This article was first published in the summer of 2019 as part of a 100 part series on the history of British Airways and its predecessor airlines, Imperial Airways, BOAC and BEA. You can browse the full series of 100 stories in numerical order, by theme or by decade.
Note many articles have been updated since they were first published.
Lord Marshall of Knightsbridge was recruited by Lord King to be Chief Executive of the airline in 1983.
Lord Marshall had previously been Chief Executive of Avis in the United States. The UK was of course a very different country in the early 1980s. Those in the UK who had been to the United States in the 1970s knew, for all of the faults of the US, of the competitive power of the market. Lord Marshall would later say:
“In a deregulated environment, where government policies can no longer fix markets and offer competitive protection, who calls the shots? The answer is obvious: the customer. It is the essential truth of the new world competitive order – of global business development – that customer choice, preference and demand are its real driving forces.”
Like Lord King, Lord Marshall joined BA with no experience of working in the aviation industry. Speaking to the New York Times in 1989, Lord Marshall said of BA:
”There was very little understanding of what the passengers wanted and what the marketplace was all about,” ”And ‘marketing’ was a word that did not exist in the company. They had a commercial director, but no marketing director.”
Lord Marshall oversaw a “night of the long knives” which resulted in the dismissal of over 70 senior managers.
“Almost like an archaeological excavation, we had to sweep away the dust and dirt of generations of economic and attitudinal litter, in order to expose the treasure trove of air transport quality that we knew had accumulated over years of network, product and technical development. Then it needed to be polished to the point where it would both attract the customer and dazzle the competition.”
Lord Marshall was responsible for many changes at BA including its “Putting People First” training programme and the introduction of branded cabins, such as Club World. He was also seen as a foil to the notoriously brusque manner of Lord King.
Speaking to the Harvard Business Review in 1995, Lord Marshall offered a number of insights on customer service in the airline industry. These were of course made before the rise of low cost airlines and 11 September 2001, but do still offer many pertinent insights.
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.
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.
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.
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.
Lord Marshall was appointed Chairman of BA in 1993 and retired from the airline in 2004. He died on 5 July 2012, aged 78.