What Can Web Hosts Learn from the Airline Industry?

Well it seems Hostingcon has taken its toll on myself and our team in the sense that we have been very busy following up with clients since we got back hence my delayed post.  I mentioned last time that I would like to explore the airline industry from both a marketing and operational angle.   One of my theories, albeit I know next to nothing about the industry, is that I wonder how disappointed an airline really is when it is “forced” due to weather or control tower directions to cancel flights?   Although they end up with customers such as myself who are inconvenienced, I wonder if there is a financial payoff for them?  They can easily respond to these upset customers citing these problems as beyond their control however is this also convenient for them?

Airline seats are perishable much like hotel rooms or seats at a movie.  Once the plane has left, they can’t fill any open seats – at least until they arrive at their next stopover or final destination.  By cancelling flights, what is happening in effect is that they are redistributing these customers onto other flights that are less than full – even if those other flights are with another airline that will require some sort of financial compensation.  I would imagine that after paying for seats from these other airlines and a few upgrades here and there, it’s still more cost effective to do this than to have flown the cancelled flight.  This gives airlines the trump card to play at the last minute once they already have you as a confirmed customer for a specific date pushing you out into sometime in the future to “optimize their inventory”.

This point leads me to my last point related to marketing and which I think all hosts should be reminded of.   Measuring the hard costs of moving customers around may in fact be profitable for the airline industry but what is the cost of the upset customer?  Are they likely to use that airline again?  Would they even fly rather than take the train or drive assuming these are options?  In my case the flight into La Guardia was completely cancelled because there was not enough air space / runway space to land the plane.  My question is – Why the heck did they schedule that many flights in the first place if the airport is so close to capacity?  Why did the airline “sign up” for a schedule they know is unlikely to be feasible under all but perfect timing and conditions?  What is the cost of this experience in the eyes of the customer?

As a host, are you spending all your resources acquiring new customers while your churn is high and therefore you are quickly losing them out the back door?   Maybe you’re overloading your shared servers hoping that all will remain stable similar to my example above about perfect conditions.  What happens if something goes wrong and the server crashes?  Retention is not just about customer support but also stems from poor operational decisions.  Unfortunately for us, there aren’t many airlines to choose from when you start looking at specific routes and schedules BUT there are a lot of web hosting companies for customers to choose from.  Take a look at your numbers and where your effort is being spent.  I know you have heard it before but the cost to acquire a new customer is much more than retaining existing customers.

If you have any comments on this and especially if you know anything about the airline industry, I’d be interested in hearing your feedback!

Posted August 30, 2009
Categories: Blog, Advertising and Marketing General
Tags: , ,

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