Brand equity: definition, measurement, and strategic importance

Brand Equity: United Airlines on How Not to Manage Your Brand's Value

The airline industry is known for thin gross margins and profits, a continual pursuit of operational efficiency and performance, with customer services often squeezed between these two critical aspects of individual airlines' businesses models. For an airline to attain profitability and grow, it must have an exceptionally efficient of operations, the innate ability to optimize performance given variable constraints, and a brand that promises and delivers exceptional customer experiences (Michael, Tsikriktsis, 2006). With the deregulation of the airline industry the competitive forces have made balancing these factors even more challenging, forcing airlines fail on the promises they and their brands have made for decades (Block, 2011). United Airlines, once one of the most prestigious airlines globally, is today considered the lowest in terms of customer satisfaction with a score of 62 as measured by the American Customer Satisfaction Index, 2013. JetBlue is leading the industry with a score of 81. Please see Appendix A for a comparison of customer satisfaction benchmarks from the latest American Customer Satisfaction Index (ACSI). United has fallen from a high score of 90 in 1996. Since then United's management has placed a greater emphasis on the areas of consolidated operations, more focus on efficiency of seating and increasing profit per seat, with practically no major investments made in the areas of customer experience or strengthening their brand with exceptional customer-centered performance. Soon their brand was making commitments the remainder of the company could not keep and satisfaction plummeted, as is seen in the ACSI index shown in Appendix A.

Brand Equity Concerns

When the operational systems and processes of a business fail to deliver on the promises, perceptions and expectations of customers, a brand loses credibility and trust. Brand equity is the truest measure of brand value there is, yet it can be difficult to measure, monitor and evaluate on a frequent basis (Mitchell, 2000). Yet United's failure to keep the trust of the public in general and its customers specifically is so apparent, that The Brand Equity Ten as defined by Dr. David Aaker, a leading theorist on branding (Aaker, 1996) show how far this company ahs become disconnected from its customers. Using loyalty measures, perceived quality/leadership measures, associations/differentiation measures, awareness and market behavior measures taken together illustrate how much brand equity United has lost (Michael, Tsikriktsis, 2006).

A leading business-to-consumer brand doesn't lose brand equity due to just a single or series of smaller events; it is rather an accumulated set of behaviors that lead to the degradation of a brand's value over time. The four dimensions of brand equity include loyalty, perceived quality, identity, and awareness (Aaker, 1996). These are comparable to a value chain that brands must rely on to create and reinforce trust. United Airlines has had many lapses in performance that have undermined the credibility of their brand. Three of them are defined here, along with alternatives for improvement and an analysis of resources required to create alternative solutions.

United Breaks Guitars

Of the many lapses in performance that United has endured, the most visible and highly publicized was their careless treatment of Dave Carroll's $5,000 guitar, which resulted in it being broken while he was in route to do a concert. Dave Carroll asked United to pay for the repairs, which they refused to do for over a year (Perkins, 2009). Mr. Carroll explained he had personally seen the baggage handlers throw his expensive guitar across the tarmac between planes at Chicago's O'Hare field (Garfield, 2009). United did not offer to compensate him for the damages to the guitar and after a year of asking for their assistance, Dave Carroll wrote the song United Breaks Guitars and recorded it on Youtube. As of March, 2013 the video has over 12 million views. Clearly United's employees are more rewarded for internal efficiency and cost reduction over customer empathy and generating high levels of customer satisfaction. This problem became globally known quickly as the video went viral in a matter of days. Yet United still held to efficiency even in dealing with the public relations disaster that was occurring (Perkins, 2009).

Clearly United employees need to continually strive to balance the spectrum between operational efficiency and empathy. Alternatives include providing enhanced customer service skill training for the first-line support personnel; creating a separate series of workflows for delicate and fragile cargo including musical instruments; or specialized containers for high-value cargo that are essential to the livelihood of passengers. Training would need to also include a redefining of authority levels for customer service representatives to provide refunds and cash compensation for damaged cargo. This would require a redefinition of reporting structures and a revised system of how United manages cash payments. The most costly of these solutions would be defining an entirely new class of packaging and cargo service; the workflows associated with this would be in the millions of dollars a year in software alone, with change management being even more expensive. The least expensive would be empowered customer service representatives to take immediate action on these types of catastrophic situations. The culture of United would change over time to make exceptional stories of customer service the norm.

When United Lost A Child in 2012

The second problem is the unfortunate occurrence of United Airlines losing a 10-year-old child who was traveling alone last year (Huffington Post, 2012). For any parent this is the worst nightmare of all, as there is a feeling of complete powerlessness of being able to solve the problem. The only source of hope for these parents was the customer service representative they happened to get when calling to see where their child was when she didn't arrive at her planned destination. The attitude of the customer service representative was arrogant, hostile and only through sheer luck of getting another customer service representative who was a mother did the couple make progress on this terrifying situation. Again the lack of customer empathy on the part of United Airlines is again shown in this situation. The problem isn't just the customer service representatives on the phone, it is a culture that places efficiency over empathy. United's alternatives are to complete additional sensitivity training for their call center representatives, institute entirely different workflows and processes including check-points on child-only fliers, or go to the extreme and assign a United Ambassador, an employee trained in empathy and customer service to take total accountability for the child in transit. Training and process redefinition are less expensive and will only last as long as the memories of those trained. While the United Ambassador is the most expensive, it is what United must do to regain the trust of parents after this harrowing incident. Apparently the child was left alone in an airport for hours, unescorted by anyone from United (Huffington Post, 2012). This is inexcusable and requires United to practice exceptional service recovery. Millions of parents, many of them loyal United flyers, lost their faith and trust in the airlines over this.

United Kills A Dog And Lies About It