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JetBlue’s Call Center Marketing Advantage Over Virgin America (Guest Post)

I’m busy enjoying some Maui onion rings right now, so I’ve lined up a guest post for your reading pleasure. Eric Starkman has read this blog for a long time and he had an interesting story to tell regarding outsourced call centers. Enjoy.

Here’s a marketing tip you can take to the bank: companies that excel at customer service and engagement don’t outsource their call centers. And don’t just take my word for it. Here’s what Blake Nordstrom, CEO of the customer-centric retailer that bears his family name, told me when I asked why his company doesn’t outsource its credit card call centers:

“As merchants, we don’t profess to be bankers. We do feel strongly, though, that we work one on one with our customers and not have a third party in between to potentially jeopardize our relationship.”

JetBlue Airways understands the dangers of outsourcing customer service functions. Virgin America doesn’t. And therein lies a marketing tale.

I was once one of Virgin America’s most enthusiastic frequent flyers. The airline’s vaunted in-flight entertainment service didn’t do much for me, but I loved that it was among the first to offer Internet access, individual USB ports, and, at least initially, some pretty darn good food. In the early days, Virgin always also had an incredibly loyal and enthusiastic team of employees. Yeah, the company’s problem-plagued and error-prone online reservations system was a huge pain, but I was willing to tolerate the inconvenience.

My love affair with Virgin America soured last summer thanks to some employees who don’t actually work for the airline. Rather, they worked for the company that runs Virgin’s call center. I always dreaded having to deal with these employees because of all-too-frequent problems with my online reservations, but an incident relating to Hurricane Irene put me over the edge.

I was scheduled to fly from SFO to JFK the day after the storm was expected to pound the Northeast coast. I figured my flight would be cancelled, particularly since Virgin had posted a notice on its site saying it wouldn’t impose change fees for flights leaving days before or after Irene’s predicted arrival.

Virgin American Weather Change Policy

But the agent insisted on imposing the change fee, arguing that the notice (image above) made clear that the fee would be waived only if my scheduled flight was actually cancelled. The agent, whose disinterest and unprofessionalism was exceeded only by her incompetence, readily conceded that change fees are never imposed on cancelled flights, but still argued that I was misreading the notice. I asked to speak with a supervisor and was put on hold for more than an hour, only to have my call dropped. I’m still steaming about the incident.

Virgin America ultimately refunded me my change fee, but I was underwhelmed with the company’s handling of the situation. So, I decided to give JetBlue a try. And I was immediately blown away by the experience.

JetBlue doesn’t outsource its reservation call center, and that immediately became abundantly clear in my first interaction. The employee I called gladly and rather enthusiastically took care of a seating request, and, upon learning that I was a dissatisfied Virgin America customer, immediately seized upon the opportunity. Let’s just say that before the call ended, the guy had me enrolled in JetBlue’s frequent flyer program and signed up for its American Express card. That was no mean feat because I long ago had forsaken airline affinity cards.

Perhaps I’m flattering myself, but I think I’m a pretty desirable airline customer. I’m bicoastal and fly JFK-SFO return at least once a month. I always pay for an extra legroom seat. And I’m a pretty heavy credit card user, so JetBlue is doing all right by me on that front.

My favorable experience with JetBlue’s call center wasn’t a one-time incident. I recently had to change a flight and asked if the airline might be willing to waive its change fee simply because of my frequent patronage. And the agent, with the help of her supervisor, gladly did.

JetBlue’s decision not to outsource a critical customer service function on its own probably isn’t a marketing advantage. But the mindset responsible for the decision is likely the same mindset behind the company’s progressive HR policies and its dogged determination to interact with its customers even when they are pleased. I’ve yet to interact with a JetBlue employee who didn’t really like working for the company, and I’m incredibly impressed with the speed and personalization of emails I’ve received from JetBlue complimenting them on various persons who I have cited for exemplary performance.

Virgin America was once JetBlue’s equal on the customer service front and filled with employees who would go beyond the call of duty, but the company has lost its edge. I recently sat next to a veteran Virgin America pilot who readily shared my view. “[CEO David] Cush is just looking to take the company public so he can make his millions and get the hell out,” he said. The pilot spoke even less favorably about Cush’s deputies.

Maybe the pilot’s view is unfair or not even widespread, but I will tell you this: Wall Street loves outsourcing call center functions because on paper it dramatically can reduce costs. In reality, it can actually make it difficult for a company to attract or retain some high paying customers. Savvy investors would be wise to consider why JetBlue is planning on adding more lucrative extra legroom seats to its flights while Virgin America recently was offering heavily discounted rates for its extra legroom seats on Labor Day weekend flights.


Eric Starkman is PRESIDENT of STARKMAN, a public relations and marketing firm with offices in New York and San Francisco. Earlier, he was a reporter with major newspapers in the US and Canada. He is a frequent flyer and an avid and longtime reader and supporter of this blog.

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