I was at an LAX Starbucks, awaiting my order and watched a guy waiting for his drink at the drink pass-off station. “Venti latte,” the barrista called.
“What kind of milk?” the guy asked.
“2%”
“I have one with non-fat.”
“Comin’ up.” The barrista made the drink and passed it to the guy.
“Can I get a spoon?” The barrista found one and handed to him with no interaction.
“Sleeve?” the guy asked. The barrista pointed to the opposite side of the glass and the guy picked up a sleeve. As he turned to leave he said to the five people in line, “They wonder why they’re in trouble.” Ouch.
Is that something your customers might say as they leave your business or finish a call to your business? If you’ve followed the onslaught of “sage business advice” and cut costs at any point, it just might.
I was at Hertz a couple days earlier when I arrived at LAX. It was late on a Thursday afternoon. I’ll admit I was tired but after waiting for the Hertz bus to the gold counter for nearly 30 minutes (and seeing their competitors busses every 8 minutes) I called Hertz. Their response? “We’ll give them a call.” No sorry or anything.
When the bus eventually did arrive the driver said, “Hi I’m Don, I want to apologize for the long wait. We laid off too many people and are trying to catch up.” Great.
When the bus dropped us off my name was not on the quick board so I had to go inside. (The whole point of the #1 Gold Club is to “skip the counter and the wait.”)
There was one agent and a line. A guy came in from the parking lot as I approached. “Name?” I told him. “Your name not on the board?”
“Yes.”
“We didn’t have you coming in for another hour.”
“Don’t you check with the airlines? I can’t even make a reservation unless I give the flight number.”
“Oh, we don’t look at that. Space 304.” Fine.
After I got in the car and drove to the exit there was a line of five cars per lane. All five booths had their OPEN signs lit but only two were actually open. As I watched the attendant come out, check the license plate, go around the entire car, etc, it hit me, these are not Hertz employees anymore.
When I got to the attendant – after a 20 min wait – I asked and sure enough their uniforms showed they were now outsourced to Guardsmark.
What is Hertz selling with their #1 Gold Club? Service and speed. What did they deliver? Neither. It was an hour from the time I got to the shuttle stop and the time I drove off the lot.
A month ago, the NY Daily news said the CEO has now laid off 32% of the workforce since he came on board.
He justified it in another article. ”Hertz experienced unprecedented volume, pricing and residual value contraction across all of its businesses in the fourth quarter of 2008,” said Chairman and Chief Executive Mark Frissora in a statement. “Although there was an adjusted pretax loss for the quarter, we made significant progress towards achieving our objective of right-sizing the business to economic conditions.”
What a disaster of a brand (see my post last week about my experience in Richmond.) Heck of a job Brownie!, (to coin a phrase.) You can cut and cut but when you cut past the bone like Hertz you have damaged the reputation.
You staff for the rush, not the schedule. If ever there was a company that should be able to manage all of this and match to employee schedules it is Hertz because they have all the flight information and know demand well in advance.
For small business owners you can shorten hours if you are looking at your register reports and can see where the business is consistently slow. But you don’t just cut across the board. Otherwise you could be cutting to the bone. In Hertz case, they cut to the heart of why I do business with them.
You can reduce your open-to-buy once you look at your POS reports and cut those SKUs that are not profitable. The danger is that you will cut across the board and be out of stock. If you are out of stock on multiple items, both customers and employees will wonder about the viability of your business.
You can reduce your advertising if you honestly look at your marketing to see how effective it is. But you have to still advertise – especially in a recession. You don’t cut across the board and disappear from your customers’ awareness.
Pay attention to what matters to customers to avoid customers saying under their breath, “They wonder why they’re in trouble.”
Cut too much and you’ll have customers upset, waiting and wondering why they chose you instead of a competitor. I do now when I rent a car.
I was walking through Dulles International airport in Washington Sunday when I stopped and noticed the FOX newscast on the plasma screen. They were showing another angered politician who was justifying not supporting the stimulus plan to adoring looks from the anchor.
(This post originally appeared in 2009.)
