An accident waiting to happen
It’s not the first time United has committed a corporate gaffe with its clients. In 2008, Canadian musician Dave Carroll saw his guitar being thrown out of the airplane, and, after the frustration of not getting any compensation for the broken instrument, he created the video entitled “United Breaks Guitars,” which now has more than 17 million views. In another episode, in 2017, United blocked two teens from boarding because they were wearing leggings. According to company employees in Denver, this was enough justification to remove them from the flight, because they were dressed inappropriately. Last week’s event seems to be the straw that broke the camel’s back. Anyone who saw the horrific scene of Dr. David Dao being pulled out of his seat and dragged with his face battered, saw how absurdly United dealt with the overbooking event.
Talk vs. walk
On United’s website, the company affirms that their purpose is to “connect people.” The airline also declares one of its values with the phrase “we fly friendly.” This is a fake positioning, dissociated from real life, that inspired all the hate we saw on social media.
Importance of Brand value
Today, a company’s Brand is its primary intangible asset, and it is now treated as such in legal terms, and in certain cases can be incorporated into companies’ balance sheets; this is the case in Europe and the U.S., and even in Brazil (since 2011).
Studies among publicly traded companies around the world show that, on average, 38% of commercial airlines’ market value is owing to intangible assets, especially the Brand. United Airlines has a Brand value of approximately USD 5.5 billion, behind only American Airlines and Delta. This value comes from the equity created over the course of decades, and has positively influenced the demand by consumers, partners, society, sales and distribution channels, employee loyalty, terms and conditions of supply, and investor interest, and has transformed the business’ performance and its financial results.
According to our calculations, 25% of United Airlines’ Brand value is owing to its reputation and image. The breach of trust by people working for the Brand represents a 15% loss of United’s Brand value in 4 days. A considerable loss.
The big question now is whether there will be a domino effect, if people who are dissatisfied or outraged by this latest event will move to other Brands, avoiding purchasing new United tickets, thereby considerably increasing the churn. A boycott movement could generate an even greater loss of Brand value, with a serious impact on their business. Everything will depend on upper management’s ability to contain this structural/strategic crisis in a permanent and sincere way.
But we don’t believe this will happen, since United does not have a Brand culture and management system that are suited to today’s world, where the focus needs to be on the creation of value for the consumer. Innovating and humanizing people’s experiences, in a relevant, unique and consistent way, does not seem to be part of the company’s plans. The relationship between Brand and people needs to be valued, and an inspiring stance needs to be practice.
To make things worse, even with a huge amount of data about its consumers, United doesn’t have the right analytics system to turn the data into action. The company is treating the matter as a simple image crisis, trying to justify that it simply did what the law and the standard procedure dictate. This situation has further worsened its reputation and image.
“We made a mistake. Please accept our most sincere apologies. We are going to do everything possible so this never happens again.”
When a crisis happens, a key factor is how you deal with it. Firstly, by accepting that the mistake occurred. Next, acting quickly to correct the process, procedure and culture. That’s like using the mistake to make lemonade out of lemons. By not admitting their mistake, United CEO Oscar Munoz had to apologize again, and was obligated to say sorry for the apologies he had given earlier. This amplified the crisis, increased the hate, and turned the lemons into cyanide. The world we live in no longer tolerates corporate bullshit – standard responses, ignoring mistakes and avoiding responsibilities.
We live in an age where what you do counts much more than what you say. If you really have a shared purpose and values, going beyond just hanging them on the wall, you need to use them as the guiding lights of your business. Your purpose and values need to shape your way of doing business, and how you build your client’s experience.
Gaffes like United’s will continue to happen, since they are inherent to any large organization. But the public will be less and less complacent with the attitude we have seen. Did you make a mistake? Admit it! Apologize in a real and credible way, and seek to transform your organization through lessons learned, so that it never happens again. That is the only path to collective forgiveness, to permanently stem the Brand’s meltdown.