Lufthansa says pilot’s strike to cost up to $103 million

Victoria Bryan reported on the negative impact the recent pilot strikes have had on the Lufthansa Airlines’ balance sheet, but also on it’s worldwide customer relationships, in the American Reuters Magazine on Friday 4 April 2014. The German airline had to cancel a total of 3,800 flights, which resulted in a loss of $103 million. According to Kratky, Chief Operation Officer of Lufthansa Airlines, the consequences are disastrous. Critics argue that the ‘never ending strikes’ do not communicate a healthy internal market culture. Seven groups of Lufthansa employees have been on strike in the past 12 months. Kratky fears that ongoing strikes could result in customers thinking twice about travelling with the German company.

Source: Reuters/Michaela Rehle

The request of the above-average-paid pilots is higher remuneration, as well as an even earlier retirement. This demand has not only resulted in outrage in the German media, but also amongst other employee groups within the 118,000 people strong company. Lufthansa’s Chief Executive, Christoph Franz, apologised to customers for the inconvenience caused and ‘begged’ them to please stay loyal. The large amounts of strikes make internal marketers curious whether the company has simply a very weak working culture or if the unions are just so strong that there is continuous ambition for more success.

According to primary research, pilots at Lufthansa are proud of their jobs and feel a strong commitment to their customers. However, where is the passion for service when they know that their strikes result in a complete shut down of the German airways? Lufthansa should invest in stronger internal market relationships not only in every work segment, but across all employees to minimise strike cost and to improve its working culture.

Source: AP

Employees have discussed online their disappointment about the bureaucracy practised at Lufthansa, which slows down the communication between management and front line staff. From an outside perspective, it seems that the firm is very hierarchal, but also consists of a very flat structure at the bottom due to the very diverse expertise required for airline operations. A former employee who worked ten years for the brand suggests that senior management should not forget to motivate employees, even during difficult times, and that they should not wait too long before announcing new structures to secure one of the two most precious stakeholders of all…their employees.

Lisa Grobien
Current student in the Master of Marketing program at the University of Sydney Business School

Customer experience vs. user experience

One of the marketer's role in an organisation is to understand the needs of its customers and develop a satisfying relationship with them. Today, many organisations dedicate specific marketing staff members solely to digital marketing and to considering how to improve 'customer experience' within digital channels.

When I came to know that the marketing community is all abuzz with the 'customer experience' within and across organisational channels, I noticed that there is another term, 'user experience', which may flow more naturally in the IT business.

So what is the difference between 'customer experience (CX)' and 'user experience (UX)' ?

According to the article, 'Understanding customer experience' in the Harvard Business Review, customer experience is defined as 'the internal and subjective response customers have to any direct or indirect contact with a company.' It says direct contact encompasses touch points between customers and workers, covering purchase, use, service, and indirect contact is said to involve customer's emotion, such as preference, or complaints, that customers feel when they encounter a company's product, service and brand.

On the other hand, ISO 9241-210 (Ergonomics of human-system interaction) provided the definition of user experience as 'a person's perceptions and responses that result from the use or anticipated use of a product, system or service'.

Based on these two definitions, I can see that CX and UX look in fact very similar. However, their approaches are somewhat different from each other. UX tends to focus on making a product and service easier and more enjoyable to use for customers, especially in the digital space: websites, mobile phone, tablets. Meanwhile, CX tends to take an extended concept, describing the whole experience that customers have across all the interaction with a company's channel.

In a nutshell, while user experience is developed by a customer's relationship with a product, customer experience is defined by all touch points of company's brand, online and offline. Ultimately, UX makes customers grow attached to the product and leads to more differentiated product competency, and CX extends the scope of experiences across, before and after product-use, and enables companies to take corporate competency by acquiring existing and/or potential customer's loyalty.

So is this distinction actually crucial for business? I believe CX and UX are aligned very closely, and there is a fine line between them. If a company conducts its business online, customer experience begins digitally and user experience is the key.

Marketers at the very least need to clearly identify two definitions of both CX and UX used in the current market, and create great communication and collaboration between two working fields.

Joo Nam Park
Current student in the Master of Marketing program at the University of Sydney Business School

Value Proposition Statements - A.K.A "Hey You There, Pay Attention To Me!"

What is a value proposition? It’s not a company overview or a mission statement and it’s not your brand slogan or motto. A value proposition is ideally created internally by your company and simply put - it is what value your product or service has to offer to your consumers.

Be wary, however, as consumers can shape their own value propositions for your offering. This is where marketing comes in; it can be used to bridge the gap between differences in perceptions. If your internal value proposition is not aligning with your consumers value proposition you may potentially have consumer expectations not being met.

The benefits of having a clear value proposition will show potential consumers how your product or service will be of benefit to them, how it will add value and it will also showcase what sets your offering apart from your competitors.

Some companies that have clear value propositions are:

Pandora - free, personalized radio that plays music you'll love

Skype - make internet calls for free and cheap online calls to phones and mobiles

Square - accept credit cards on your iPhone, Android or iPad

They are outstanding examples because they communicate their offering clearly and present it in a visually pleasing manner. You don’t get to make second impressions in today’s fast-paced market; we are increasingly competing to be noticed by consumers.

Some tips we can all use to create better value propositions for our companies are:

• Avoid complicated business jargon – it needs to be understood clearly in simple terms
• Avoid more than 2-3 sentences for a value proposition – less is more
• Value propositions are not slogans or mottos – slogans or mottos help with brand recall; you want your value proposition to sell your product or offering
• Make sure it stands out – why should a consumer choose you over the others; present it aesthetically
• Avoid clichés – stay away from overused phrasing such as ‘never before seen’, ‘one of a kind’, ‘best of the best’

Luckily, the Marketing Matters blog has a current value proposition that I can do a personal evaluation on regarding its overall effectiveness:

“Marketing Matters is a blog that tells marketing stories from an industry, academic and student's perspective. We confront and debate today’s business trends!”

I would say this is a good value proposal for these reasons:

• It lets us know what the blog is about and what the end benefits of reading it are
• It knows who its target audience is and has worded it appropriately and clearly
• It has identified its unique differentiation point that helps set it apart from other marketing blogs out there

The foundation is there to continually perfect the visuals. If this small exercise has taught me anything, it’s that there is always room to evaluate and improve your value proposition to ensure that consumers notice your offering and your brand/company over all the others out there.

Kori Bassi
Current student in the Master of Marketing program at the University of Sydney Business School

Extending your reach through employees

I’m fascinated by the idea of ‘Employee Activism,’ and it has been a talking point in the business media in recent times. 

I read about an interesting study by the PR and Marketing Communications agency Weber Shandwick. They surveyed 2,300 employees over 15 global markets, finding that 1 in 5 workers are ‘employee activists’; people who will publicly defend and advocate for their employer. They also found a further 33% were on their way to adapting to these pro-employer traits.

Weber Shandwick Workforce Activism Spectrum™

The other day, another graduate student joked with me proudly that they had been ‘institutionalised’ by their company. I could strongly relate to this notion, as I also share a positive sentiment and a long tenure within my own ‘institution’!

In the last couple of years I’ve witnessed my own organisation prioritise and subsequently embed some new values and culture throughout the business. This is a successful paradigm shift from 5 years or so ago when organisational culture was defined by a dusty ‘commitments’ poster pinned to the office wall. The workforce has actually been mobilised to live out the values. It’s been successful because the culture was put at the top of the company agenda; made real by an innovative and engaging ‘internal brand’ platform.

So what do a highly engaged staff of activists look like? Well, it’s mainly expressed through social media. They may, of their own freewill, post pictures and videos about their company on Facebook. Or perhaps they generate favourable online discussion about their employer. Of the companies surveyed, one third encourages their employees to do this – especially in relation to sharing company news, campaigns and information.

This of course poses a great threat to organisations dabbling in employee generated social media. By placing part of your brand communications messaging in the hands of employees, there is a gamble with co-destruction. 16% of the survey sample indicated they had shared negative and critical comments about their employer, and 14% posted comment about their employer that they regret.

Sometimes the risk isn’t just an employee who has had a bad day at the office. The activists themselves can do harm to your brand. For instance, employees leaving favourable reviews on user-generated content websites can also be damaging by harming brand credibility.

Travel site, TripAdvisor has been put under scrutiny in relation to the authenticity of reviews on the site. They have previously been criticised for posting unconfirmed and anonymous reviews about restaurants, hotels and attractions that could have potentially been posted by ‘employee activists’. But is it unethical for an employee of a restaurant to favourably review a meal they enjoyed when dining at work? This is a grey area, but there is certainly some degree of fake reviews on these types of websites that originate from employees.

Organisations need to get on the front foot and educate their people on how to use social media whilst protecting the brand. Tools like PeopleLinx are popping up to help employees become skilled social marketers. Training and granting your employees access to social media tools will attract an army of brand advocates. "People don't buy from brands; they buy from people they know and trust," comments PeopleLinx CMO Michael Idinopulos.

www.peoplelinx.com

The scary part is that the study also revealed less than half of those surveyed could adequately describe the company’s business activities, and even fewer could articulate the company’s goals.

So, if you are going to encourage the team to engage in company-related social chit-chat, you would want to make sure they are on message and you would also want to ensure there is no unrest within the ranks.

This is an interesting strategic marketing issue of the moment. It represents tremendous opportunities on one hand; and catastrophic threats on the other. If you’d like to get a snapshot of the study without reading the report, check out the infographic. 

Aaron Rowden
Current student in the Master of Marketing program at the University of Sydney Business School