CUTOMER’S REVENGE

After reading the attached interactive case, please write a paragraph as case summary and then respond to the
following questions:

1. How should companies' best react to disgruntled customers using the web to voice their complaints?
2. What should Atida Motor Company do to respond to angry customers?
Case summary
This article is mainly about a dynamic business environment that companies are facing in terms of dealing with
the rise of online platform as a tool customers use to vent their anger and frustration on incompetent service
provision. In the initial case study involving the Angels airline, customers were frustrated till they posted a video on
YouTube enlightening other customers of poor customer services rendered. Atida Motors is facing a similar scenario
with some of their customers threatening to go online about deficiency in their service delivery and subpar products.
The author of the article sensitizes companies on the threat online complains can cause because of this platforms
ability to spread negative information quickly. Companies can leverage customer online voice in a proactive manner.
He also adds that traditional means such as complaint containment are no longer effective. Customer classification is
important as well because it helps companies filter customers hence identifying the loyal customers from those who
are troublesome and a constant menace.
Questions
1. They can use customer online voice proactively by making this dialogue intrinsic to the brand experience. It
can initiate engaging dialogue platforms like use of social media tools such as facebook to respond to
customer complains. This will at least satisfy some of the disgruntled customers.
2. Atida motors should first of all classify their customer according to historical and predicted value. By doing this
they will identify elite customers like Tom who have been loyal customers over a long period; such consumers
opinion are very legit and should be checked. It also helps the company identify customers with a disturbing
tendency whom are supposed to be ignored in case they reach out. Finally, they should develop a system that
is more focused on distributive fairness as opposed to trying to contain negative spin. Fair process and
respectful treatment mitigate customer frustrations.
I agree on outsourcing these services; by outsourcing these services, the company will not only give this function
to a team of experts that is knowledgeable in this field, it will cut costs as well as allowing Atida focus on its key
competencies.
Problems faced by Atida
 Atida is facing problems in dealing with unhappy customers
 Jessica Long is unhappy with her car despite her car being replaced by the Company . She has even expressed
concern over the quality of call centre service
 Tom is exasperated with the kind of service the Company offers and threats the company of making a nasty
film about the company and upload it on youtube
 The disgruntled customers are flooding the Company’s CEO, Paul Turm’s, mailbox with complaint letters and
the service department has not taken any action yet
 Lisa Ross , head of customer communications , is not ready to accept the problem of customers whose
complaints border on extortion .
 Marieke Kuesters , head of public relations, wants them to log a solution for every pronto .
Reasons for Being concerned
 Jim recently saw a video on youtube about Angel airlines and knows what negative impact internet can have
on the peoples’ viewpoint .
 In customer satisfaction survey they have dropped down on the rankings
 These could result in drop of the sales of their newly launched Andromeda XL model
 TARP (Technical Assistance Research Programs), a U.S. group which focuses on complaining customers, found
that 26 out of 27 people who experience problems do not complain.
 The average upset customer tells nine people. One in five tells more than 20 people.
 A brand that is known for 70 years may lose its sheen because of this negative publicity
 Because of lack of services they may lose business to rivals
Short term solutions
 Cater to the customers who are currently facing problems with their Atida Cars
 The CEO of the company should reply to Mr. Tom and Mrs. Jessica Lang and assure them that their problem
will be looked into
 Dishonest customer s with fake complaints, must be dealt with in a positive yet stern manner.
Solutions to the problem
 A change in the service policy is required to cater to customers with issues beyond the boundaries of service
department
 The customer care staff should be trained enough to handle calls related to all the issues
 Follow up is required to track whether the customer is satisfied after the issues with the car are being resolved
Implementation of solutions
 The complain should be answered immediately with either the car being repaired within a specified period of
time or being replaced
 If the lower level management is not able to solve the problem the issue needs to be taken with upper level
on priority basis
 Customers should be made aware of the problem that they are facing in their car and the probable reasons
for it .
 Mapping of customer experience and complaints for each category of car to analyze the quality of the
product
 Train customer service representatives to handle technical and high profile calls
 In response to any online negative publicity initiated by an upset customer the company can upload a video
justifying its stand .
The flip side
 The changes in policy may set a bad precedent for the customers. They may leverage on this to make all kinds
of claims
 A dishonest customer may take advantage of these new policies and may bring in invalid complaints which will
consume time and company resources
 Training the customer care staff will require more time and funds
 Introduction of new compensation programs will require investment
Conclusion
A complaint is a blessing in disguise as it helps the company to improve its product and services since many customers
might do not bother to complain & thus may satisfying many other customers indirectly. At the same time dishonest
customers should be identified and dealt with intelligently and should not be ignored .

UNITED BREAKS GUITAR

IDENTIFICATION OF THE PROBLEM
 Improper handling of baggage by the airlines.
 Staff was not properly trained to handle the situation at the moment.
 Careless approach towards a frustrated and unsatisfied passenger by the staff.
 Time consuming customer support which resulted in more frustration and anger.
 The airline was not concerned or worried that their approach would harm their market reputation.
 The airline was also suggested the solution by Dave which was also ignored that cost them millions.
 The Vision and mission statements are either not properly communicated to the staff or not taken seriously by
the company as none of their actions replicate the same.
 The Senior Executive of the airline showed least interest in the matter.
 Bad service recovery.
 Late realisation of their mistake.
 No real effort to dissolve the issue.
  They seem to not learn from their mistakes as Dave in his last video mentioned about other customers
complaining about their issues which were ignored in the same way like his.
SITUATION ANALYSIS

United airlines commonly known as United is a huge airline company, headquarters based in Chicago. It is the world’s
third largest airline company in terms of revenue. The airline has lot of positives and here is a list of them.
1. Strong operational network- United has a strong operational network as it has over 5000 flights a day spread
across 6 continents.
2. Strong brand name and recognition- United has strong brand name and is highly recognised being in the top 5
airline company in the world.
3. High employee productivity
4. Price of the airline tickets are affordable to the general public
Even with all the above strengths United lacks in these following aspects.
1. Weakening financial performance due to continuous losses.
2. Too much dependant on third-party for their airline management and customer service.
3. Lack of adequate customer support.
4. Inability to handle customer grievance in an effective way.
5. Constantly falling brand reputation due to negative reviews from its customers.
The Airline can still manage and try to counter the above weakness as there is a lot of scope. The Airline being an
American native can work to grow as the US economy is on track and progressing positively. And also being
among the top airlines it has got the advantage over its rivals. Due to increased global tourism the airline can
cover up for the previous losses and target new customers.

Threats to the Company

Lot of threats to the airline industry in today’s growing economy. The one being high fuel prices which leads to
increase in the fare of the airline. Competition from other airlines which offer low fares comparatively. The bad
reputation earned over the years is also a threat. Risk of recession, the airline was hit hard by the recession in 2008
and there is no certainty of it happening again anytime.

ANALYSIS OF ALTERNATIVE

1. Monitoring the baggage’s appropriately- The Luggage and baggage department should be closely monitored
to ensure that this error does not take place in the first case.
Advantages
 It ensures that the baggage is not damaged.
 Monitoring helps to reduce carelessness by the baggage handlers as they are aware of the monitoring.
 Improves the quality of service delivery.
Disadvantages
 High monitoring cost involved.
 Time consuming activity.
 Near impossible task to monitor each and every flight’s luggage as the volume of flights operating each day is
very high.

2.Efficient training to employees- Provide the employees/staff proper training to handle customer complaints.
Advantages
 Sets a benchmark for the company’s after sale service.
 Helps to convey the mission and vision statement of the organisation to its customer through its
staff/employees.

Disadvantages
 Time consuming
  Cost of training is high.
 Customer complaints are heterogeneous which becomes a difficulty in training.
3. Take customer complaints seriously- The company neds to take customer complaint seriously and act accordingly.
Never neglect the problem by thinking it is not a big deal.
Advantages
 Ensures that all customer complaints are handled professionally
 Helps retaining its customers.
Disadvantages
 Not all customer complaints are genuine or true.
 The Customers may take advantage of this and may complain for petty issues or even if there are no issues
causing wastage of time and effort.

4.Compensation/Service Recovery – If things go wrong never hesitate to compensate the customer. The customer is
more likely to come back to you if he gets a good compensation.
Advantages
 Helps customer Retention.
 Customer becomes your marketer as he is more likely to share this incident with his friends or family.
 Positive publicity.
Disadvantages
 Compensating each and every customer for their complaint would prove costly for the company.
 Most of the time customers take advantage of this just to get compensated without any genuine reason.

5.Set up a good customer support- Have a good customer support which provides quick and speedy response to its
customers.
Advantages
 It can avoid the customer from being more frustrated and angry. It can calm the customer.
 It helps build trust in the company even if it goofs up often.
Disadvantages
 High cost involved in setting up a good customer support.
May not be effective as mere good customer support does not help in dealing with customer problems, providing
solution does prove to be effective.
RECOMMENDATION

Compensation/Service recovery is the best alternative or we may solution this case as considering the problem
initially was not so severe and Dave himself gave the recommendation to compensate for the loss either by money or
vouchers equalling the repair cost of the guitar. The company ignored his request and then later paid a huge cost for
that. This shows what a bad service recovery could do. Initially where United had to pay mere $1200 ended up losing
millions in stock market. Never let a customer leave in anger, just a song went so viral that it hit the company bad
enough that they till date have not been able to recover from this huge loss.
Not only in service industry overall many good companies have also goofed up several times as the employees are
only representing the company and take decisions on what is right for them at that moment but these companies
know how resolve issues even after goofing up which helps them maintain their company reputation and goodwill.
One example being Samsung, leading mobile manufacturer in the world had issues in the handsets catching fire. The
company was quick in rectifying the error by compensating all its customers by replacing each of their handset and
also a public apology for this. A good company not only delivers good service but also good service recovery when it
fails.

IMPLEMENTATION PLAN
Short-term recommendations
 Provide the authority to the low level staff to take decisions on these type pity issues arising.
 Have a customer support Head and hold him responsible for all the unsolved customer queries and claims.
  Communicating with the Customer throughout the claim process and ensuring him that it would be taken care
of in a professional and ethical manner.

Long-term recommendations
 Train the employees to make it more service oriented rather than just making revenue.
 Division and segregation of departments from high level to low level which helps in better monitoring.
 Re-structure the complete Hierarchy chart so that the top management analyse reports generated by each
department.
 Provide a social networking platform for customer service where customers can get quick and speedy
response.
 Re-structure the customer support system to make it more easy and simple for the customer to approach.
 Having deadlines for all the claims and complaints which will ensure that all claims are addressed.

 Why do you think Dave Carroll's video spread so fast to so many people?

 The campaign was very well handled by Carroll & his friends. The reasons of success are:
 Simultaneous & effective use of social media by them which includes twitter, Digg & other social sites which
have the voting option
 Tweet to the persons who had the similar experience spread a sort of buzz effect
 Immediate pickup by the websites like Consumerist.com, Los Angeles travel section etc. who deal with
customer satisfaction & travel respectively
 The reporting of the video by these sites further brought the video in limelight and hits continued
 Reporting of the incident by the mainstream media further brought the matter in general public’s eyes
 Bob Taylor also leveraged upon the opportunity and supported the campaign

Why do you think Dave Caroll’s video spread so fast to so many people?
Dave Caroll’s “United breaks guitars” music video on YouTube has 15,845,615 views as of now. This video was posted
by Dave’s friend Ryan Moore at 10 p.m on July 6th, 2009. By 7th July, 7 p.m, the video had 24000 views and 461
comments, most of them maligning United Airlines. By the end of the month, the video had been viewed 4.6 million
times.
The reasons why this video spread so fast to so many people are:
1) Bad public relations:
United Airlines had a bad reputation when it came to customer service. The fact that the video had 461
comments within a day maligning United Airlines suggests that they already had bad public relations. People
were not happy with their service and this was evident from the comments received on the video. This caused
people to view and share the video.
2) The power of social media:
The video was promoted widely through social media by Dave’s friends initially. They posted the video to Digg
and other social platforms to which people could submit stories and vote them up and down. Moreover, the
video had made its way to Consumerist.com, a website affiliated with Consumer’s Union and the publisher of
Consumer Reports magazine. The video then made appearance in Los Angeles Times, HuffingtonPost.com and
NBCChicago.com which added to the hype.
3) Mainstream media:
Mainstream media started calling Dave for interviews which subsequently increased the number of views on
the video. CNN, the CBS show and the Associated Press began calling Caroll for interviews.
4) Dave Caroll:
 Dave Caroll was a successful musician. His popularity, coupled with people’s negative perception towards
United Airlines led to the video being popular.
5) United Airways poor response:
United Airways’ poor response to the social media comments and ignorance towards the case caused people
to hate them even more.

How do you evaluate the airline's response? What would you have done different in this position?

The airline's response was more on the negative side because of the following reasons:

 Issued a sincere apology, sprinkled in some humour, and even came out and said that theywanted to use this
video for Training Purposes

 United was selective in the type of media they used to respond to the incident

 While they answered journalist queries, they did not address it on its website or on its Youtube channel

 Next day another video was updated on YouTube with Carroll acknowledging the apology but only 200,000
people viewed it which was actually only 5% of the people watching the other one

 Should have issued their own humorous You Tube response

 The airline’s belated decision to donate $3,000 to the lonious Monk Institute of Jazz as a gesture of goodwill(Carroll
said he was beyond the point of accepting money) did nothing to contain the damage

They tried to handle the situation by the following ways:

1) They used the twitter handle by tweeting the sentence “ This has hit a chord with us “ by emphasizing on the fact that
they have taken notice and have contacted Dave in an attempt to pacify the situation
2) Rob Bradford apologized to Carroll for the incident and asked if they can use the video for training purposes to help
change its culture
3) They offered him 1200$ in cash plus 1200$ worth flight vouchers. When Carroll declined they transferred 3000$ to a
musical school
 4) They were selective in media questions they answered many question but did not respond to it on their website or you
tube channel to avoid any kind of negative publicity
According to us the airline did try to pacify the incident but it was too late as they had already drawn a lot of flak
because of their laidback attitude. They had a lot of backlash in the form of:
1) Falling stock prices
2) Their rating on American customer satisfaction index came down
3) People questioning why I took them 15 months and a viral video to respond to a customer’s genuine grievance
Thus a lot of damage had already been done and their image had taken a hit and now they were not being seen as a
customer oriented airline by many people

WHAT SHOULD HAVE BEEN DONE:

 To tackle such a problem the company should have a dedicated person/team who reports such an incident
and the matter to be addressed immediately but after planning and strategizing
 Mere apologizing would not satisfy the people who are talking about the service failure, the company should
take some tangible actions like change in the training procedures or action plan in this case
 The tangible action should be promoted as an answer to the mass who are spreading negative publicity
 Learning from the mistake and fixing it will help the corporation
 Assuring the customer of not repeating the mistake
 Provide compensation to the affected person

Ques: What would you have done different in this position?

Ans: In similar scenario I would also have taken help of social media and would have posted a blog or event on Facebook and
tagged senior members of the Airlines, followed by polls and other tools to keep the post viral.

Also, would have taken my family and friends support to make the post viral so that the pain gets heard at top level of Airlines.

Q. What did the airlines do wrong?

In general, how should corporations prepare for the challenge posed by user-generated video and other material
disseminated on social media?
First of all, corporations should make sure to have an effective customer grievance system which leaves no or very less scope to
have negative user generated content. Bad news seems to travel faster than a good one as mentioned in the case.

So to avoid any social media disasters, corporations should look to have a good product and an even better after service.   It is
essential to highlight the positive reviews and experiences from the customers. If by any chance, a customer had any bad service
experience, corporations should make sure of redressing it as soon as possible and never leave the touch with the customer/
complainant until the problem is resolved and customer is happy with the after service. Then it is also essential to highlight that
the grievance of the customer is resolved which shows that every customer is valuable for the company. Also it is essential to
address the problem as early as possible since if problem is left unheard, it may be a potential threat to the online reputation of
the company. 

Filene’s basement Inside a fired customers relationship

Answers in a separate ppt

1) How valuable was Norma to Filene’s Basement? What value did she provide to the retailer?

2) How valuable was Filene’s to Norma? What value did it provide in her life?

3) How would you characterize Norma’s relationship with Filene’s Basement? What type of relationship did she have? What
are its rules of engagement? How did those rules emerge and change over time?

4) Trace the trajectory of Norma’s relationship with Filene’s Basement. What were the critical inflection points in the
relationship and how did they shape the type of relationships that emerged and its value to Norma and to the company?

5) Should Filene’s Basement have fired Norma? Why or why not? If yes, on which grounds? If no, what else could Filene’s
Basement have done?

The Filene’s Basement

Filene’s Basements’ Business Model

• Fast flow of inventory
• This reduced inventory cost.
• Automatic markdown method was used to price the product based on the date stamp.
• Provided customers with new kind of a shopping experience – bargain and thrill.

Automatic markdown
• The Date dictated the amount of discount received by a customer
 • The discounts on a product increased with the increase in the time the merchandise was on shop floor
• Faced initial criticism, people thought shoppers would not buy products in the initial pricing cycle
• Was proved wrong since people were afraid the selected merchandise would be gone if they waited.

Experience at Feline’s basement

• People lined up for hours before the sales
• Merchandise was displayed on tables and bins
• Difficult to find complete assortment
• Diverse products attracted both rich and poor
• Shoppers hid the merchandise hoping for it to be there till the next markdown.

2009
1998 Sold to Syms
Corporation
First Bankruptcy , after another
1989 Rescued by value bankruptcy
city department
Acquired by stores and then to Finally closed
Federal Buxbaum Group permanently in
1990’s department store 2011
and then by
Second most Campeau
popular tourist Corporation
attraction
1960’s
Generated
greatest
sales per
square foot
Diagram 1: The Filene’s Basement Story

Impact of Changes
• Increase in pressure over managers for increasing profits and sales
• Increase in number of stores further increased pressure on managers and staff
• Change in store staff frequently leading to customer dissatisfaction
• No track of information on shopping patterns of customers
• Low control over decision making at store level led to decrease in specialized deals for customers

Norma Story - A story of the ‘Best Customer’

• Norma was a loyal customer for the past 20 years and was used to special treatment from the staff
• She had special status as one of “The Regulars” and was a member of Filene’s Basement Insiders club
• But in recent past things changed, Norma was no longer treated as a special customer
• Filene’s Basement eventually fired her for her “excessive returns” and “frequent registered complaints”

Key reasons of change in behavior

• More pressure on managers to perform
• New employees not familiar with Norma
• Tight profit margins
• Evolved corporate Strategy
• Change of Ownership

Instances showing a change in relationship

• Lack of recognition from employees.
Instance: Norma is not entertained room by the employees and they refuse to treat her special
 • Excluding Norma from the Insider club
Instance: Norma is not invited to join the insider club at Newton Store
• Not provided with special treatment by the store manager or the CFO
Instance: Manager refuses to entertain or incorporate any suggestions suggested by Norma. Further, the CFO
suggests Norma to shop somewhere else as she faces too many problems at their store

Reactions to the fallout

Norma refused to go to the court but got the story published in the media. And it followed with 2 different sorts of
reactions from varied set of audience.
• Consumers having worked in retail talk about their own horror stories with problem customers
• Customers otherwise are worried about the manner in which the companies are using the data they are
collecting about them.

Customer Centricity to Customer Firing

Reasons for the change
• Companies realized it is uneconomical to serve all the customers
• Companies started evaluating customer on the basis of revenue Vs Cost per customer
• CRM software helped analyze consumer buying behavior enabling them on customer on one-to-one basis
• 30% of the customers are unprofitable.

Giving Customers what they want

Attracting and Delighting them in order to retain
Customer is the King them

All Customers are not equal

Managing a portfolio Offerings should be customized to reflect their
of customers personalized value

Allowed companies to capture a lot of data about their

CRM Systems and customers
CRM systems helped the companies to take
software personalization to the next level

Customers could be divided in different tiers

Sophisticated CRM This helped the companies to segment their
with analytics marketing efforts to the perceived profit potential

Diagram 2: Evolution w.r.t. Customer Centricity

Pl
ati
nu
m
Gold
 Bronze

Lead

Norma and Filene’s Basement: The Early days

• The retail chain established a unique shopping culture by opening the Filene’s Basement in 1970.
• This shopping was a “contact sport at Filene’s Basement” and customers were ruthless to grab the most
desirable merchandise.
• The Filene’s basement was opened in the suburbs and to some other cities also. The company came up with the
strategy to split designer shipments so that each store received only a few items to sell.
• This actually made the task difficult for the
consumers as they have to Diagram 3: Customer Characterization based on Profit Potential rush to match and
make a product set. Also, the customer faced
issues as there were no fitting rooms were available.
• People use to buy the approx. size to try them at home. This was not convenient for the consumers as for the
return of clothes they have to spend money as well as time. A bartering system evolved among the consumers.
For the culture developed it was justified and appropriate for the consumer.

One of the Regulars

• “The Regulars” were the consumers who became the loyal customers and were always the first in line for
every sale. Most of the employees were also familiar with them.
• These regulars were also benefitted most of the time. They were given privilege that other customers did not
enjoy.
• Many times, the employees bent rule for them, granting pre-sales prices and sales extension or peeks at just in
merchandise that had yet to reach the floor. For more than 30 years the Norma was differentiated from the
masses.
• The company also rewarded their regulars with special offers and events under their CRM program, Filene’s
Basement Insiders Club.
• Norma was very close to the Filene’s employees and she mentioned that “we were like family”. She used to buy
the presents for the staff on different occasions. This level of the commitment was quite common in the Filene’s
basement.
• These stories were even shared on the website. Norma actually helped the Filene’s to grow. From a paying
customer to serve as a collaborator, Norma’s role was extended.
Norma – From ‘Best Customer’ to ‘Fired Customer’
Analysis & Recommendation

Issues with Business Model

• Customers do not have time and facility to take judicious purchase decision which leads to excessive return of
products
• Business model encourages excessive use of return policy and pamper the customer to the extent that it became
their major pain points

Is firing customer the right decision?

• NO! Results in loss of customer and a potential loyal customer base and Distribution network.
• NO! It received negative publicity because of firing Norma.
Alternate Course of action
• Rather than direct firing, use subtle measure to fire the customers indirectly
• Employ measures that discourage Free Riders from shopping in the store
• Change the return policy to discourage excessive returns of products
• Charge customers for the product returned or
• Keep a limit on the number of items that can be returned in a month or year.