of Classic??™s six hotel partners, by renting cars from one of their three car rental partner companies and by using their Classic Rewards co-branded credit card]. According to Classic Airlines Exhibit A (3), [miles earned in Classic Rewards will not expire as if the members travel at least one time in a two-year period. Classic Airlines allocates 10 seats per flight for frequent flier redemption with blackout periods surrounding all major United States and European holidays. Frequent flier redemption tickets are non-transferable, and members may only redeem one ticket per flight. Members are allowed to redeem for only one companion ticket every two years. Classic Rewards members may redeem miles for stays at one of Classic??™s six partner hotel chains or for car rentals at one of Classic??™s three car rental partner companies. Members may also redeem miles for upgrades to first-class and may redeem miles for an annual ???pre-board??? pass that allows them to board flights prior to normal boarding.] Conversations with customers indicate dissatisfaction with redemption options, blackout dates, the number of limited non-stop flights for rewards customers, and the limited options for redemption for companion tickets.
To increase customer loyalty Classic Airlines needs to focus on improving Classic Rewards member??™s customer satisfaction regarding the redemption options for earned miles. Conversations with Classic Airlines??™ customers found in University of Phoenix Classic Airlines Exhibit B, competitors of Classic Airlines offer more frequent flyer rewards redemption options than Classic. Classic Airlines should closely consider this area of their customer service and make the necessary changes to improve customer loyalty. Recommendations for changes in Classic Rewards member??™s frequent flyer miles redemption options include allowing customers more flight options including direct international flights, reassessing blackout dates allowing more flexible travel options and allowing more frequent redemption of miles for companion tickets. By doing market research, Classic Airlines can obtain a better understanding of the frequent flyer mile redemption options offered by their competitors enabling them to make the necessary changes to their program to be more competitive in their market. By partnering with other Airlines, Classic Airlines as well as the partnered airlines could allow their customers to exchange frequent flyer rewards miles between the two airlines allowing more redemption options for the customers. The frequent flyer miles are rewarded perks rewarded for repeat customers for loyalty. As such, the customer should be able to use the reward miles for flights based on assigned trade values same as cash for flights on the customers desired travel dates and for companion tickets. Classic Airlines should also increase partnerships with to include additional hotels and rental car agencies, credit card companies, and by adding restaurants, spa services, companies offering entertainment venues and other travel related services. Classic can also increase options allowing customers to use frequent flyer miles for upgrades in flights. Options are available for allowing the Classic Rewards members to use earned rewards that would result in a minimal cost Classic Airlines. The options include allowing Rewards Club member to redeem miles for early boarding more than the current one-time a year and for checking luggage without additional charge to the customer.
Reports found in University of Phoenix Classic Airlines Exhibit B show that 80% of Classic Club Rewards members are business travelers while whereas only 20% are leisure travelers. Classic Airlines Segmentation Strategy shows that business travelers are heavy to medium users of air travel with a medium loyalty level to a single carrier. Classic Airlines Segmentation Strategy indicates that low price fares to many destinations are this travelers primary benefit concern while customer conversations indicate that on time flights and adhering to flight schedules is a significant concern for these travelers. This stands to reason as business travelers will be more likely confined to time restraints than the leisure traveler because of their high frequency of travel these customers expect reward in return for their loyalty to a single carrier. Conversations with Classic Airline customers reveal customer concerns with delayed or canceled flights and a shortage of direct flights to enough destinations. By partnering with other airlines, Classic Airlines would have access to more hubs and more flights domestically and internationally decreasing flight delays or flights with connections resulting in possible delay due to layovers. By increasing partnerships with other airlines, Classic Airlines would increase customer satisfaction and result in increased customer loyalty.
[Customer calls as well as conversations with exiting employees reveal problems with Classic Airlines??™ CSM. Customers as well as exiting employees express dissatisfaction with the interface between the website and the telephone system regarding customer service related conversations. According to Classic Airlines employees, management expresses more concern with the amount of time spent on each customer service call than with the level of customer satisfaction reached by the conclusion of the call] (University of Phoenix). In University of Phoenix Classic Airlines Exhibit B, [because of the interface between the website and the phone system customers were repeat complaints each time they made contact with Classic Airlines customer service department, according to an employee exit interview. In an employee exit interview, the Director of Applications for Informational Services within Classis Airlines was asked ???If you could change one thing at Classic Airlines, what would that be??? The employee answered in part, ???Re-define the role of the IT department as it relates to the software implementation function. ???] (University of Phoenix). Classic Airlines should allow the customer service agents who deal directly with not only the customers, but also with the CSM to work in conjunction with the IT department to identify shortcomings and problems within the CSM and to make changes within the software to improve the system. By implementing these changes, Classic Airlines would make improvements to several problem areas including customer complaints regarding customer service and employee satisfaction. Retaining information received from customer online and from telephone conversations would shorten call times. The shortened call times resulting from the customers not having repeating the same information several times would decrease customer frustration. The decreased customer frustration and saved time would allow the customer service representatives more time to deal with the issues that prompted the customers??™ call increasing customer complaint resolution. As a result, Classic Airlines employees including both the customer service representatives and the IT personnel would have a greater sense of job satisfaction.
[Employee exist interviews further indicate that [employees leave Classic Airlines due to a feeling of having a lack of opportunity for promotion within the company and a lack of relationship with upper management including the Chief Executive Officer] (University of Phoenix). Employee retention is a problem with Classic Airlines that needs to be addressed. [The benefits of employee retention affect a company??™s bottom line. Employee retention enhances customer satisfaction, sales, and satisfied employees. Employee turnover is costly with websites suggesting that is costs the company 150% of an employee??™s salary and up to 200% for managerial level positions. Costs include recruiting, interviewing time, the loss in productivity, customer dissatisfaction, lower employee moral along with other miscellaneous costs that cannot be accounted for] (???Anonymous,??? 2009). [A recent article in HRFocus suggests that employee satisfaction is the differentiator between organizations that successfully recover from the recession and those that do not. Recent research indicates that this may indeed be the case. Retaining key talent and keeping productivity high will surely help and organization to succeed and get back into a growth mode.] (???Anonymous,??? 2010). When there is a lack of relationship between employees and their managers, employees often find it easier to leave the company than to discuss their dissatisfaction with their bosses. Classic Airlines needs to focus on the talents within their existing employee pool and on fostering improved relationships between employees and management. Classic should improve communication between employees in different departments within the company including customer service, HR, and IT, marketing and management incorporating employee ideas and suggestions into the company??™s decision-making process. The customer service representatives are the employees who directly hear the customer complaints.. By working with customer service the IT department could help resolve problems within Classic??™s CSM. By focusing on employee relations, Classic Airlines could improve employee moral leading to increases in customer satisfaction. Improved customer relations would increase customer loyalty and improve the company??™s reputation within the marketplace. Therefore, by enhancing employee retention efforts Classic Airlines would increase profitability. The money saved increased employee retention could be spent in other areas of the company.
???Classic Airlines has the highest labor cost of any airline in their union??? (University of Phoenix, para. 4). By conducting market studies of employee compensation within other competing airlines Classic Airlines could align their employee compensation with that paid by other airlines. Adequate research may reveal areas in which some employees are over-paid while others are being under paid. Classic Airlines has an opportunity to increase employee job satisfaction and retention while possibly saving money. The money saved could fund new positions within the organization that could result in improved customer service. Regardless of how used, the money saved would positively affect Classic Airlines bottom line.
A study of the Classic Airlines scenario reveals problems within the organization including customer dissatisfaction with customer service, a decline in customer loyalty and problems with employee job satisfaction and retention. The problems faced by Classic Airlines have resulted in financial losses for the company and without resolution to these problems, Classic Airlines could result in bankruptcy. Solutions to some of the customer service issues identified within Classic Airlines including limited redemption options for frequent flyer miles earned by Classic Club members, limited direct flights, and the timeliness of scheduled flights are possible outcomes The enhancement of departments within Classic Airlines such as integrating their IT department with the customer service department would prompt improvement in the CSM system. In addition to improving customer service, this change would also serve to empower employees providing increased job satisfaction and employee retention. Declines in customer loyalty can be addressed by Classic??™s partnering with other airlines and travel service related providers allowing more direct flights, improved flight timeliness and increasing the Classic Rewards member??™s frequent flyer miles redemption options.
Anonymous. [Move the period to follow the citation] (2010). HR Focus, 87(4), 11.
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Anonymous. [Move the period to follow the citation] (2009). The Importance of Retention, 47(3), 22.
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University of Phoenix.. Classic Airlines Exhibit A. Retrieved from University of Phoenix,
MKT 571 ??“ Marketing website.
University of Phoenix. Classic Airlines Exhibit B. Retrieved from University of Phoenix, MKT
571 – Marketing website.
University of Phoenix. Scenario: Classic Airlines. Retrieved from University of Phoenix,
MKT571 ??“ Marketing website.