Sir Colin Marshall on “Putting People First”

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British Airways unveiled its “Landor” retrospective livery yesterday.

Introduced in 1984, that period from the mid 1980s to the late 1990s which spanned privatisation and strong financial performance, is often referred to as BA’s golden age.

That is true to a point. Of course this era pre-dates the rise of low cost airlines following the deregulation of aviation in Europe, September 11 2001, rising fuel prices and taxes, and the internet which made for easy price comparisons between airlines.

BA’s aggressive expansion in the late 1990s also led to it emerging from 11 September 2001 heavily indebted and it took nearly a decade for the airline to recover.

With that out of the way, it remains the case that this 1995 interview with Sir Colin Marshall from Harvard Business Review on delivering consistent high quality service in a commoditised market should be mandatory reading for anyone with the slightest connection to air travel.

Sir Colin Marshall, like BA Chairman Lord King, joined the airline from outside the aviation industry having been CEO of Avis in the US. Sir Colin Marshall oversaw BA’s “Putting People First” training programme. Designed by Danish firm Time Manager Inc, this was introduced in the same year as the Landor livery and involved a two day workshop for virtually all BA employees.

The crux of the interview is that it doesn’t shy away from acknowledging that air travel is a tough price sensitive market. But where airlines ultimately fly the same aircraft on the same routes at the same speed, differentiation on branding and perception of value is critical.

Whilst almost every service industry is now falling over itself purporting to provide an “experience” (often very contrived and scripted in actuality), in 1995, this was not the case.

Comments towards the end of the interview on industry consolidation and technology also proved to be very prescient.

On providing value in a commoditised market

You’re always going to be faced with the fact that the great majority of people will buy on price. But even for a seeming commodity such as air travel, an element of the traveling public is willing to pay a slight premium for superior service. They are the people we’ve been trying to attract and retain as customers. We don’t just mean people who fly business class, first class, or the Concorde. Many service companies ignore the fact that there also are plenty of customers in the lower end of the market who are willing to pay a little more for superior service.

It all comes back in the end to value for money. If you can deliver something extra that others are not or cannot, some people will pay a slight premium for it.

On where and where not to cut costs

There are two sides to the business equation: costs and revenues. Any business that focuses on one at the expense of the other is going to pay very heavily. You can’t walk away from the fact that if somebody can do the job better and cheaper, you have a problem and you have to do something about it. But you can do it without undermining the fabric of what you have built up. When business conditions got tough in recent years, we did not take meat cleavers to our product. We did not reduce costs indiscriminately. We did not reduce the quality of the wine. We did not stop investing in airport lounges and in training people. We continued making that investment despite the fact that it would have been very easy not to. Why is it that people prefer to fly business class with us? It’s because our product is better.

On providing an experience

There are different ways to think about how to compete in a mass-market service business such as ours. One is to think that a business is merely performing a function—in our case, transporting people from point A to point B on time and at the lowest possible price. That’s the commodity mind-set, thinking of an airline as the bus of the skies. Another way to compete is to go beyond the function and compete on the basis of providing an experience. In our case, we want to make the process of flying from point A to point B as effortless and pleasant as possible. Anyone can fly airplanes, but few organizations can excel in serving people. Because it’s a competence that’s hard to build, it’s also hard for competitors to copy or match.

There’s another critical element of our approach to serving customers: Filling customers’ value-driven needs. Every industry has a price of entry—the ante you have to pay to get into the game. In our industry, there are five basic services that everyone has to provide. We must: get passengers to where they want to go, do it safely, go when they want to go, provide some nourishment, and let them accrue frequent-flier miles. But our research shows that customers now take the basics for granted and increasingly want a company to desire to help them, to treat them in a personal, caring way. Fulfilling those desires is the centerpiece of how we wish to orchestrate our service.

What do you mean by orchestrating service?

I mean exactly that: arranging all the elements of our service so that they collectively generate a particular experience. We try to think about what kind of impression or feeling each interaction between the company and a customer will generate. For instance, we ask our crews not to load up passengers with food and drinks and then disappear — not for cost reasons but so we can create additional personal contacts with the customer. According to our research, just seeing crew members creates higher customer-satisfaction levels. Other airlines pile on the food and drinks so that their crew members don’t have to go back.

The comment about crew visibility is particularly pertinent, which BA doesn’t always get right on long-haul flights.

On BA’s brands

BA’s seven brand managers are customers’ main advocates within BA. They oversee the process of refreshing the brands and are among those responsible for thinking of ways to innovate and improve services. Each of our services — Concorde, First Class, Club Europe, Club World, Euro Traveller (European economy), World Traveller (long-haul economy), and domestic Shuttle service — has its own brand manager. We started to treat our categories of service as brands in the mid-1980s.

BA is still one of very few airlines to brand each of its individual economy and premium cabins. The world “Club” of course became synonymous with business class.

And the importance of regularly refreshing them

We came to recognize that there is a wear-out factor in terms of the way we present our different categories or classes of service just as there’s a wear-out factor for consumer products and their branding approach.

We recognized that delivering consistent exceptional service was not enough — that service brands, like packaged-goods brands, need to be periodically refreshed to reinforce the message that the customer is receiving superior value for the money. Refreshing your service is also a way to make sure you periodically reassess how the value you think you are delivering compares with the value customers think you are delivering. When we began, I thought the wear-out factor for a service brand was somewhere in the five-year range. Now I am pretty convinced that five years is about the maximum that you can go without refreshing the brand.

There is certainly a kernel of truth here. Familiarity easily breeds contempt amongst frequent flyers.

On the importance of service recovery

I try to impress upon our people that in a service business the customer doesn’t expect everything will go right all the time; the big test is what you do when things go wrong. If you react quickly and in the most positive way, you can get very high marks from the customer. Recovery matters as much as trying to provide good service, since occasional service failure is unavoidable in a business like ours.