A long time back I had written a post titled "The Power of Gold" which referenced to a customer being upgraded to Gold status basis his business with the bank. Within this post, I had promised to write one on downgrading the customer and its challenges. Many times companies make elaborate plans on segregating customers across value and promoting them to the higher levels. But very often, they forget to manage the downgrade of the customer when he does not meet the qualifying criteria.
A good case in point is Jet Airways. All airlines having frequent flyer program have graded memberships. Depending on the flights taken or mileage clocked a customer is upgraded to the next level. Then there are detailed rules on maintaining the tier level as well as on getting upgraded to a higher tier. Jet Airways has an additional feature whereby they track a customers flights with the airline. If they notice a increasing trend of using Jet flights then they upgrade the customer without waiting for the completion of the eligible number of flights. While this ensures a frequent flyer to get upgraded faster, Jet is also efficient to downgrade the flyer if his usage drops.
This was my personal experience. Due to some reason, for two months I had taken exclusively Jet Airways flights. Though my pattern of travel had not changed but since all the fligts where on Jet Airways, the airlines noticed a increasing pattern of patronage. Accordingly, they upgraded me to the Silver tier and explained the quick upgrade. As fate would have it, the next two months happened to be Kingfisher and Air India flights. Jet Airways probably saw this as a reducing trend of usage. After a couple of months, I got a letter from Jet Airways. The letter first reminded me that I was upgraded due to my increasing usage of Jet Airways inspite of me not having met the qualifying criteria of the upgraded tier and then went on to inform me that since I had not kept up with the usage patter, I was downgraded to the lower tier.
While I understood the logic and process followed by Jet Airways in this process. This incident did leave a bad taste for me. The next few months whenever the travel department presented an option between Jet and any other airlines, I always chose the non-Jet option. Normally, I would not have bothered and would have let the travel department select the best option within the time of travel.
Since then I have discussing with various experts on how to handle the downgrades of the customer in such programs. Till date I did not get any satisfactory reply.
Last week I was discussing with an HR consultant on employee promotions. He explained how he decides on employee growth. An employee who has outgrown his existing role is typically a candidate for promotion. However, he does not promote this person. The employee is encouraged to take up additional role or function. For the next 6 to 9 months, the employee is evaluated on his management of the increased responsibilities. When he shows good performance on the increased responsibilities, only then he is promoted to the next role. If he fails at the new responsibility, then the employee is offered a different set of roles or responsibilities. The promotion only happens when the employee is successful in the new role. The HR consultant explained that this process is beneficial to both - employer and the employee. The employer gets employees growing up the hierarchy who can manage the new roles and the employee grows into roles that are manageable by them. In other cases, since a employee is normally not demoted (since that causes problems with morale), quite often the employee's performance suffers and often he leaves the employer.
After my discussion with this consultant, I was trying to find how this approach can be applied to customer relationship (see my earlier post on Let HRD solve Marketing Issues). And I realized the solution was right here and very obvious. I could immediately draw up the analogy. Coming to my experience with Jet Airways. The airlines should have communicated that due to my increased patronage, the airlines is providing me a gift of facilities that are normally available the higher tier for a period of 2 months. After the end of two months, they should have reminded me of the additional service I enjoyed and enticed me to meet the qualifying criteria to continue to enjoy the additional services. If my usage has remained constant, the airlines could have extended the additional facilities for another two months, and so on till I met the qualification criteria for the next tier. If my usage had dropped, that was it, I enjoyed two good months of additional services. If my usage remained the same or increased, eventually I would qualify for the next tier and be upgraded as a normal course of action. There was no negative or demotivating message of being demoted to the lower tier.
Every company which has differentiated customer relationship based on tiers or grading can use this approach. Contact me on michaeldsilva@gmail.com and we can review your customer grading scheme and draw up similar strategies for customer upgrades and demotion.
A good case in point is Jet Airways. All airlines having frequent flyer program have graded memberships. Depending on the flights taken or mileage clocked a customer is upgraded to the next level. Then there are detailed rules on maintaining the tier level as well as on getting upgraded to a higher tier. Jet Airways has an additional feature whereby they track a customers flights with the airline. If they notice a increasing trend of using Jet flights then they upgrade the customer without waiting for the completion of the eligible number of flights. While this ensures a frequent flyer to get upgraded faster, Jet is also efficient to downgrade the flyer if his usage drops.
This was my personal experience. Due to some reason, for two months I had taken exclusively Jet Airways flights. Though my pattern of travel had not changed but since all the fligts where on Jet Airways, the airlines noticed a increasing pattern of patronage. Accordingly, they upgraded me to the Silver tier and explained the quick upgrade. As fate would have it, the next two months happened to be Kingfisher and Air India flights. Jet Airways probably saw this as a reducing trend of usage. After a couple of months, I got a letter from Jet Airways. The letter first reminded me that I was upgraded due to my increasing usage of Jet Airways inspite of me not having met the qualifying criteria of the upgraded tier and then went on to inform me that since I had not kept up with the usage patter, I was downgraded to the lower tier.
While I understood the logic and process followed by Jet Airways in this process. This incident did leave a bad taste for me. The next few months whenever the travel department presented an option between Jet and any other airlines, I always chose the non-Jet option. Normally, I would not have bothered and would have let the travel department select the best option within the time of travel.
Since then I have discussing with various experts on how to handle the downgrades of the customer in such programs. Till date I did not get any satisfactory reply.
Last week I was discussing with an HR consultant on employee promotions. He explained how he decides on employee growth. An employee who has outgrown his existing role is typically a candidate for promotion. However, he does not promote this person. The employee is encouraged to take up additional role or function. For the next 6 to 9 months, the employee is evaluated on his management of the increased responsibilities. When he shows good performance on the increased responsibilities, only then he is promoted to the next role. If he fails at the new responsibility, then the employee is offered a different set of roles or responsibilities. The promotion only happens when the employee is successful in the new role. The HR consultant explained that this process is beneficial to both - employer and the employee. The employer gets employees growing up the hierarchy who can manage the new roles and the employee grows into roles that are manageable by them. In other cases, since a employee is normally not demoted (since that causes problems with morale), quite often the employee's performance suffers and often he leaves the employer.
After my discussion with this consultant, I was trying to find how this approach can be applied to customer relationship (see my earlier post on Let HRD solve Marketing Issues). And I realized the solution was right here and very obvious. I could immediately draw up the analogy. Coming to my experience with Jet Airways. The airlines should have communicated that due to my increased patronage, the airlines is providing me a gift of facilities that are normally available the higher tier for a period of 2 months. After the end of two months, they should have reminded me of the additional service I enjoyed and enticed me to meet the qualifying criteria to continue to enjoy the additional services. If my usage has remained constant, the airlines could have extended the additional facilities for another two months, and so on till I met the qualification criteria for the next tier. If my usage had dropped, that was it, I enjoyed two good months of additional services. If my usage remained the same or increased, eventually I would qualify for the next tier and be upgraded as a normal course of action. There was no negative or demotivating message of being demoted to the lower tier.
Every company which has differentiated customer relationship based on tiers or grading can use this approach. Contact me on michaeldsilva@gmail.com and we can review your customer grading scheme and draw up similar strategies for customer upgrades and demotion.
