To Perk Up Your Business, Try Emulating British Airways

British Airways' experience indicates that many people, even in the United States, are willing to pay a premium to not be treated like cattle.

While many of its competitors have focused on cost cutting to keep prices down, the British airline has maintained that there are enough customers who will pay for quality service, according to a Harvard Business Review interview with its chairman, Sir Colin Marshall. British Airways has responded by continually improving airport lounges and offering quality products, and customers have responded by giving the airline a healthy profit year after year.

What can community banks learn from an airline? A lot. What British Airways has done for its customers - research them thoroughly and serve them assiduously - is what more community banks need to learn to do. Find customers who will pay for the extra level of service, then make sure you provide it.

The banking business is not much different from the airline business. It is a mass-market service in which there are different ways to compete. One is to think of a business as merely performing a function - in a banker's case, money transaction and management; in British Airways' case, transporting people from point A to point B on time and at the lowest possible price.

Another way to compete is to go beyond function and compete on the basis of providing "an experience." The American Express Platinum Card, for example, provides unique experiences which, while expensive, offer tremendous perceived value to their customers (cooking with Julia Child, golf with Arnold Palmer, tennis with Bjorn Borg, etc.). In British Airways' case, it made the process of flying from A to B as effortless and pleasant as possible.

British Airways set out to remove some of the common hassles one encounters when traveling today. For instance, it worked with the British government to install fast-track channels at Heathrow and Gatwick Airports to make it easier for premium (full-fare) passengers to speed through immigration. Also, it does not charge for access to its first-class lounges; the lounges are part of the product. Everything in them, from drinks to telephone service, is free.

Banks, too, can use this approach to serving customers, which is totally oriented to filling value-driven needs. Every industry has a minimum price of entry just to catch the customers' eye. But research shows that many customers, whether of British Airways or of banks, now take these basics for granted, and increasingly want a company to treat them in a personal, caring way before they'll give it their business.

The phrase "nothing too small, nothing too big" captures what British Airways is trying to achieve. The "nothing too big" tells customers that the airline goes where they are going and that is professional. The "nothing too small" lets them know that British Airways has orchestrated its services to look after their individual needs. The airline wants people to know that it carries millions of people but to feel that its individual interactions with them were not mass-produced.

The challenge for super community banks is to achieve a simliar market position. "Outlocal the nationals, outnational the locals" is what super community banking needs to be about. We need to identify our own "basics" that customers expect. These may include transaction accuracy, transaction speed, competitive rates, courtesy, and personal service. This, combined with targeting the right customers and creating the right experience for them, is the challenge ahead.

Not all potential customers care about this type of value. Even in a mass market business, you do not want to attract and retain everyone. The key is to first identify and attract those who will value your service and then to retain them as customers and win the largest possible share of their lifetime business.

British Airways, for example, continuously and extensively studies the market to pinpoint the segments that offer the possibility of generating a higher profit margin - segments such as businesswomen, unaccompanied minors, and consultants. Then they create extensive lifestyle profiles of each customer, which they use to increase ticket purchases and to sell other products and services.

But identifying such customers is only half the battle. Learning from them so that you can design and improve service that they will highly value over time is the other half. That is where British Airways, First USA, and many other leading-edge companies excel. That is where the war for customer ownership will be won or lost. That is where you need to decide who you are fighting for. Not all customers are equal. Identify your niche and fight for that value.

Ms. Bird is chief operating officer of Roosevelt Financial Group, St. Louis.

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