Bumpy Landing (#400)
Leadership lessons from Delta Airlines' SkyMiles controversy
I am a loyal Delta Airlines customer and have always been a points junkie. So when Delta Airlines recently announced a major overhaul of their SkyMiles loyalty program, I paid close attention.
Over the years, airlines have been shifting their loyalty programs from rewarding miles flown to dollars spent, which makes intuitive business sense. Delta did the same in their recent changes to SkyMiles, but those sweeping changes resulted in an immediate, widespread backlash from loyal customers and travel bloggers alike. There was even a wave of customers publicly declaring on social media that they’d canceled or would be canceling their Delta American Express Cards.
With the pressure building and other airlines opportunistically targeting Delta’s frustrated customers in the weeks since the changes, Delta’s CEO Ed Bastian did damage control. Bastian said Delta went “too far” and promised “modifications” within a few weeks.
From a leadership standpoint, I believe there were several principles Delta could have taken into consideration when changing their SkyMiles program that leaders in general should note.
People Are Loss Averse
Scientifically, people feel the pain of a loss more acutely than the pleasure of a gain. Delta’s changes triggered the loss of several existing benefits for loyal customers, which is always a recipe for disaster.
I distinctly remember a similar situation in our own business years ago. After significant feedback, we moved to a better health plan that was less expensive and had far more coverage options. However, to my surprise, we had several employees who were very upset about a few trivial benefits that were reduced under the new plan even though the new plan was better in almost every other way.
Since that day, I’ve always been careful to avoid taking even small benefits away when possible, or I’ve anticipated the reaction and planned a response to it.
Include Stakeholders in Key Decisions
Generally speaking, people react poorly when decisions that affect them are made without their representation, input or awareness. Had Delta included a representative sample of SkyMiles members in the review process and previewed some of the possible changes, they likely could’ve anticipated customers’ reactions. At the very least, they would have received input on how they could have amended these changes before rolling them out to millions of people.
Waterfall Communications
Whenever we had major changes to share with our full team during my time as CEO, we would waterfall the messaging. We shared the news with a small group of senior executives to get their questions and feedback, repeated the messaging with our more junior executives, then finally communicated to the whole company.
This had a dual benefit. It ensured the message was delivered well—and gave us the opportunity to iterate our talking points—and it prepared our senior people to answer questions from their teams. That’s benefit evaporates if everyone gets the news at the same time.
Customers Don’t Care About Your Problems
Unless there is a real unexpected catastrophe, paying customers don’t care about your problems.
Years ago, we signed my son up for a club soccer program, which wasn’t cheap. The program was a mess and lacked coaching coverage for all the new teams they added. When we complained to the club director, she tried to blame it on delayed visas for their non-American coaches.
I told the director very nicely that this was not my problem. The club shouldn’t have added more teams if they didn’t have the coaches secured—and they did not have to happily take my money before solving that problem.
Delta’s SkyMiles adjustment was attempting to fix a problem. A major percentage of Delta’s profit comes from co-branded Amex cards. Several of these cards offer unlimited Delta Club lounge access, which is why customers pay for the hefty annual fees on these cards. Delta realized that the steady growth of card members led to its “exclusive” lounges becoming overcrowded, so they began limiting members to 10 lounge visits a year while keeping the card fees the same.
It’s not surprising that so many cardholders were furious, as the primary benefit that they explicitly paid for was severely restricted, but the price stayed the same. They didn’t care about Delta’s problem—they wanted the benefit they’d paid for.
Change is never easy, but it’s almost always made better by focusing on what people can gain, including impacted people in the process to get their input, clearly communicating and making sure you don’t push your own problems onto other people.
I am sure Delta’s leadership wishes they had "landed" these changes more smoothly.
Quote of The Week
"If you make customers unhappy in the physical world, they might each tell 6 friends. If you make customers unhappy on the Internet, they can each tell 6,000 friends." - Jeff Bezos
Have a great weekend!