A tragedy foretold.
This isn't the first time United has made corporate blunders with its customers. In 2008, Canadian musician Dave Carroll had his guitar thrown off a plane and, frustrated by not receiving compensation for the broken instrument, created the hit song "United Breaks Guitars," a video with over 17 million views. In another episode, in 2017, United prevented two teenage girls from boarding because they were wearing leggings. According to company employees in Denver, this was sufficient justification to remove them from the flight for being inappropriately dressed. Last week's event seems to have been the last straw. Those who witnessed the horrific scene of Dr. David Dao being ripped from his seat and dragged away with his face bruised by the brutality saw how absurd United's handling of the overbooking incident was.
Speech and practice
On its institutional website, United states that its purpose is to "connect people." The airline also declares "we fly friendly" as one of its values. This is fake rhetoric, detached from practice, and an inspiration for all the hate we see on social media.
Importance of Brand Value
Brands are now the main intangible asset of companies, and are legally treated as such, and in certain cases can be activated and incorporated into the balance sheet in Europe, the USA and even in Brazil (since 2011).
Studies of publicly traded companies worldwide reveal that, on average, 38% of the market value of commercial aviation companies is due to intangible assets, especially the brand. United Airlines has a brand value of approximately R$ 17.1 billion, second only to American Airlines and Delta. This value comes from equity built over decades, positively influencing consumer demand, partners, society, sales and distribution channels, employee loyalty, supply conditions and terms, and investor interest, transforming business performance and financial results.
According to our calculations and methodology, 25% of the United Airlines brand value is due to its reputation and image. A breach of public trust in the brand represents a loss of 15% of United's brand value in 4 days. A considerable loss.
The essential question now is whether there will be a domino effect, whether dissatisfied or outraged customers will switch brands, avoiding buying new United tickets and considerably increasing churn. A boycott of the company could generate an even greater loss of brand value, seriously impacting its business. Everything would depend on the ability of senior management to contain this structural-strategic crisis definitively and sincerely.
We don't believe this will happen, as United doesn't have a brand culture and management system suited to today's world, where the focus should be on creating value for the consumer. Innovating and humanizing the customer experience in a relevant, differentiated, consistent, and proprietary way doesn't seem to be part of the company's plans. It's necessary to value the relationship between the brand and its people, adopting an inspiring approach.
To make matters worse, despite having a vast amount of data about its customers, United lacks a proper analytics system to transform that data into action. The company treats the issue as merely an image crisis, attempting to justify it ineffectively by claiming it did what the law and standard procedure dictate. This situation has further damaged its reputation and image.
“"We made a mistake. We offer our sincerest apologies. We will do everything we can to ensure this never happens again."”
When a crisis occurs, a determining factor is how you handle it. First, by accepting that the mistake happened. Then, by acting quickly to correct the process, the procedure, and the culture. This is about turning lemons into lemonade. By not acknowledging the mistake, United's CEO, Oscar Munoz, had to retract his statement again, being forced to apologize for the apologies he had already given. He amplified the crisis, increased the hatred, and turned lemons into cyanide. The world we live in no longer tolerates corporate bullshit. Standard responses, dodging mistakes and shirking responsibility.
We live in an era where what you do matters much more than what you say. If you truly have a shared purpose and values, more than just hanging them on the walls, you need to use them as guiding principles for your business. Your purpose and values should shape how you do business and how you build your customer experience.
Blunders like the one at United will continue to happen, as they are inherent to any large operation. But the public will be increasingly less tolerant of behavior like the one observed. Made a mistake? Admit it! Apologize sincerely and credibly. And seek to transform your organization through the lessons learned, so that it never happens again. This is the only path to collective forgiveness, definitively halting the brand's erosion.
Originally published in Next | Media & Message
