I am not so indiscreet as to actually post my wife’s age on the Internet, but suffice to say she is over 25. She is also a full time college student, pursuing a degree in Special Education. She recently went online at StudentUniverse looking for discount airline tickets, and found a pretty good deal on Northwest Airlines. She went to buy the ticket, only to be told that Northwest does not offer student discounts to ‘non-traditional’ students and that their good deals were only available to students between the ages of 17 and 25.
Let’s put aside the blatant age discrimination inherent in the policy. The only difference between my wife and every other college sophomore who does qualify is her age (and her grades, her taste in music and her ideas concerning what constitutes a good time on a Saturday night). Let’s examine the business logic for such a policy. Somewhere high in the NWA executive penthouse, some highly educated folks have come to the conclusion that excluding people with the drive and intelligence to go back to school later in life in order to skin an extra couple hundred bucks from them makes sense. Next week for example, Eleanor Gershien will receive her Bachelor of Fine Arts degree from Maryville University at the ripe old age of 75. Clearly she is not the sort of person NWA would like to let in on any deals. I guess they figure that Eleanor has had plenty of time to save up enough dough to pay full price, and NWA ought to get their hands on any cash she set aside while she went to school full time.
I struggled with that sort of business thinking and figured I ought to look a little deeper into things to try to understand it. The business principles driving NWA did not become clearer, however, they got muddier. For instance, I found something called NWA’s "Customer First" Customer Service Guide. Incredibly, it includes the statement, "Ensure that you receive a response to your written complaints within 60 days of their receipt by our Customer Relations department." That’s right – you tell them about a problem in writing and, by golly, within two months they’ll get back to you.
Compare that with the policy of the EPA who says "The section chief will maintain a log of all incoming issues/complaints and will respond within 10 business days of receipt." These guys at NWA are six times worse than the Federal government. The rest of the Customer First Guide reads like the fine print at the bottom of a car dealer’s ad. They commit to nothing. Instead they will ‘make every reasonable effort’ and go so far as to tell you if they have sold you a ticket on an oversold flight – but only if you ask. They are not going to volunteer that handy bit of information.
Of course, lunacy at NWA is hardly limited to Customer Service policies. These are the same people who came up with the scheme to charge an extra fifteen bucks for a window or an aisle seat – then when the howling got too loud, backed off for people with enough frequent flyer miles. If you have spent several thousand dollars with them, they will cut you a $15 break. They quietly lowered the baggage weight allowance from 70 pounds to 50, leaving a group of high school kids who had collected used computers for needy kids in Africa high and dry. NWA told ’em to cough up $1,100 or the computers don’t go. The computers didn’t go. NWA’s explanation: Hey, we don’t cut a break on the weight allowance for people taking medical supplies to third world countries, so why should we help out these kids?
So how’s it all working out for NWA? They are in bankruptcy, of course – and they blame most of it on their employees. The most recent reported revenues are down substantially. According to the Airline Quality Report, NWA deteriorated last year in all four areas they measure: rate of customer complaints, on time arrivals, mishandled baggage, and denied boarding rate.
So who is running this three ring circus? Mr. Douglas Steenland, who just so happens to have received his law degree with the highest honors from George Washington University. Under the lawyer’s leadership, the company is driving customers away in big numbers, but the good news is that he has protected the shareholders from opportunists like my wife from getting student fares, and the high school kids in Seattle from using NWA’s airplanes to haul a few hundred extra pounds of stuff to people in need, and from tall people trying to hog all the aisle seats. Yes sir. No one is going to get something for nothing from NWA while Doug Steenland has anything to say about it.
What, you may be asking, does any of this have to do with lean manufacturing? I’ll tell you.
NWA is hardly alone in seeing a critical need to have lawyers and accountants engaged in protecting the business from its evil customers. It is sadly widespread in manufacturing. In fact, it is so pathetic that an outfit with the warm and cuddly name of CakeLove.com has the following customer service policies clearly posted: Refunds are limited to store credit (even if the cake made grandma deathly ill, I assume); same day service is an additional five bucks; advance payment is required – no personal checks; no same day delivery service; all deliveries must be paid in advance and the driver will not accept payment; and, of course, all prices are subject to change without notice. Policy number one is "We work hard to please every customer every time", unless of course that customer gets a bad cake or needs one in a hurry or does not have their credit card with them. In that case, CakeLove could care less about the customers.
Who writes this stuff?
How about Tyan Computer Corporation, who says that, "In the event that a product needs to be returned to TYAN for service, the customer must obtain a Return Materials Authorization number from TYAN in advance, and that number must be clearly printed on the outside of the box. TYAN will not accept any shipment without an RMA number." So, Tyan’s failure to comply with its manufacturing quality standards in no way justifies a customer’s failure to comply with Tyan’s return policies. I don’t think I’ll be shopping for Tyan products anytime soon.
It is a sad commentary on American business when the best benchmarks for taking care of customers are in the government. If you want to see a great policy on taking care of customers, read the one set by the USGS. As pathetic as Northwest Airlines is, the people at USGS are that good. How about the Customer Service Policy at the US Navy Exchange. They basically say that if you’re not happy, you get your money back – period.
If your company needs to have lawyers and accountants editing and approving the commitments you are making to your customers, fold up your tent and go home – no amount of manufacturing excellence is going to help you. If your company cannot lay out in clear terms just how far they are willing to go to make sure that someone who buys something from you gets exactly what they paid for, forget it.
I wrote an email to Mr. Steenland at NWA that for me, was downright nice, asking him exactly what NWA was going to do about the way they treated my wife. I’ll let you know what he has to say – by no later than June 29 – guaranteed.
John Hunter says
I flew JetBlue Airways last week. The help at the counter was polite and friendly. While this is only one data point (and hardly a “high bar” to meet) it contrasts with most of my flying experience (in my experience Southwest has a good likelihood of meeting this goal). More on Airline Quality – http://evop.blogspot.com/2006/04/airline-quality.html
Mark Graban says
That’s a voluntary discount that NWA offers to students, as they choose to define it. If you don’t like their policy, I guess you can fly another airline. You tried explaining it as a lean issue, but I still don’t see how it is.
Cranky McPIlot says
So they treated your wife badly by enforcing a policy the same way they enforce it for everyone else? Can I get a “senior” discount if I’m a senior in college? Geez, just pay fro the ticket.
Bill Waddell says
The point I attempted to make is that a core principle of lean is to define and deliver superior value for customers. Some companies – generally the unsuccessful ones – take the approach that they will define their product as they see fit, then set in place the rules under wich they will ‘allow’ customers to buy it.
NWA certainly has the right to choose to do business however they want. The path they have chosen has been to provide inferior service in all four measurable areas of their product quality. In turn, customers have the right to choose to fly on other airlines. Customers have opted to exercise that right, hence, bankruptcy and continually decreasing revenues for NWA.
Whether NWA has the right to offer discounts to some, and not to others, based solely on age is another matter entirely. A company has the right to offer a job to someone or not, as they see fit, but they do not have the right to make that offer to one person and not another based solely on age. Denny’s has found out the very hard way that they have the right to offer tables in their restaurants or not, but they do not have the right to offer them to white folks, but not black folks.
However, as I pointed out, my point was not to criticize the legal, moral or ethical implications of NWA’s policies, but the stupidity of them.
They save a few hundred dollars by excluding my wife and others from student discounts. They tried to grab an extra $1,100 in revenue from the high school kids. They claim their $15 charge for good seats will generate an additional $15 million in revenue. Add it all up and how much did their policies really bring to the bottom line? Bankruptcy and a 6%+ decrease in revenues.
A company may choose to squeeze customers, rather than focus on value, but that choice is not very smart. I hope you read the customer service policies of USGS. I believe it epitomizes how a lean company interacts with its customers.
And to Cranky McPilot, I hope you are not a ‘McPilot’ for NWA. If you are, you took a 15% paycut in 2004 and another 24% paycut last month because, according to Mr. Steenland and crowd, the problems at NWA stem from your greed – not the policies of the company that led to tanking every relevant customer quality measure.
Mark Graban says
Age-based discounts are pretty legal, hence senior discounts, etc. and other discounts based on age.
Mark Graban says
I agree airline service sucks… I just don’t know if it’s a lean issue. I flew American today and had about four interactions with extremely cranky and rude employees and was pleasantly surprised to find a smiling flight attendant when I boarded. NWA and AA are probably the GM and Ford of the airline industry, getting beaten by JetBlue and Southwest, who probably represent Hyundai and Toyota. That’s the closest “lean” parallel I can find, the way that newer companies can think of newer ways of doing things (I’m focusing on the process difference, not the labor or “legacy cost” issues). United Airlines just came out of bankruptcy and said they were too preoccupied with the bankruptcy proceedings to focus on cost reductions. ?!?!?!?!?! No wonder these companies are in trouble.
Mike says
Sure it’s a lean issue. The “hub & spoke” system all the major airlines use is a batch & queue (and queue and queue…) system of the first order. As a fairly frequent flyer, I can attest to the vast quantities of waste inherent in each airline’s system. However, whenever costs reductions are required, they come in the form of direct labor reductions and cuts in the quality or quantity of value-added services.
But, let’s not forget that all the major airlines’ problems are solely the fault of 9-11. The same goes for travel agents, hotels, etc. Sure.
Many people like to hold Southwest and JetBlue up as some form of Toyota equivalent airlines. The problem with this analogy is that both these airlines serve limited areas with limited schedules. That would be like only being able to buy a Toyota in Kentucky or California. Southwest has clever advertising, but don’t start believing their press too much. There have been plenty of bad experiences, missed or delayed flights, surly stewardesses, clueless ticket agents, and so on. And how many of us really love their “general admission” seating?
Chris R. says
So, what happened? You promised an update of what the result was of contacting our goony CEO.
Bill Waddell says
You’re right, Chris. The first response I received from NWA was from an Administrative Assistant to the CEO who sent an email explaining the law and laying out how NWA could not be held liable in court for age discrimination.
I wrote back to tell her that I had no intention of taking legal action, and that the real issue was why NWA would choose to exclude people like my wife from the discount program. I thought I did a pretty good job of explaining that the savings to NWA from their policy could not possibly offset the long term harm from alienating older college graduates. My central arguement with NWA was that a policy that arbitrarily excluded a small group of people was dumb, whether it was legal to exclude them or not. I imagine that better than 95% of all college students are under the age of 25, and I could see no bottom line benefit to NWA from excluding the remaining 5%.
I then received a reply from NWA’s legal department reiterating their defense against a claim of age discrimination – this time it was a multi-paragraph legal brief. Their position was that the law allowed them to exclude the older 5%, and that was all that mattered.
Rather than reply to the legal department, I forwarded the brief back to the CEO’s office and restated my question about whether NWA thought their policy made sense from a customer service/satisfaction standpoint – whether they thought it helped or hurt their bottom line in the long haul.
The final response was from the same Assistant, advising me that NWA had fully responded to my questions in compliance with their Customer First policy and that no further emails from me would be answered.
In all fairness to NWA, their final email telling me to go away and quit bothering them was written on June 27. They met their commitment to clear the issue (at least as far as they were concerned) by June 29.
Chris R. says
Thanks Bill – they have a defensive and ungenerous policy towards their rank and file employees as well, thought you might like to know. ‘You are not alone.’