Wednesday, November 12, 2008

Microsoft and the Red Ring of Death Warranty

My son's XBox 360 now displays Microsoft's infamous Red Ring of Death. It's kaput. Just means we need to send it in. Unfortunately this means will miss the first 2 months of Guitar Hero 4. Kind of a drag, but no biggie.

The standard warranty is 1 year on all Xboxes. That seems fair and reasonable. I check out the manufacture date on this console and it is March, 2006. So the box is out of warranty. But while researching the Red Ring of Death, I come across some interesting news. Back in July of 2007, Microsoft extended all warranties to 3 years due to the high number of defects. Hey, that's good news and props to Microsoft for doing the right thing.

So I head over the XBox 360 support area and begin the process of requesting a repair. First, they make you register for a Windows Live ID. I don't want a Windows Live ID, but I have no choice. I get my ID and register the console and start filling out the form to get the console fixed. I submit everything and it tells me that the console is out of warranty. Hmmm, that's interesting. I guess the automated system doesn't have the updated warranty information.

Next step is to call in to see what is going on. I go through a lot of the same stuff and the guy tells me that the box is out of warranty and I'll have to pay. I ask about the warranty extension and he immediately says something to the effect of "ah yes, that's true. Let me process this for you now."

While I guess its good that I'm getting the repair for free, it seems obvious to me that Microsoft is trying to only give the free repairs to people that know about the warranty extension. If I had not been an informed consumer, they would have happily charged me $94.00 to fix a problem they have pretty much admitted is their fault. That doesn't seem very consumer friendly to me.

Monday, October 20, 2008

The Death of customer Service in the Airline Industry: Part II

Hopefully you managed to through the tome that is Part I. A frustrating experience to be sure. As promised, here is my experience with American Airlines a short time later.

My Experience with American Airlines (and Hotwire)

So I had my twenty year high school reunion in Miami and I need tickets to Miami for my wife and me. I do my normal searching between Travelocity (my favorite site), Expedia, Hotwire and others. I generally search these comparison sites first and then see if I can beat those prices with the airlines themselves or something like Priceline. After a good hour of searching (hey, it can be fun to find a bargain!), I determine that Hotwire offers the best deal for my requirements, which are namely a direct flight at the lowest possible flight. A new requirement for this trip was that it couldn’t be on United. I do check with American to see if they can beat that price and they can’t. They can match it, but Hotwire makes it easy so I give my business to them. I book the trip and I’m good to go. Like most travel sites, Hotwire offers a really nice experience. I can’t imagine booking a trip can be made much easier.

I get my confirmation email and that is when I discover I have a problem. Despite choosing the dates and verifying them on the confirmation screen, the dates booked were wrong. They were off by one week. Now I know there is a 99% chance that it was me who made the mistake. And I know it is going to cost me, because, well, it’s the airline industry. And from this point forward I’ve identified 3 more problems with the airline industry.

Problem #1: The airlines penalize you for working with their partners

My experience begins with a call to Hotwire. I explain the situation and tell them that I need to fix the dates. The first guy is friendly and helpful. He doesn’t apologize (which I don’t expect him to do), but he does empathize and, hey, that’s something. He looks at my booking to determine what can be done, but ultimately comes to the conclusion that my tickets are non-refundable and that to change them would be to incur American’s $150 per ticket change fee. He also informs me that only American can waive that fee. Well, I guess that makes sense. This guy gives me the number for American and suggests I give them a call. Seems reasonable; thanks for the help.

I give American a call and explain the situation to the agent. She confirms that I’m calling the same day as the tickets were purchased and I tell her yes. I booked these less than an hour ago. She says, “No problem, we can waive the change fees as long as it is under 24 hours.” And I’m happy. She asks me to hold while she takes care of it. No problem.
Problem. She comes back on and says that they can’t waive the fees because I purchased the tickets through Hotwire and not directly with American. Huh? So you penalize people for working with partners? I ask to speak to a supervisor and she happily complies. All in all, she was pleasant and helpful.

Now the supervisor comes on and is pretty much combative from the beginning. I should have check the dates more carefully. I should have booked the tickets directly with American. Why did I use Hotwire. Its not their problem if I use a 3rd party. Wow. I’m actually a little stunned at this point. How do you respond to a company that tells you that you shouldn’t use their officially sanctioned partners? She says at this point only Hotwire can waive the fees. I tell her that their position is that only American can do that and she again throws the partner under the bus. “Nope, they’re wrong. You’re Hotwire’s customer.” She doesn’t seem amused when I point out that American is actually the company whose airplane I’ll be on.

Back to Hotwire. I tell the next agent what’s going on and that I’d like to speak to a supervisor about this. He passes me through. Right away the tone is negative. What is it with supervisors? It was my mistake and why should they do anything for me. Their policy is clearly posted, etc., etc. I acknowledge all of that, but tell them of American’s policy of waiving the change fee in the first 24 hours. I tell her that if I would have booked directly with American, I wouldn’t be having a problem right now. Basically, I’m being penalized for using Hotwire. All I want from her is to use her channel partner connections to either waive the fees or ask American to do it because they would do it for their direct customers. She refuses! She won’t help me. She won’t inquire anywhere. She won’t do anything. And to add insult to injury, she accuses me of not understanding business.

Wow.

My last question is simply, why would I use Hotwire again? Aside from how you’re treating me right now, what is the advantage of booking through Hotwire? I only see downside. I can get the same price and a better change situation if I book directly with the airlines. Her answer, “we have great deals on hotels.” Interesting since I’m not booking a hotel. But whatever, time to move on. I’m stuck with these tickets and I either have to change them or buy new ones.

Fascinating that neither company seemed appreciative of my business and neither really seemed concerned about keeping me as a customer. They both just wanted to get me off the phone as fast as possible. They’re “customer service” reps are probably bonused on how fast they turn calls over.

Problem #2: Change fees are exorbitant

If I’m going to change my existing tickets, I’m going to have to pay $150 per ticket. Let’s examine that little fact for a minute. $150 per ticket! For what? To have a call center operator either (based on how their computer system works) create a new itinerary and cancel the old one or just change the existing itinerary. I’ve done this before and it never takes more than 15 minutes. Never.

If that holds this time, that would mean that I’m paying American $1,200 per hour ($300 x 2 tickets x 4 fifteen minute periods in an hour) to change two tickets. I guess that is good work if you can get it. My question is no longer how can I change the tickets, but whether they’ll hire me as a customer service rep at $600 an hour (hey, I’m willing to split it with them 50/50!).

It seems they are trying to force fit one policy on all situations. I’m not sure how much sense that makes. Maybe there should be different policies based on different situations, like when the tickets were booked and when you try to change them. Maybe they should just allow reps to use common sense? Crazy, I know.

So what is the reason for this policy? What is the reason for non-refundable tickets? Well that is pretty simple. Airline seats are fixed resources. If a plane takes off without a passenger in a seat, that is revenue that can never be recovered. It is gone for good. Also, the seats are based on supply and demand. The fewer seats that are available on a plane, the more expensive they are. If you buy far enough in advance, almost all of the seats on a plane are available and this is usually the cheapest time to purchase them.

Of course, there is also the artificial time limits put in place, just to make sure business flyers are paying more, but that is a different story.

Based on this business situation, airlines have to do all they can to make sure they are maximizing their resources. By giving non-fundable tickets, they are insuring that they are getting paid for these scarce resources and maximizing their revenues by charging the next buyers more. It also allows them to plan ahead, like which size planes they need for each route, etc. Travelers get a better deal for giving the airlines certainty. You can imagine how much money airlines would lose if all tickets were refundable and people canceled at the last minute. The airlines would have a hard time reselling the seats on short notice.

While acknowledging all of that, how does changing a ticket on the same day it was purchased effect that formula? The answer is, of course, not at all unless it is the day of the flight.

Bottom line, the airlines are treating their customers poorly because they need to extract every last dime out of them possible. $150 change fees aren’t fair and I suspect most airline employees know this. But they’ve got you the same way that you can only buy food inside a stadium (not bring it in with you), the way banks are increasingly fee driven (switching costs as expressed in convenience is high) or any other pseudo monopoly situation. Simply put, you’re stuck.

Problem #3: The airlines own computer systems don’t know the cheapest way to fix a mistake

I still need tickets though, so back to the research. What is the cheapest way to fix this? I’m not at all happy with what’s occurred to this point, so I wait a couple of days. Nothing major, just don’t want to yell at the first person I call when they had nothing to do with my frustrations. I go back online and find the cheapest ticket on Travelocity, again through American. Not thrilled with this, but the next cheapest ticket was over $25 more per ticket. Not a big deal, but it adds up. Plus, it was roughly similar to what I paid before. I call up American to see if changing my existing tickets will be cheaper. Based on what Travelocity is quoting me, it is going to be close. I tell the American rep the situation and ask her to tell me which way is cheapest. She gives me a price that is over $200 higher than Travelocity is quoting me. I tell her that I’m looking at a much cheaper price buying new tickets and she says I’m wrong. She can’t see that price in her system and Travelocity must be wrong.

I book the tickets on Tavelocity. Amazing. American’s own computer system can’t sell you tickets that their partners can. It can’t figure out which is the cheapest way for someone to get from one point to another. It seems to me this is their business, except for the fact that they’re looking to charge as much as possible in every case. Even if this is their view, wouldn’t it be in their best interest to match the Travelocity price because they’d get to keep it all as opposed to giving a booking fee to Travelocity? I guess it is no wonder that the travel sites seem to be doing well. Which brings me to…

Bonus Problem: American is now charging to check bags

A couple of weeks go by and it is time for my reunion. My wife and I pack our bags and head to the airport only to discover that American is now charging $15 for the first checked bag per passenger and $25 for the second. Wonderful. At least one airline has now taken something that used to be included in the cost and is now charging passengers extra. Once confronted with this, I thought I had remembered reading about it somewhere, but I had completely forgotten about it.

This wouldn’t be so bad if all the airlines did it and all charged the same price, but my issue is that is now much more difficult to compare prices to see where you’re really getting the better deal. In my situation, another airline would have been cheaper. That was an additional $60 for my trip ($15 x 2 bags x 2 legs of trip).

The only reason to do this is to be able to advertise lower fairs that are not really apples to apples comparisons. It is deceptive and they know it.

So you’ve read parts I & II and my only recommendation is this. Recently my best experiences have been on Southwest and Frontier. They don’t seem to nickel and dime you, they have better amenities and in general they seem more helpful. When possible, fly with them. To some extent, they attempt to be simpler and maybe that is the secret for the airline industry moving forward.

Thursday, October 16, 2008

The Death of Customer Service in the Airline Industry: Part I

Ok, say maybe that was a bit dramatic because I’m really only talking about United and American, but you’ll get the idea. I want to relay two experiences I recently had with these two American carriers and how I think they could have handled them differently. I deal with United in Part I and American in Part II.

My Experience with United Airlines

So I had a soccer tournament in Las Vegas. Due to an injury, I wasn’t sure if I was going to be able to play, but fortunately two weeks before the schedule departure, I felt good enough to play. My daughter also had a violin recital on the Friday before the tournament so I didn’t want to leave until Saturday morning. Unfortunately for me, this meant that all of the remaining direct flights were hideously expensive (3x normal). The best deal I could find was on United, but it connected me through Los Angeles. I also had to leave from San Francisco instead of my preferred departure of San Jose. No big deal as it still got me to the game on time, so I bought the ticket.

Travel day comes and I make an on time departure to Los Angeles. Flight was uneventful and everyone was pleasant. Land in LA and head over to the next gate and everything is good to go. Get on the plane and we leave the gate on time. Everything is looking good for me to make my game until the plane stops. Not in the gate, not on the runway, but somewhere in between. And we sit there for 15 minutes. The captain comes on and explains that we are having mechanical difficulty and we’re going to have to pull back into the gate. Long story short, it ended up being a 3 hour delay and I didn’t get there until 20 minutes into the 2nd game (obviously missed the first game completely). Whatever, I certainly don’t want to fly in a plane that can’t make it and hell, I shouldn’t have booked a connection anyway. My bad.

Live large in Vegas for a couple days, finish 2nd in the soccer tournament (lost a heart breaker in the final) and generally had a pretty good time. Head to the airport to catch United’s last flight out of Vegas. I get there in plenty of time, the plane is on time and I’m good to go. I even have time for a snack and libation. Plane leaves on time and life is good.

We land in LA and begin taxiing to gate. The pilot comes on and says that our gate isn’t ready and we’ll have to sit here for 10 minutes until the gate opens up. No biggie; my connection isn’t for 50 minutes and its not like I need to clear customs or anything. 10 minutes turns into 20 and finally into 30. Pilot informs us that we’ll be switching gates. After 40 minutes they let us out of the plane.

Our gate is in the 70s and the connection is in the 60s. Anyone that knows anything about LAX knows I now have a serious run ahead of me. This after 6 soccer games in 3 days. Now is the time in the story to let everyone know that I have a job interview in San Jose at 9:00 AM the next day. I’m on a dead sprint through LAX one suitcase and my soccer bag. OJ Simpson’s got nothing on me. I have to come to a stop for about 90 seconds for some sort of security drill and I notice there are about 6 other people that appear to be in the same exact situation (although probably without the morning job interview). Drill’s over and we bust it down the 60s. And you know what? We make it. The plane is still there and we’ve made it with about 5 minutes left before departure time. Life’s good. Go up to the agent and show them are boarding pass and this is where the fun begins.

They’ve already shut the doors. What? They’ve already shut the doors. They won’t let us on. I’m looking out the window at the plane and its still there. I’m actually looking at the pilot. I actually make eye contact with the pilot and yet, there is nothing they can do. This is the last flight of the day. They won’t let us on. We argue with the gate agent for 5 minutes and the plane is still there. Then watch the plane pull out. It leaves. Without us.

I switch into emergency mode because I need to get home. The gate agent tells us to head to the front desk to see what are options are. I get there and there are no more flights on any airline. I confirm this with my iPhone. I’m screwed. United offers to put us all up in a hotel at their expense, so I enquire about their morning flights. I tell the agent my predicament and she scans the morning flights. One San Francisco flight would get me there at 9:30, but I’d never make it down to San Jose in time. What about San Jose flights? There is one flight that would get me in on time, but it is over booked and they can’t guarantee me a spot. I would get no preference (?!?) and it would be a risky move. She checks other airlines for flights that meet my requirements and they are booked as well. She can guarantee me a seat on the noon flight. I decline the hotel room.

I now have to deal with the unthinkable. It is 11:00 PM on Sunday night and I must (MUST!) be in San Jose in 10:00 hours and a flight won’t get me there. I have to drive. By myself. In the middle of the night. Through the Grapevine. Through Pacheco Pass. I head over to National Rental Car and rent a Prius (might as well save some money on gas) and drive home. And it rains. The entire way. For 7 hours.

A couple of days later I’m feeling more objective and I give United a call to ask for one of three things: 1) A total refund of my trip because they met exactly 0% of my expectations – roughly $250 2) a refund for my rental car fees plus gas – roughly $200 or 3) one round trip ticket to compensate me for the trip – roughly $0 to them.

I reach the call center agent and explain the ordeal. I explain how they messed up on both legs. How I missed some of the soccer games. How I had to drive home. I explain it all. She apologizes and informs me that the only thing that can be done is to refund me the last leg of the flight (SFO to SJO) because I didn’t use it and it was their fault. Also, because I didn’t book with them directly (I used Travelocity), I would have to get the refund from Travelocity. Other than that, it was against their policy to refund or compensate me for anything else. Uh, may I speak with a supervisor?

I get the same answer from the supervisor. They will not do anything for me. They will not give me one of the three things I’ve asked for. I tell her I’m not satisfied and this is doing irreparable harm to my views of United. She offers to have “Level 3” customer support call me back.

To my great surprise, someone from United calls me the next day. She reads me back the notes of the incident (I think she actually called it an incident). Not surprisingly, the most galling details had been left out by the previous agents. No mention that I had made it to the gate on time in LA despite United’s best efforts to prevent me from doing so. No mention of the first delayed flight that caused me to be late to my game. No mention of the fact that United offered to get me a hotel in LA but won’t pay for a similarly priced rental car. No mention of the fact that my drive home occurred in the middle of the night. No mention that it rained the whole way.

At this point, the United rep is appropriately embarrassed and apologizes profusely. No exaggeration, she must have said she was sorry over 50 times in a 20 minute phone call, but she wouldn’t (or in her words: couldn’t) give me what I was asking for due to company policy. She saw that I had flown over 200,000 miles with them. She saw that I used to be Premier Executive with them. She saw that I still made 3-5 flights with them a year. But there was nothing they could do.

And that’s that. I haven’t spoken to United since and not coincidently I haven’t flown on them either. They’ve lost me as a customer. I used the last of my United miles to fly my wife and son to Dallas for (ironically) my son’s soccer tournament. And perhaps more ironically, his flight was delayed after connecting through LAX and he was late to opening ceremonies.

So my final thought is this: is any company served by draconian policies that prevent customer service representatives from doing the right thing? Policies are designed to make the customer experience uniform and predictable. They are designed to control costs. I get that. Business is tough and the airline business is really tough. But that is no excuse. There are always edge cases and companies need to plan for those as well. I think it would have been obvious to the first agent I spoke to that this was an unusual situation and maybe it would be better handled by someone trained to deal with unusual situations. Instead they force fit me through the standard policy and the end result is a lost customer. A better policy might be to allow one level of customer support to have only one policy: use common sense to make sure our customers are thrilled with us.

I cannot imagine that this is what United intended. No company would willingly cling to $200 in order to lose $600. That is what they would have made off of me over the next 6 months. That is what my past behavior would have predicted I would do because I always used their frequent flyer program. They had all of that data available to them. I would have easily and instantly forgiven this one transgression because I had generally had a good experience with them in the past. Instead my business went to Frontier and American for my next 3 flights.

And for any of you wondering how my interview went, while a little tired, I think I did fairly well. Though I ended up with a different company the next month.