New Leader Training / Vanguard, Spirit & Frontier Struggling Due to Horrible CX / You Can’t Make Experience Irrelevant / Southwest Airlines Ditches Open Seating / Customer Experience is at an All-Time Low

Customer Experience is at an All-Time Low – I don’t think this is shocking to anyone today. According to Forrester’s US Customer Experience Index (CX Index™) rankings report, CX quality among brands in the US has plummeted to an all-time low, marking a decline for the third consecutive year. Only 3% of companies are now classified as customer-obsessed, prioritizing customers’ needs, desires, and satisfaction in all business decisions and actions.

Brands are not Connecting Emotionally with their Customers – While emotional connection remains crucial for high CX performance, US brands are increasingly struggling to connect with customers on an emotional level. In 2024, top-tier brands evoke, on average, 25 positive emotions for each negative emotion, a decrease from 29 the previous year. The average effectiveness of experiences has dropped to 64%, and the average ease of experiences has declined to 66%.

“US consumers are experiencing the worst interactions in a decade,” said Rick Parrish, VP and research director at Forrester. “Brands aspire to create better experiences and recognize the importance of customer-centricity. However, the scale of change required is daunting. Our research shows that customer-obsessed firms achieve faster growth in revenue, profit, and customer loyalty compared to their competitors.”

Irrefutable Evidence – Even modest improvements in a brand’s customer experience quality can generate significant revenue gains by reducing customer churn and increasing share of wallet. By addressing these challenges and prioritizing customer-centric strategies, brands can improve their CX quality and realize substantial business benefits. Customer-obsessed companies report 41% faster revenue growth, 49% faster profit growth, and 51% better customer retention than their non-customer-obsessed counterparts.

You cannot make experience irrelevant – Being the lowest price in your industry typically only has advantages in the short term. It is a great way to capture new market share. However, these types of customers are just chasing the best deal. It is just a race to the bottom, especially when your customer experience is also the lowest in the industry, which is usually the case. All you are doing is giving more customers the idea that the cheaper they go, the more it costs them. “The lowest cost always wins,” said Barry Biffle, Frontier CEO. A JD Power 2024 survey found that customers ranked Frontier and Spirit last and second to last, respectively, among 11 North American airlines.

This prompted United Airlines CEO Scott Kirby to predict Spirit and Frontier are on a crash course to “going out of business” due to the unacceptable customer service they both provide. Kirby said both airlines have a “flawed business model,” which attracts passengers with ultra-low fares but then imposes high fees for oversized carry-on bags, sometimes exceeding the ticket cost. He highlighted Frontier’s reported initiative to incentivize gate agents with bonuses for identifying oversized carry-ons, allowing them to charge passengers an additional $99.

Are Spirit & Frontier Going out of Business? The US Department of Transportation said that Spirit and Frontier had the highest rate of customer complaints among domestic carriers in 2023. Despite a travel boom, Frontier, the Denver-based ultra-low-cost carrier, has failed to report a profit in three of the last four quarters. Since Jan. 1, Spirit shares have fallen by more than 75%. Earlier this year, a federal judge blocked a $3.8 billion merger with JetBlue. “Best service always wins,” Kirby said. When asked what he thought the future held for ultra-low-cost carriers, Kirby said, “I think they’re going out of business.”

*Related – How to Make Your Customer Experience So Good, Price Becomes Irrelevant

New Leader Training – One of the biggest challenges Senior Leaders face is developing emerging leaders. In fact, The Chartered Management Institute’s research found that an incredible 82% of bosses are “accidental managers,” and what’s even scarier is that 25% of those are in senior leadership roles. This is negatively impacting employee morale and a third of employees are quitting their jobs. That is why we are so proud to announce that starting this fall will be our first Leadership Academy Class. This comprehensive program empowers leaders, HR teams, and emerging managers to create a workplace where inspiration thrives, teams are fulfilled, and growth is inevitable.

Abysmal Service = Client Exodus – Vanguard, a leading investment management firm, gained a devoted customer base by drastically cutting fees and advocating for simple, index-tracking investments. However, many of these loyal customers are now disillusioned. Social media, review sites, and Reddit are rife with complaints from Vanguard brokerage clients about issues such as glitchy trades, inaccurate balance information, and difficult-to-reach customer service representatives. Theodore Wagenaar, a 75-year-old retired college professor from Sarasota, Fla., who was a Vanguard client for over 40 years, expressed his frustration in a Wall Street Journal article, saying, “It was difficult for me to leave them…But it just continually got worse. The service is abysmal.”

In a recent Investor’s Business Daily survey of 2,700 investors, Vanguard ranked last among eight major brokerages for customer satisfaction with website performance and mobile apps. “They’ve always tried to keep costs low and service has suffered as a result,” said Jeff DeMaso, editor of the Independent Vanguard Adviser newsletter. “Long wait times are an issue.”

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Southwest Airlines Will No Longer Offer Open Seating on Flights

For several decades, Southwest Airlines, known for the best customer service of any US airline, was also the most profitable. However, due to eroding profits, Southwest has decided to abandon one of its key differentiators: open seating.

Southwest executives have indicated that the company must evolve to meet the expectations of today’s customers, signaling a potentially significant shift in its operations. “This is the right change at the right time,” Southwest Chief Executive Bob Jordan said in an interview.

Loyal Southwest customers have said they loved open seating. Previously, when flights were less crowded, passengers frequently secured window or aisle seats. However, with fuller flights, this is becoming increasingly rare. In an internal message on Thursday, the airline informed employees that although open seating was once “enormously successful and differentiating,” it now often extends boarding times and places additional strain on both customers and staff.

Episode 167 of The Customer Service Revolution Podcast: Building and Developing Great Leaders

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