If you’ve been following the news about United Airline’s terrible treatment of one of its passengers, you’re likely disturbed. The subsequent response by United Airlines CEO, Oscar Munoz, has further upset the public, and caused a landslide of bad PR and negative Word of Mouth that will affect the company for months, and possibly years, to come. As proof of the power Word of Mouth has to make or break any company, United Airlines Stock (UAL) has seen a loss of $255 million dollars in market value as of market close Tuesday. At its lowest peak on Tuesday, the company was down almost 1 billion dollars. The stock was down a further 1 percent yesterday.
So what should United Airlines do to maintain what customer loyalty they have left? A breach of customer trust this big requires an equally large effort to win back your customers. How? First, United Airlines needs to go above and beyond for the benefit of the man at the heart of this controversy. The CEO of United Airlines should have immediately flown to Dr. Dao, personally apologized, offered to pay all of his medical costs, and given him and his family a lifetime of unrestricted First Class air-travel. It won’t make up for the assault witnessed by millions on the web, but the conversation around United’s handling of this incident may very well change. Most importantly, to win back its positive Word of Mouth in the long run, United must make fundamental long-term changes to its customer service to slowly win back the public’s approval.
As an example of how companies should handle potential PR blunders and redeem their Word of Mouth, I’m reminded of Lexus. Lexus enjoys great Word of Mouth, and is known for providing exemplary service. It’s no accident on their part. To survive as the first true luxury Japanese manufactured car in the American market, Lexus had to deliver luxury above and beyond its better known competitors, like Mercedes and BMW. Back in the early 1990’s, Lexus was just beginning to win over critics who felt a Japanese company could never compete in the European dominated American luxury car market. When reports began to come in from new Lexus owners that the expensive cars they had just purchased were experiencing electrical problems, Lexus knew it had to act fast.
Instead of throwing in the towel and letting the recall become the PR disaster everyone had expected, Lexus saw the recall as an opportunity to create great Word of Mouth. Lexus wanted to prove that luxury isn’t only about the expectation of leather seating and advanced features. They used the recall to redefine luxury as the entire customer experience they provide. So they did the unexpected. They deployed mechanics to all of the homes and offices of Lexus owners affected by the recall to pick up the affected cars and save the owners a trip to the dealership. If the customer was out of range of a dealership, they flew a mechanic to their location. One Lexus mechanic even made the trip from Los Angeles to Anchorage, Alaska just to perform a simple recall maintenance. The result was a very costly short term solution that caused a long lasting avalanche of great Word of Mouth. It solidified Lexus as the definition of luxury in the minds of high-end American buyers, and made them millions more than they would have had there been no recall in the first place. It’s an example the executives at United Airlines clearly could have benefited from this week.