Why the focus on customer experience is shortsighted

Many transport undertakers, agencies who are responsible for transport, consultants and suppliers are focusing nowadays on the customer experience in transportation transport.

Articles such as the recent McKinsey article on travel distribution show exemplary what the philosophies and proposed strategies behind this narrative are.

1. Harness advanced analytics to understand the customer better.

2. Adjust mobile offerings to capture, secure, and serve the customer.

3. Safeguard against future disruption.

The article than further explains the success and high valuation of data aggregators and sales platforms such as booking.com, AirBnB, etc…

While their success is certainly true, it is also a high risk/high reward business model with no sustainable distinct capability.

These companies solely depend on network effects and a high market penetration, they usually have one successful product, tackle the leisure market and fully depend on its revenue and are not vertically integrated to have additional revenue streams.

What can be the risks of this strategy:

  • Obsolescence due to technological or business model innovation
  • High revenue fluctuation due to dependency on one (ok, global) leisure market
  • Limited flexibility on costs, potentially fluctuating bottom line
  • Very limited control on actual market metrics (service provision costs, goods provision costs)
  • Over valuated market perception, thus high market expectations
  • Most market models are focused solely on the billing process
  • Large costs with little rewards

Why transport undertakers should not go towards this direction

While one could debate a lot about the role and responsibility of transport undertakers, it can be summarized in my opinion under the following:

  • Provide efficient, reliable and safe transport service

Under this goal, all initiatives need to be taken into consideration. It should not be that transport undertakers spend hundreds of millions on capturing data that does not provide a significant advantage in better customer service, improved efficiency, safety or reliability.

What transport undertakers could do instead

To harness the benefits of these digital markets and new distribution channels, transport undertakers should do the following:

  • Structure their data in a comprehensive way
  • Provide a clear and open API to let the market play
  • Take corrective actions if a monopolist should emerge

Apart from that, transport undertakers should focus on the classic goals:

  • Look at the bottom line, focus on improvements
  • Focus on factors that have major impacts in cost structure, topics that can affect the customer journey, but might be also fully separate
  • Improve factors in service that can create sustainable distinct capabilities
  • Focus on long-term gains
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