There must be some pretty smart people at Continental Airlines. They have found a way to make thousands of customers happier at virtually no cost.
What did they do? They sent out a slew of coupons allowing a standby upgrade to first class for customers who aren't frequent fliers. If an empty first class seat is available five minutes before takeoff, these coupon holders can be upgraded to use the space.
What is the cost to Continental? Virtually nothing-a better meal already on board and maybe a couple of drinks. The benefit? Many coupon holders have switched to that airline hoping a seat up front will be available.
How often does this happen? About only one trip in five in my case, as holders of gold and silver cards take precedence for empty seats. But with the other carriers, I don't have any chance of an upgrade.
A good example of giving an inch to earn a mile is a story about a woman who returned rotten pieces of a melon to a grocery store. The grocer gave her $2.32 back-even though the store hadn't carried that type of melon in months.
Why did he give her money that wasn't spent in his store?
The grocer said he didn't want to risk the woman's future business.
The inch rescues the mile in other areas as well. The restaurant that gives a free cocktail if you have to wait, or the hotel that offers a free or discounted night after a glitch saves the loss of a good customer- probably for life.
The same policy of giving an inch to go the extra mile certainly applies in banking.
The most important example I can think of is: The customer is always right.
People are always delighted when their bank immediately takes any disputed item off their credit card bill. Even if the bank is proven right after an investigation, the customer will be pleased if there is no interest charged for the time the search involves.
Speed in handling any request with a quick no rather than a slow yes is another positive trait of smaller banks. Their employees can usually make a decision without going through a bureaucratic process.
Giving an inch to gain a mile applies also to new "spectacular offers" sent to customers.
When I get an offer of some "great new service" such as a credit card whose teaser rate jumps to well over other banks' rates in six months, I wonder what else the bank is pulling on me.
Two banks in my town were bought out. One put up a sign that read: "Please understand if we don't recognize you at first. We're new in town, and it takes a while to know you."
The other bank told its customer service people to respond to my query about a disparity in the bank's billing procedures. But it turned out the customer service representatives didn't understand the disparity either.
People want to feel special. New community bank networks that allow the customer of one bank to use automated teller machines without paying a fee makes us feel special-at a low cost to the banks. It even costs less than the grocer's melon.
Mr. Nadler, an American Banker contributing editor, is professor of finance at Rutgers University Graduate School of Management.
