United Airlines Epically Underestimates the Impact of Digital Technologies on Its Business

April 12th, 2017

Topics: Communications Customer Marketing / Sales

Unless you have been out of the country, you know it’s been a bad few weeks for United Airlines. Both the blocking juvenile passengers for wearing leggings and now the aftermath of videos showing police forcefully removing a paying customer to allow employees to take his seat are black eyes for the company which didn’t have a stellar reputation to begin with. In an Airline Quality Rating report released this week, United placed 8th out of 12 airlines in the U.S.

What has been surprising to watch is how completely unaware United’s leadership and employees seem to be of the power shift in customer relationships, driven in large part by digital technology. In previous decades, United might have received bad press for removing a passenger, but without video it could easily be played off as an issue caused by the passenger. In fact, United tried this approach initially, as media outlets were directed to the passenger’s past as relevant information. But in 2017 customers all have cameras and video streaming devices in their hands. They have social media to broadcast those videos and photos. And they are easily reached by media outlets seeking more information from customers who witnessed the events.

Beyond the role of video of the most recent event, we witnessed a response from United CEO, Oscar Muñoz, that criticized the passenger – a characterization that was easily disproved via actual video evidence from other passengers. His response was woefully inadequate and because it was via a Tweet and internal email, his own words were used to criticize the brand as out of touch and bad with customer service. Overnight memes and hashtags began criticizing the company. An alternate United Airlines slogan hashtag allowed angry customers and even non-customers alike to rip into an easy target.

The impact of all of these missteps and customer-driven anger? That would be $1.4 billion in lost market capitalization in less than two days. That’s how quickly digital technologies and bad business decisions can impact your bottom line. Wise leaders understand both the enabling role of technology, and also the risks associated with operating in this new world.

This year, the CDS, is focusing on digital customers and how technology is changing the dynamics of business. Customers are more powerful than they’ve ever been. They know their options, seek out alternatives, and have the ability to amplify their voices when they perceive issues of unfair treatment. (Notice, I didn’t say when they actually experience unfair treatment.) Customers are active in response via public forums even when they only perceive bad service or unfair treatment.

It’s a new digital world where customers are power players. Wise executives realize the world has changed and lead accordingly. It’s clear that United Airlines is still behind in realizing the world has changed. Perhaps losing $1.4 billion will help them come to terms a little more quickly.