Sweat the small stuff

Today (September 23rd 2019) is a very sad day for thousands of Thomas Cook employees and millions of customers. A business founded in 1841 and one of the world’s oldest travel brands has effectively ceased to exist. So how did a firm with such long-standing heritage, 22m customers and such a familiar name go bust?

Unfortunately, it sounds like the business has been suffering from a perfect storm of challenges. There have been long standing debt problems and much publicised need to refinance borrowings. Not to mention the issue of a highly competitive market, which has served to erode margins to the point where (according to the BBC) Thomas Cook were only making £11 per customer. No wonder then that they’ve needed to encourage customers to pay to pre-book their seats and in-flight-meals, and also attend those awkward ‘welcome meetings’ to be flogged excursion tickets.

I’ve been a loyal Thomas Cook customer for at least the last 16 years and, with the benefit of hindsight, have to say Availability Bias is a powerful motivation. Behavioural Science shows us that people are poor at assessing risk and tend to over-estimate the incidence of rare occurrences, such as an AirBnB booking going pear-shaped or a budget airline going bust. Not only have we been reassured by booking with an ABTA operator and world-famous travel brand, but we’ve also been put off challengers like AirBnB because of the relative perceived risk. Ironically, as of 2am this morning, Thomas Cook shares are effectively worthless while AirBnB has an estimated value of at least $38 billion.

The analysts will, I’m sure, point to Thomas Cook’s high cost base of High Street stores. However, it was our local Thomas Cook team that made us such loyal customers. We’ve relied on their impressive knowledge of destinations, amenities and hotels. Unfortunately, the wider organisation has never seemed to care as much about our experience and every year we’ve come home discussing the same issues with our Thomas Cook holiday. The business didn’t seem to have been geared up “sweat the small stuff” to deliver great customer experiences. For example, every year there has been a problem with our in-flight meals, which were booked at least 6 months in advance. This year when my daughter’s vegan meal was given to the wrong passenger (who promptly complained after tucking into it), the cabin crew informed me that their systems were still entirely paper-based.
 
We also had a worrying time while waiting to leave the hotel to catch our return flight, as the taxi booking had somehow been changed to my son’s name – even though he is a minor, and was unable to access the ‘Your Holiday’ portal without my say so. We’ve also been into our local branch since returning home to share feedback on a disparity between the brochure view of a hotel and the reality – only to be told the local branch couldn’t accept feedback or complaints.
 
Sadly, it is now a moot point, but I can’t help wonder whether getting all those small details right might have helped Thomas Cook turn its business around and translate all that neutral customer sentiment (see YouGov) into positive perceptions and advocacy.

Colin Gray | Head of Marketing Strategy and Behavioural Economics

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