Business

Frequent Fliers’ Lament: U.S. Airlines are Second String

Phillip Nones Uncategorized , , , , , , , , , , , , , , , , , , , , , , ,

It isn’t just with automobiles that the U.S. public sees American companies as worse than their overseas counterparts. Our airline industry also comes in for its share of lumps.

Anyone who has ever heard horrific air travel stories from colleagues, friends or relatives – and that’s most of us – wouldn’t be surprised if consumer ratings of U.S. airlines pale in comparison to others. And now we have the record to prove it. SeatGuru, TripAdvisor’s online site that bills itself as “the ultimate source for airplane seating, in-flight amenities and airline information,” has just released the results from its most recent annual survey of frequent fliers (defined as people who have flown at least eight times in the past year).

And what does this year’s survey tell us? For starters, U.S. air carriers have the least comfortable seats of all airlines.

Also, they serve the worst food – if they serve it at all.

Rude flight attendants? Bottoms again.

Who ranks best? If you’re looking for good food, the survey respondents tell us we can’t go wrong with Singapore Airlines, British Airways or Air France. Perhaps surprisingly, Continental Airlines also ranked well. But avoid American, United and U.S. Airways – rated the worst of the bunch.

These same three U.S. carriers also scored at the bottom of the heap for the comfort of their economy-class seating. JetBlue does score well in this category; too bad most of us never get the chance to fly this airline because they serve precious few cities. (For the best business class seating, respondents gave highest marks to British Airways.)

And guess what? The very same three carriers – American, United and U.S. Airways – topped the list for having the nastiest flight attendants. If polite, friendly service is your thing, you’re far more likely to find that over at Singapore Airlines or Southwest.

What about the all-important performance metric of on-time flight arrivals? For that, we can look to actual data compiled by the U.S. Department of Transportation’s Bureau of Transportation Statistics rather than rely on survey findings. What we see is that for the first three months of 2009, Hawaiian Airlines had the best on-time performance of any U.S. airline company, with more than 90% of its flights arriving within 15 minutes of schedule.

But they’re a small airline company. What about the biggest carriers? Southwest has performed the best, while Continental is at the opposite end of the scale.

And what flight to take if you want the dubious distinction of traveling the worst airline route of all? That would be Northwest Airlines Flight #5803 from Atlanta to Honolulu. It was late a mere 96% of the time. Well, there’s consistency for you at least!

As for getting yourself to your destination in one piece … may your pilot be Chesley B. ‘Sully’ Sullenberger.

Happy Travels!

Yes, even the Reader’s Digest …

Phillip Nones Uncategorized , , , , , , , , , , , , ,

Reader's Digest logoAs print magazines have been hammered by falling advertising revenues and as eyeballs have shifted from paper to PCs, the one publication one might think would be spared much of the fallout is Reader’s Digest. With its readership skewing older along with its strong popularity across the entire income spectrum — not to mention its 8 million domestic circulation — it would seem to be the media property best able to maintain a strong position in the current environment.

Well, you can burst that bubble. This past week, Reader’s Digest announced plans to shed some 2.5 million subscribers. It also announced that it is reducing its frequency from monthly to just 10 issues per year.

Plus, like other consumer magazines, Reader’s Digest is expanding its digital presence. Just listen to how Eva Dillon, Reader’s Digest president and group publisher, puts it (in florid language): “As one of the world’s largest producers of original content, we will continue our transformation into an innovative, multimedia brand by delivering content to users whenever and by whatever means they want, through expanded digital and print investments and the development of new mobile, video and multimedia applications.”

Translation: The print model isn’t working anymore, so we’re trying what everybody else is doing. We’ll see how it goes.

Of course, let’s not forget that Reader’s Digest is the world’s largest transnational magazine brand. When you add up its 50-odd country editions around the globe, its circulation tops 14 million.

So this brand isn’t going away anytime soon. But it is interesting to see that despite its unique (and enviable) position in the publishing world, Reader’s Digest is having to deal with the very same issues as everyone else in the industry.

This just in: The organization stinks. Now, what are you going to do about it?

Phillip Nones Uncategorized , , , , , , , , , , , , , , , ,

I Hate People BookI’m in the midst of reading an interesting book with a provocative title: “I Hate People!: Kick Loose from the Overbearing and Underhanded Jerks at Work and Get What You Want Out of Your Job.” (Little, Brown Publishing, ISBN-10: 0316032298 … also available in a Kindle edition.)

I think this book takes some risks. It certainly bursts a few bubbles in the conventional thinking about organizations and how they work. If you read it, be prepared to discard some of those platitudinous notions about shared mission and vision, organizational behavior, teamwork, matrix management and all the rest.

Coauthored by Jonathan Littman and Marc Hershon, this book fearlessly tackles the thing many workers know but are afraid to say out loud: Every day they come in the office, people have to deal with colleagues who exhibit a host of traits they frankly can’t stand.

We’re well familiar with the types … and Littman and Hershon give us catchy names to describe them, such as:

“Stop Sign” — the person who always finds something wrong or unworkable with the latest idea/product/strategy/solution being proposed. (And isn’t it interesting how many of those issues would entail that person having to contribute a bit more time and effort of his or her own?)

“Switchblade” — be very careful of these people … they’re highly dangerous when you’re not looking!

“Happy Face” — you know, the folks who approach their work at the office the same way they circulate at a cocktail party or spend an evening at the country club.

Or “Time Waster” — there’s no explanation at all needed for this common specimen!

The idea of “teamwork” comes in for pointed criticism by the authors as well. In theory, teams are all about working together to achieve consensus and implement better programs or initiatives that everyone can support. Littman and Hershon remind us that too often, teams produce nothing more than mushy “group think.”

And the bigger the team, the more tepid the results. The authors contend that only a few team members carry their own weight; the others can get away easily with little more than just showing up at meetings. For this reason, we’re advised to join teams of no more than four or five people, where “hiding in plain sight” is far more difficult to pull off.

A good thing about this book is that instead of presenting a litany of problems and then just leaving the entrails on the floor, Littman and Hershon provide ideas for how to work around all of the mediocrity and the frustration. They sugggest practicing “solo-crafting.” What’s that? Basically, it’s taking it upon yourself to “just do it” rather than passing the buck or relying on others. Or, as the authors put it: Stop talking, stop acting, start doing.

The book is quick to point out that solo-crafting doesn’t mean becoming a loner or maverick. It also doesn’t mean becoming a peacock, screaming “Look at me, I’m so great!” — just the kind of person everyone loves to hate.

Instead, by accomplishing more while working within the orgnizational structure, Littman and Hershon contend that you’ll find yourself being recognized for your ability to actually accomplish what others simply give lip service to. And that will result in being asked to perform more key tasks, with more opportunity to be recognized and rewarded for a job well done. Solo, of course.

Bing Search: Pike’s Peak … or Halley’s Comet?

Phillip Nones Uncategorized , , , , , , , , , , , , ,

Well, it didn’t take long for the marketplace to render its verdict on the Bing search engine phenomenon. Fueled by a multi-million dollar advertising rollout plus an aggressive PR push, web tracking service StatCounter has reported that Bing actually vaulted past Yahoo to become the #2 search engine … for one day.

That’s right. According to StatCounter’s data, on June 4th, Bing captured over 15% of the U.S. search share market, while Yahoo had only around 10%. By the next day, Bing’s share had dropped below 10% while Yanoo notched up a point to 11%. And by Day 3, Bing’s share had fallen still further to just under 7%.

Think it couldn’t get worse? The day after that, Bing was mired below 6% share.

Similar results were recorded worldwide.

What’s behind the primal shrug that Bing seems to have met in the marketplace? Certainly, all the PR hype was successful in getting people curious enough to click through and do a bit of tire-kicking. But it’s obvious that most weren’t particularly impressed by what they experienced, despite the fact that Bing does provide some user-friendly features not available over at Google.

But that’s not nearly enough for success. Google’s users are, by and large, quite satisfied with the search experience. It’s what they know. It’s comfortable. And unless there’s a compelling reason to switch — to change deep-seated habits — most people simply aren’t going to play ball … whether you put millions of dollars in advertising behind your pitch or not.

The folks at Google might have been shaken a least a bit on June 4th when their market share of search dropped to 72%. But they needn’t have worried. Four days later, Google’s share was back up to 80% — where it had been to begin with.

Next case, please?

More Action on the Search Engine Front

Phillip Nones Uncategorized , , , , , , , , , , , , , , , , , , , , , , , , ,

Bing logo designWolfram Alpha logoDespite the fact that Google has proven itself to be all but immune from threats posed by competing search engines, hope springs eternal. Within the past couple weeks alone, two new challengers have emerged, accompanied by much fanfare in the business press.

Microsoft takes yet another swipe at Google with its new Bing search engine. Based on an earlier one called “Kumo,” some industry observers — though not all — believe it is a pretty good competitor. Reviewers are particularly pleased with the presentation of refined versions of search queries. Bing also features a rollover display of each link’s content, allowing you to see how useful it will be before clicking through to the site.

The search engine also appears to index more recent “breaking news” items, whereas with Google, those results are not shown unless you click through to Google News — an extra step.

The big question is whether Bing will be able to wean web users away from their habit of searching on Google as their default choice. Certainly, Microsoft is putting some serious promotional dollars behind the launch — upwards of $100 million according to Advertising Age magazine. But based on the tea leaves, a wholesale change in search behavior seems unlikely. Search habits aren’t going to change dramatically unless there is a dramatic improvement in the effectiveness and speed of search activity. Fom what we see of Bing so far, we’re talking about improvements nibbling around on the margin rather than big sweeping change.

But “big sweeping change” just might be the recipe for Wolfram/Alpha, the other new entrant in the search engine sweepstakes. That’s because W/A isn’t actually a search engine in the classsic sense. Instead, its developers refer to it as a “computational knowledge engine” that uses complex algorithms to search databases to come up with answers to questions, rather than presenting a list of sources where the answer might be found. It can report some really cool factual results just based on the user typing in, for example, a date range, several city names, or an animal species.

The key difference between Wolfram/Alpha and Google is that W/A does not index web pages. Instead, it draws answers from a wide range of information-packed databases. So if you want to know the number and magnitude of hurricanes hitting North America in the past 15 years, you’ll get a specific answer rather than being presented with a series of web links wherein you might find the answer to be hiding.

Some observers see the potential for W/A and Google to team up rather than compete against one another. After all, what they do isn’t directly competitive, but in more respects complementary. And in an interesting twist, it turns out that Stephen Wolfram, the ~50-year-old computer scientist and developer who created the software platform upon which W/A is based (called “Mathematica”), once supervised a summer intern by the name of Sergey Brin — who would go on to develop Google with partner Larry Page.

Sergey and Stephen teaming up once again would be quite the coincidence … or would it really?

Even John Q. Public doesn’t believe newspapers are going to survive …

Phillip Nones Uncategorized , , , , , , , , , , , , , , , , , ,

It’s not just inside observers who are predicting the demise of the printed newspaper. The “Great American Public” seems to be well clued in to the problems of newspapers also. In fact, a poll released by Rasmussen Reports on May 12, 2009 reports that fully two thirds of adult Americans believe daily papers will disappear within the next ten years.

Even more dramatic, nearly one in five respondents think that it will happen within three years.

When two thirds of all adult Americans predict daily papers will go the way of the dinosaur within the coming decade, that’s big news. No longer is this just a discussion among industry insiders … it’s crept into the popular culture. That’s yet another big danger signal for the papers.

All of this is underscored by Rasmussen’s findings that a majority of Americans (56%) purchase a paper once per week or less — and 37% rarely or never buy a print version of their local paper.

In a possibly related development, Rasmussen’s surveys report that the credibility of newspapers and other media has declined in the public’s eyes. For example, only about one in four respondents has a favorable opinion of the New York Times. That may be a new low for a paper that likes to think of itself as America’s #1 print news source.

The most recent Newspaper Association of America’s financial figures are showing that newspapers have lost a whopping $18 billion over the past three years in their print operations. And while many papers have been counting on their online operations to counterbalance all of this red ink, total Internet revenues over the same period amounted to ~$9 billion — not nearly enough to erase the losses on the print side.

Of course, as this is 2009, the story would not be complete without government officials coming to the rescue, offering their share of interesting proposals. But how does the public feel about these efforts by politicians to save the newspapers? Nearly 40% favor federal government subsidies to keep newspapers in business … but slightly more than half feel it’s better simply to let them go out of business.

It will be interesting to see what the federal and state legislatures actually end up doing — whether it be turning newspaper companies into not-for-profit entities as Senator Ben Cardin of Maryland has suggested … or providing special business tax breaks for the industry as has been proposed by Washington’s governor Christine Gregoire.

Whatever is attempted, my prediction is that it won’t have nearly the positive effect its proponents hope for. The sweep of change in the communications arena is simply too broad and deep for that.

Loyalty? … What Loyalty?

Phillip Nones Uncategorized , , , , , , , , , , , , , , , , ,

Godiva's newly announced customer loyalty program is a yawner.
Godiva is a late entry in the customer loyalty program sweepstakes.
Godiva Chocolatier has just announced its first-ever loyalty program for customers. It promises to ply chocoholics with all sorts of goodies — from free in-store confectionery gifts to free shipping on online orders. Anyone over age 18 is eligible to sign up with no obligation to purchase … and for those who activate their loyalty membership before June 13th, there’s even a chance to win a complimentary “chocolate party” for up to 25 friends at their nearest company-owned Godiva boutique store.

How wonderful. Now, pardon me while I stifle a big yawn.

For a program that seems pretty decent actually, how come it all sounds so predictable … so mundane? That’s because everybody’s doing it. (And Godiva is really, really late to the party.)

A recent report issued by consulting firm Colloquy contains some interesting statistics about loyalty programs. With more than 1.8 billion loyalty memberships on the books, the numbers have never been higher. (This translates to a whopping 14 loyalty program memberships per U.S. household.)

These stats underscore the fact that loyalty programs have migrated well beyond the original airline frequent flyer and hotel frequent stayer programs to encompass seemingly every corner of consumer activity today.

But according to Colloquy, fewer than 45% of all loyalty programs are actually active, in that they’ve had at least one instance of activity in the preceding 12 months. “The relative ratio of active to inactive loyalty program members suggests that more than half of all program memberships are merely names in a database,” the report states. “The implication for marketers is clear — the era of growing membership rolls just for the sake of growth is over.”

What this suggests is that companies have done a better job of signing people up for loyalty programs to begin with … but not nearly enough to keep them engaged as regular customers over time.

Could it be that the single most popular tactic — offering a one-time 15% or 20% discount on purchases as a “sign on” incentive — has attracted customers who cheerfully take advantage of the special activation offers, but have no compelling reason (or even any intention) to participate over the long haul?

If that’s the case, the loyalty is only skin deep … and the current economic conditions will likely spark even more instances of lax participation.

But what if companies tailored loyalty programs to individual customers based on their unique profile and actual purchase history? Would better customer conversion result — along wth improved ROI?

It’s more challenging to run a tailored loyalty program … and it requires more focus and attention than many marketing department personnel are willing to devote to it. Moreover, there’s no guarantee that consumers won’t simply “take advantage,” without spending any more on merchandise than they would have done without the loyalty program being offered in the first place.

But with the sorry participation rates currently being experienced with loyalty programs … it’s certainly worth a shot.

What?! A Reduction in Postal Rates?

Phillip Nones Uncategorized , , , , , , , , , , , , ,

The first class postage rate is going up again this month. But not so fast! The USPS is actually having a sale on postage as well.
The new first class postage rate is going up again this month. But not so fast! The USPS is actually having a sale on postage as well.
Death … taxes … rising U.S. postal rates. It seems all three of these things are just a given. And the USPS is getting ready to up the price mailing a first-class envelope another 2 cents, effective next week.

But hold on! Because it’s suffering from a significant decline in mail volume approaching 15%, the USPS is concurrently rolling out a special program heretofore never seen from this most politically tin-eared of government agencies. The impressively named Saturation Mail Incentive Program gives large standard mail direct marketers who increase their mailing volumes the opportunity to earn per-piece credits — discounts essentially — on their mailing activity.

The discounts themselves are rather small — ranging from 2.2 cents per nonprofit letter mailer to 4.0 cents per flat piece (catalog).

… And the “fine print” conditions as to who actually qualifies for the discounts are almost byzantine in their description.

… And the savings are for a limited time only (~1 year) beginning this month.

… And program participants must formally apply to the USPS for approval.

… And they must do so by June 11 or lose their opportunity to participate at all.

… And, and, and … Well, you get the idea.

But the fact that the postal service is actually throwing a “sale” on rates is big news in and of itself. When has this ever happened before?

Quoting the eloquent words of USPS spokesperson Michael Woods, “The Postal Service is always looking for ways to use our pricing flexibility to improve business, and the current economic climate makes that more important than ever.”

Translation: “We’ve lost a pile of business in the economic downturn, and maybe if we lower our prices, we’ll get some of it back.”

Good luck.

We’ll check back after a few months to see how things are going. Judging from the most recent financial results published this week — a quarterly loss of nearly $2 billion — we may not see much improvement. After all, the USPS has managed to make money in only one quarter out of the past eleven!

UPDATE (5/18/09) — The USPS has now finalized the program, which will now launch July 1. Details are here.

Yet Another Headache for the U.S. Auto Industry

Phillip Nones Uncategorized , , , , , , , , , , , , , , , , , , ,

Several Mexican drug cartels are very active along the U.S. border.
Several Mexican drug cartels are very active along the border -- and U.S. auto parts plants are getting caught in the crossfire.
Now here’s an interesting confluence of events that at first blush seem totally unrelated to each other: the U.S. automotive industry and the Mexican drug wars. As if the auto industry didn’t have enough problems on its hands, now it’s finding itself in the crosshairs of the Mexican drug cartels’ shootout with the government in towns along the U.S. border.

Ciudad Juarez, Mexico is a factory town that happens to have its share of U.S.-owned auto supply factories, drawn to the region by cheap labor rates averaging less than $1.50 per hour. Always a tough city, Juarez has gotten a lot more dangerous in recent months. The raging violence peaked several months back with drug gangs killing six police officers in one single week before the Mexican government sent military troops in.

Civilians and foreign nationals are also at risk, it turns out. In January, a plant manager for Detroit-based auto parts manufacturer Lear Corporation was kidnapped on his way to work in Juarez, and a $1 million ransom was demanded for his release. Shortly before this drama unfolded, the firm’s local facilities were attacked by a band of gunmen armed with assault weapons; reportedly, they were after employees’ Christmas bonuses plus proceeds from the plant’s ATM machine.

Auto parts maker Delphi has also reported a number of disturbing incidents, including the attempted kidnapping of one of its female executives.

So, in addition to being faced with a blizzard of bad news on the domestic front stemming from the collapse of automotive sales, the auto parts manufacturers are encountering an entirely different set of bad conditions on the border. In response, they’re taking special precautions, including adding more security (and vetting security personnel more carefully), removing ATMs from plants, restricting local personnel travel to daylight hours only, and even going so far as to keep their CEOs away from the region entirely.

But you can only wonder how much longer things can go on like this if the Mexican government doesn’t gain the upper hand in quelling the danger and the violence — and soon. After all, there are nearly 1,000 auto parts makers in the country, ~70% of which are subsidiaries of U.S. companies. That makes it very hard for the military to patrol so many locations against the seemingly random attacks, kidnappings, and other acts of violence.

At some point, the prospects of cheap labor and low costs will run smack up against basic safety, security and peace of mind. Other Latin American countries face similar issues … so might this mean a shift of some of these operations back to the United States? Now, that would be an interesting twist!

We shall see.

Now that April 15th is behind us …

Phillip Nones Uncategorized , , , , , , , , , , , , ,

While we’re all catching our collective breath after filing our 2008 federal and state tax returns … it’s a good time to consider the most recent findings on Americans’ tax preparation behaviors.

You might expect that a significant portion of tax filers are now using “cheap ‘n easy” computer software programs like TurboTax to complete and file their tax forms.

Well … not so fast. A just-released survey conducted by Mediamark Research & Intelligence finds that only about 20% of U.S. tax filers used software programs. Another ~13% prepared their own returns the traditional way — by hand.

But fully half of respondents relied on outside professional help from a CPA, tax preparer or national chain resource like H&R Block — despite the fact that such services cost much, much more.

Why would half of all adults who file personal federal taxes feel the need to pay a lot more for professional assistance rather than take advantage of affordable software programs? There are a number of reasons: the complexity of the federal tax code … intimidating tax forms and instructions … concern about the safety and security of computerized software programs and electronic filing … and, not least, fear of retribution from the IRS for making an error.

The fact that many of the tax returns completed by professional preparers still contain errors doesn’t seem to make much difference. Many taxpayers would rather shift the responsibility of “filling out and filing” to somebody — anybody — else.