In addition to being the fifth largest airline company across the globe, Classic Airlines has a fleet of over three hundred and fifty jets that operate in approximately 240 cities with over two thousand daily scheduled flights. Since its inception about twenty-five years ago, the airline company has grown into an organization that consists of 32,000 workers. In the year 2006, the company not only made sales worth $8.7 billion but also gained a profit $10 million as a result of the bumper sales. Regardless of these sales, Classic Airlines is not an exception to the challenges that existing airlines have encountered since 2007. Actually, despite making these abundant sales in 2006, the airline experienced a 10% decrease in its share prices because of the growing uncertainty about flying. This growing uncertainty did not only affect Classic Airlines but also affected the general stock prices of the airline industry. Moreover, the airline industry has also been operating under increased investigations because of the worried investment community.
Problem Definition and Identification:
Given that Classic Airlines is not immune to the challenges that has faced the current airline industry, the company has experienced several setbacks. These problems include waning consumer confidence, decreased frequency of flights by its customers, increasing costs in labor and fuel, quick expansion after the 9/11 attacks and a limiting cost outline than younger airlines. In the year 2005, the company experienced a decline in its rewards program following an estimated 19% decline in the number of members of the Classic Rewards Program. The decline was also marked with another decline of approximately twenty-one percent in flights of each remaining member. Additionally, the current faithful members of the airline are jumping ship and consequently restraining the company's ability to battle for the treasured frequent flier. Following the collapse of the travel downturn that was brought by the 9/11 attacks, Classic Airlines together with its major competitors overrated the turnaround and expanded too quickly ("Situation Analysis," n.d.). Consequently, the airline is currently facing a compulsory cost reduction of 15% that is scheduled to take place in a period of the next one and a half years.
These challenges are a reflection of the various issues that Classic Airlines is experiencing in this marketing scenario. The issues form the basic things that need to be addressed by the senior leadership team of the company. These primary issues that should be addressed by the leadership team are:
Turning the Classic Rewards Program:
The decline in the number of members of the Classic Rewards Program is due to the low customer satisfaction. While the airline has attempted to discount fares with the aim of remaining competitive and enlisting new customers, the efforts have bore no fruit. According to the Customer Loyalty report that was released recently and Kevin Boyle's conversation with the airline's customers, a harsh turn down in customer satisfaction is evident. Examples of the things that customers are unhappy with include the service they get from the airline's front desk and the incentives they get from the Rewards Program.
Inefficient Utilization of the CRM System:
Despite of being the most influential tool in the airline industry that Classic Airline possesses, the company has inefficiently implemented the Customer Relationship Management (CRM) System. The failure to completely integrate the Customer Relationship Management tool has made the airline to compromise the level of service that customers receive from the airline's representatives. Moreover, the data being gathered by the CRM System is not the actual reflection of the airline's customer base. A clear evidence of the inefficient use of this CRM tool is the fact that it's only the airline's call center that utilizes the system.
Lack of Alliance Agreement:
This is the third major factor that has affected Classic Airlines since it's the only airline in the industry that doesn't have an alliance agreement. Due to this lack, the available flight options to customers have been limited and therefore limiting the ability of customers to receive and redeem reward miles. Additionally, the lack of an alliance agreement has indirectly created extra work for customers when they are shopping for flights since they are required to visit a number of websites while performing multiple searches. This search of multiple websites is a big disadvantage as compared to customers having a solitary point of information when shopping for flights. The airline's senior leadership team is not only reluctant to endorse a new marketing strategy but also hesitant to enter into any alliance agreements. This reluctance is because of the previous apparent failures in marketing and the belief that no other airline is capable of providing the level of service that the airline can offer.
The senior leadership and marketing teams of Classic Airlines are aware of the marketing problem that the company is facing are determined to find an amicable solution. The key issue that the marketing team must resolve is either marketing a new program or developing the existing program. Classic Airlines needs to improve its customer service through revising their segmentation strategy so as to realign with its customers. An improvement and proper use of the Customer Relationship Management (CRM) System will also develop customer experience. The company has various opportunities to develop itself towards a positive resolution with the senior leadership team concentrating on using the existing funds to circumvent the fuel prices for the forthcoming year ("Problem Solution," n.d.). In order to evade the current decline in sales and low customer satisfaction, Classic Airlines has adopted a problem-solving process. This problem-solving process that has been implemented by the airline is also due to the apparent lack of trust in the company's image and brand.
However, the problem-solving process is necessitated by various factors that the company needs to consider to defy further financial crisis. These factors that Classic Airlines needs to consider include the need for a comprehensive CRM system, how to gain back its customers who have jumped ship, form an alliance agreement and strengthen its frequent flier programs. One of the major problem-solving processes that have been adopted by the airline is the recent decision by the Board of Directors to mandate a 15% general cost reduction in the next one and a half years. This mandate has been implemented with two major goals that include counteracting any additional financial crisis. The other goal of the compulsory cost reduction is to help in establishing a way that enhances the airline's frequent flier program through means that illustrate a quantifiable return on any investment. Nonetheless, this problem-solving process seems to be risky given the fact that there are apparent rumors that the airline may face bankruptcy if it doesn't meet the reduction.
The other major problem-solving process implemented by Classic Airlines is the establishment of a survey program for departing employees together with the recording and supervision of customer calls. Through the survey program, the airline may be able to address employee concerns, retain a significant number of workers and make these employees happier. While the survey program should also incorporate all employees instead of the exiting ones only, it will reveal the necessary changes that need to be made especially in the corporate philosophy. A periodical review of the surveys after every three or six months determines whether there has been growth in employee satisfaction.
In order to establish the necessary and suitable changes that will enable Classic Airlines to remain successful in the airline industry, the company has five possible solutions that it can pursue (Le, 2007). These five possible solutions for Classic Airlines are & #8230;
This is one of the major possible solutions for Classic Airlines to implement in order to improve the level of customer service that it currently provides. It's important for the airline to support and unify the inner leadership team or stakeholders who will align a top-down Customer Relationship Management philosophy. This support should also include the alignment of outer stakeholders to enable them in harmonizing both Business and Needs. This alignment of stakeholders is a critical stage since it's considered as a highly modified, needs-based and transparent approach that helps in managing the apparent decision makers and secret opinion-makers.
Adopt a Customer Satisfaction Business Strategy:
As a result of top-down Customer Relationship Management philosophy, the other critical solution for Classic Airlines is to implement a customer satisfaction business strategy which will place customers as the main focus of the airline. This kind of strategy not only improves the level or quality of service offered to customers but it also increases customers' loyalty. When customers receive services that are equivalent to their money and meet their needs, they frequently return to a company. If the current CRM System is implemented fully and properly, the airline's customer will be able to access flight information quickly and easily. Moreover, an efficient CRM system also enables the airline to combine customer information in a more valuable form and also helps in tracing customer information for marketing.…