How Expedia saved $100M by looking upstream

The most successful leaders stop solving the problem right in front of them and focus on solving the problem that created the problem right in front of them.

Paraphrased excerpt from Upstream, Dan Heath’s latest book, follows. I highly recommend this book for leaders!

Where is my itinerary? (How Expedia saved $100M by looking upstream)

In 2012, Ryan O’Neill, the head of the customer experience group for the travel website Expedia, had been sifting through some data from the company’s call center. One number he uncovered was so farfetched as to be almost unbelievable. For every 100 customers who booked travel on Expedia—reserving flights or hotel rooms or rental cars—58 of them placed a call afterward for help. The primary appeal of an online travel site, of course, is self-service. No calls necessary. …. Traditionally, the call center had been managed for efficiency and customer satisfaction. Reps were trained to make the customer happy—as quickly as possible. Short calls minimized expenses. “The lens we were using was cost,” said O’Neill. “We had been trying to reduce that cost. Instead of a ten-minute call, could we make it a two-minute call? But the real question was: Why two minutes? Why any minutes?”

When you spend years responding to problems, you can sometimes overlook the fact that you could be preventing them…

… they dug into a basic but neglected question(sic): 

• Why in the world are so many customers calling us?
  • They compiled a ranking of the top reasons customers sought support. 
  • The number one reason customers called? 

#1 reason – To get a copy of their itinerary.

In 2012, roughly 20 million calls were logged for that purpose. Twenty million calls!  That’s like everyone in Florida calling Expedia in one year. 

At a support cost of roughly $5 per call, that’s a $100 million problem. So why weren’t customers receiving their itineraries automatically? The answers were pretty simple: The customer had mistyped her email address. Or the itinerary ended up in her spam folder. Or she deleted the itinerary by accident, thinking it was a solicitation. Compounding the problem was that there was no way on the website for customers to retrieve their itineraries. …The fixes for the number one issue—the itinerary requests—came relatively quickly: 

• Adding an automated option to the company’s voice-response system (“Press two to resend your itinerary”);
• Changing how emails were sent to avoid spam filters; 
• Creating an online tool to allow customers to handle the task themselves.

Today, virtually all of those calls have been eliminated. Twenty million support calls just vanished. Similar progress was made on the other “top 10”….Since 2012, the percentage of Expedia customers who call for support has declined from 58% to roughly 15%.

Expedia eventually solved the problem and saved millions of dollars by looking upstream to not just fix the problem but eliminate it. They came to realize the calls were avoidable in the first place through some simple changes earlier in the ticketing process.

Try this process:

1. Assemble your team. Ask each member to independently write down her top 2-3 most expensive problems your team faces. 
2. Discuss, debate, use data, intuition, and experience to make sure everyone understands each one.
3. Vote on the top one. (Two votes per person.  You can vote twice for the same one if you feel strongly about it.) (N.B. You will be tempted to tackle more than one problem. I recommend starting with one to improve the process as well as solving the problem.  Once you excel at the process, future solutions will go faster and you can begin to tackle more than one at a time.)
4. Move to the process below in steps 5-7.
5. Document each step leading up to the identified problem; I prefer a flow chart. Track the problem to its origin point before you start to work on a solution. For instance, Expedia’s origin point above was the inability of its customers to easily find/receive their itinerary.
6. Choose one or two of these steps that you believe are the biggest constraints.  Brainstorm and choose a solution(s) to put in place.
7. Implement. Learn. Modify, if necessary.
8. Document and update the process you went through. (Review the process each time to look for flaws, constraints and improvements.  Give people guided autonomy – e.g., must not violate core values, must align with our vision and strategy – in the process to improve chances of finding improvements.)
9. Go back to step 3 to identify the next problem.
10. Rinse and repeat this process.
11. Every few months go back to step 1. to update the list.

Example

I am often told that hiring a killer salesperson will solve the “lack of sales” problem. Unfortunately, in my experience, this approach rarely works.  The killer salesperson may upset the culture, demoralizes the team, or be more arrogant than you bargained for.

Another option is to create a process to identify, train, and reward great salespeople for your culture and solutions.  You may identify the “killer” along the way but you may also find a diamond in the rough or two on the existing team who is selling below his capability. 

Further upstream, you could also work more closely with Marketing to make sure you are targeting highly profitable prospects who identify with the problem that you are solving for your core customers.

Further upstream from that is to make sure that you are solving for the job to be done (JTBD) by your most profitable (aka core) customers and/or promoting appropriately to the market.  Here is a popular, prescriptive post I wrote on this topic.

Good luck!

Be exceptional!

Bill  – Certified Growth Coach, Foundations in NeuroLeadership certified, Predictive Index Certified Partner
(bill@catalystgrowthadvisors.com; www.catalystgrowthadvisors.com)

For MA companies ONLY, as an approved Training and Development provider, Catalyst Growth Advisors can offer up to 50% off program fees.  Click here to see if you qualify.

Please click here to order a copy of my book Further, Faster – The Vital Few Steps that Take the Guesswork out of Growth or download the free pdf version.