UNITED BREAKS GUITARS

Name- Chetan Ramesh Bakraniya

Date- 15 June 2018
Subject- Customer’s Broken Guitar

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EXECUTIVE SUMMARY

The song “UNITED BREAKS GUITARS” is about an incident which took place in Halifax, in

March 2008. A musician named Dave Carroll was travelling from Halifax to Nebraska via

O’Hare airport in Chicago in which his guitar was broken due to mishandling of luggage.

Even after trying for 9 months to get compensation for the loss through filing the claim the

airlines denied the claim each time. He tried phone calls, e-mails and also pleaded them to

offer him airline vouchers worth $1200 instead of money to cover up for the cost of

repairing the guitar. Tired and frustrated with poor customer service Dave wrote a song

describing the whole situation and put it on YouTube. The video went viral which forced

United Airlines to contact Dave which then offered him money to take the video down from

the social media. Dave denied it saying it is not about money anymore and would donate

the compensated money instead.

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Dave wrote 3 songs on them and all of them went viral which earned United many negative

impressions. It also led to a drop of 10% of market stocks overall and $180 million in value.

This incident shows us that why a good customer support is required and also how a bad

service recovery can cost the company huge losses. United in this case could have merely

compensated $1200 which was initially requested by Dave. This case reveals that how

powerful social media is in influencing the customer’s and the impact it can have on the

business. Although there few efforts by United to solve the issue but there was no real

effort to dissolve the underlying issue which became a disaster and there was no way it

could be reversed.

Below is how the video went viral.

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IDENTIFICATION OF THE PROBLEM

 Improper handling of baggage by the airlines.

 Staff was not properly trained to handle the situation at the moment.

 Careless approach towards a frustrated and unsatisfied passenger by the staff.

 Time consuming customer support which resulted in more frustration and anger.

 The airline was not concerned or worried that their approach would harm their

market reputation.

 The airline was also suggested the solution by Dave which was also ignored that cost

them millions.

 The Vision and mission statements are either not properly communicated to the

staff or not taken seriously by the company as none of their actions replicate the

same.

 The Senior Executive of the airline showed least interest in the matter.

 Bad service recovery.

 Late realisation of their mistake.

 No real effort to dissolve the issue.

 They seem to not learn from their mistakes as Dave in his last video mentioned

about other customers complaining about their issues which were ignored in the

same way like his.

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SITUATION ANALYSIS

United airlines commonly known as United is a huge airline company, headquarters based in

Chicago. It is the world’s third largest airline company in terms of revenue. The airline has

lot of positives and here is a list of them.

1. Strong operational network- United has a strong operational network as it has over

5000 flights a day spread across 6 continents.

2. Strong brand name and recognition- United has strong brand name and is highly

recognised being in the top 5 airline company in the world.

3. High employee productivity

4. Price of the airline tickets are affordable to the general public

Even with all the above strengths United lacks in these following aspects.

1. Weakening financial performance due to continuous losses.

2. Too much dependant on third-party for their airline management and customer

service.

3. Lack of adequate customer support.

4. Inability to handle customer grievance in an effective way.

5. Constantly falling brand reputation due to negative reviews from its customers.

The Airline can still manage and try to counter the above weakness as there is a lot of scope.

The Airline being an American native can work to grow as the US economy is on track and

progressing positively. And also being among the top airlines it has got the advantage over

its rivals. Due to increased global tourism the airline can cover up for the previous losses and

target new customers.

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Threats to the Company

Lot of threats to the airline industry in today’s growing economy. The one being high fuel

prices which leads to increase in the fare of the airline. Competition from other airlines

which offer low fares comparatively. The bad reputation earned over the years is also a

threat. Risk of recession, the airline was hit hard by the recession in 2008 and there is no

certainty of it happening again anytime.

ORGANIZATIONAL OBJECTIVES

United airlines main objective I feel is to earn maximum revenue and stand in the top

leading airlines in the world which they have achieved over the years the years. The revenue

of the company as of 2017 is $37.74 which is huge. Operating over 5000 flights each day

worldwide majority being the United States, the company has achieved most of its objective

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over the years. It stands tall in the stock market with 14.9% domestic market share January

2018.

ANALYSIS OF ALTERNATIVE

1. Monitoring the baggage’s appropriately- The Luggage and baggage department

should be closely monitored to ensure that this error does not take place in the first

case.

Advantages

 It ensures that the baggage is not damaged.

 Monitoring helps to reduce carelessness by the baggage handlers as they are aware

of the monitoring.

 Improves the quality of service delivery.

Disadvantages

 High monitoring cost involved.

 Time consuming activity.

 Near impossible task to monitor each and every flight’s luggage as the volume of

flights operating each day is very high.

2.Efficient training to employees- Provide the employees/staff proper training to handle

customer complaints.

Advantages

 Sets a benchmark for the company’s after sale service.

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 Helps to convey the mission and vision statement of the organisation to its customer

through its staff/employees.

Disadvantages

 Time consuming

 Cost of training is high.

 Customer complaints are heterogeneous which becomes a difficulty in training.

3. Take customer complaints seriously- The company neds to take customer complaint

seriously and act accordingly. Never neglect the problem by thinking it is not a big deal.

Advantages

 Ensures that all customer complaints are handled professionally

 Helps retaining its customers.

Disadvantages

 Not all customer complaints are genuine or true.

 The Customers may take advantage of this and may complain for petty issues or

even if there are no issues causing wastage of time and effort.

4.Compensation/Service Recovery – If things go wrong never hesitate to compensate the

customer. The customer is more likely to come back to you if he gets a good compensation.

Advantages

 Helps customer Retention.

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 Customer becomes your marketer as he is more likely to share this incident with his

friends or family.

 Positive publicity.

Disadvantages

 Compensating each and every customer for their complaint would prove costly for

the company.

 Most of the time customers take advantage of this just to get compensated without

any genuine reason.

5.Set up a good customer support- Have a good customer support which provides quick and

speedy response to its customers.

Advantages

 It can avoid the customer from being more frustrated and angry. It can calm the

customer.

 It helps build trust in the company even if it goofs up often.

Disadvantages

 High cost involved in setting up a good customer support.

 May not be effective as mere good customer support does not help in dealing with

customer problems, providing solution does prove to be effective.

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RECOMMENDATION

Compensation/Service recovery is the best alternative or we may solution this case as

considering the problem initially was not so severe and Dave himself gave the

recommendation to compensate for the loss either by money or vouchers equalling the repair

cost of the guitar. The company ignored his request and then later paid a huge cost for that.

This shows what a bad service recovery could do. Initially where United had to pay mere

$1200 ended up losing millions in stock market. Never let a customer leave in anger, just a

song went so viral that it hit the company bad enough that they till date have not been able

to recover from this huge loss.

Not only in service industry overall many good companies have also goofed up several times

as the employees are only representing the company and take decisions on what is right for

them at that moment but these companies know how resolve issues even after goofing up

which helps them maintain their company reputation and goodwill. One example being

Samsung, leading mobile manufacturer in the world had issues in the handsets catching fire.

The company was quick in rectifying the error by compensating all its customers by replacing

each of their handset and also a public apology for this. A good company not only delivers

good service but also good service recovery when it fails.

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The Above is the impact of video on United’s Market Share

IMPLEMENTATION PLAN

Short-term recommendations

 Provide the authority to the low level staff to take decisions on these type pity issues

arising.

 Have a customer support Head and hold him responsible for all the unsolved

customer queries and claims.

 Communicating with the Customer throughout the claim process and ensuring him

that it would be taken care of in a professional and ethical manner.

Long-term recommendations

 Train the employees to make it more service oriented rather than just making

revenue.

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 Division and segregation of departments from high level to low level which helps

in better monitoring.

 Re-structure the complete Hierarchy chart so that the top management analyse

reports generated by each department.

 Provide a social networking platform for customer service where customers can

get quick and speedy response.

 Re-structure the customer support system to make it more easy and simple for

the customer to approach.

 Having deadlines for all the claims and complaints which will ensure that all

claims are addressed.

REFERENCE

1. https://en.wikipedia.org/wiki/United_Breaks_Guitars - Wikipedia

2. http://sentium.com/a-public-relations-disaster-how-saving-1200-cost-united-

airlines-10772839-negative-views-on-youtube/ - Sentium Strategic communications

3. https://www.youtube.com/watch?v=5YGc4zOqozo - YouTube

4. https://www.fastcompany.com/1320152/broken-guitar-has-united-playing-blues-

tune-180-million - Fast company

5. http://www.davecarrollmusic.com/songwriting/united-breaks-

guitars/?v=11aedd0e4327- Dave Caroll’s Official Site.

6. https://prezi.com/ty9zvhqr97up/united-airlines-swot-analysis/ - SWOT Analysis

7. https://www.mbaskool.com/brandguide/airlines/9000-united-airlines.html- SWOT

Analysis

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