When Swedish businessman Jan Carlzon became CEO of Scandinavian Airlines (SAS) in 1981, it was losing money and had a reputation for consistently late arrivals. While SAS’ connection to its customers happens largely through its flight attendants, its middle office airport ops team has a much larger impact on whether each flight leaves on time—and, consequently, on the customer experience.
Carlzon re-imagined the potential of SAS’ middle management, directing them to empower front-line employees to resolve customer issues themselves. SAS’ middle office airport operations team was charged with supporting those who had direct contact with customers.
Within a year, SAS had turned a profit and was the most on-time airline in Europe. During his time as CEO, Carlzon worked to embed the “Put People First” mantra within SAS company culture. In Carlzon’s words, “If you’re not serving the customer, your job is to be serving someone who is.”
The SAS story illustrates the importance of making decisions while keeping return on customer engagement (RoCE) top of mind: What will the impact be for the customer, and how will the customer react? When you focus on engaging and empowering the customer, the business results will follow.
What does Carlzon’s experience at SAS have to do with your middle office (business operations, pricing and commercial operations)? To start, it suggests that you should think in terms of an office unified to serve the customer rather than one separated into silos. By imagining your office as a unified entity—rather than one separated into silos—you can better serve your customers and, in doing so, improve your bottom line.
Carlzon’s turnaround at SAS is an example of the power of staying focused on RoCE. If you’re looking to implement similar changes in your business, start by empowering front-line staff, learning more about your customers and making sure all employees are aligned. As you begin to develop a successful RoCE strategy that applies to your people, processes and tools, these characteristics are key:
- Responsiveness – Just as SAS’ passengers didn’t like to wait for their flights, you could lose potential customers if you don’t respond to their needs quickly. Empower your customer-facing staff to act fast and avoid this. Seek out enhanced logic (or better yet, intelligence) capabilities that build shortcuts into your approval processes. These capabilities range from upskilled employees, to fine-tuned processes, to decision-support tools.
- Insight generation – How can you profit and also satisfy customers? Analytical capabilities—driven both by tools and by people with this expertise—can help you better understand customer needs, moving beyond the efficiencies found in automating pricing and contracting tasks. The world is becoming more personal, and backward-looking reports no longer cut it. While reporting (descriptive analytics) is table stakes, consider investing in predictive and prescriptive analytics—through a focus on data science and via tools enabled by AI.
- Collaboration – Have you ever been on the phone with a company representative, only to be transferred to someone else who asks you the same questions? That is similar to the disconnect that can happen when the analysts setting your company’s prices don’t have the same information as your sales staff. Look to build people capabilities like Revenue Optimization Centers of Excellence that enable close collaboration across internal staff, and for tool capabilities like contracting systems that extend to your customers. If you are able to unify disparate data sources, all the better. Everyone in your company should see the same view of the customer.
Revenue optimization—or the transformation of revenue cycle processes related to setting, getting and sustaining prices—is a key, middle-office capability that will please your customers and lead to significant returns for your organization. These tools will help your middle office drive RoCE through revenue optimization:
- Price optimization and management (PO&M) tools provide analytical support for setting prices, identifying margin improvement opportunities and maintaining price lists.
- Configure, price and quote (CPQ) tools automate the quoting process, building a deal price from individual items and routing discount exceptions through approval workflows.
- Contract life cycle management (CLM) tools serve as a contract repository, supporting adherence monitoring, renewals and terminations.