Customer Service Edition: Alexa, Wells Fargo And British Airways

No matter what side of the story one finds themselves on, the last 72 hours in America will likely make the history books. Between the inauguration on Friday (Jan. 20), the wave of pink-hatted protests on Saturday and the glorious victory of the New England Patriots in the AFC Championship, it has been a little bit hard to keep a handle on the news these days.

Luckily, the PYMNTS team is ever at the ready to keep you caught up when the news cycle goes a little out of control. So, what to keep an eye on this week?

Amazon’s Alexa is a good place to start. The good news: It’s definitely a win for Amazon when it comes to consumer appreciation. The not-so-good news: It’s not exactly a moneymaker — yet. Also worth keeping an eye on: Wells Fargo and the great lack of consumer love it’s now feeling and buy-on-board trouble aboard British Airways flights.

Alexa And The High Cost Of Victory

Amazon is not exactly unfamiliar with the concept of loss leading up to a huge land grab of the marketplace before anyone catches on to what it’s doing.

Given that Amazon is presently the largest retailer in the world (by market cap), represents 30–50 percent of all purchases made online in the U.S. (depending on time of year and what stats one uses) and is on track to have half of all U.S. consumers enrolled as Prime customers by the end of the year, it seems clear that Amazon has written the book, so to speak, on how to make that strategy work for it.

And, according to reports this week, it looks like Alexa is the latest extension of Amazon’s “grow market share first, forget profits for now” approach. If the reporting is accurate, Alexa cost Amazon $330 million in 2016 alone, and the experts are forecasting that figure will increase to more than half a billion ($600 million) in 2017.

The reports surfaced in the context of rumors that Apple is looking to build a competitor product for the Echo — the Amazon Bluetooth speaker that serves as Alexa’s homebase. Like the Echo, the Siri speaker would have the capacity to retrieve information and be embedded into various smart home designs using voice recognition. There are also rumors about facial recognition technology being built in — care of Apple’s recent acquisition of Faceshift and Emotient.

Apple conspiracy theorists say that Amazon’s gains in loyalty via Alexa and the Echo are the real long-term value holders and that Apple is not known for very efficiently monetizing improvements of all kinds. But whether or not Apple will get the chance is a whole other question, since reports indicate Apple is still in the design phases of the Echo competitor, while the Echo is winning hearts, minds and spend each day. It might cost Amazon $600 million to win those hearts and minds, but locking Apple out of the market might in itself be priceless.

Wells’ World Of Hurt

As it turns out, even the Trump banking bump wasn’t enough to fully set the sails at Wells Fargo billowing. It seems that opening millions of fraudulent consumer accounts is the sort of thing people are apt to stay mad about for a while.

Wells Fargo’s fourth quarter report indicated that the company is still grappling with the fraud scandal that has eroded the customer trust that once personified this eponymous banking brand.

The credit card division has been hit particularly hard, especially in terms of new business, where applications sank 43 percent year over year in the latest quarter. Similarly, new checking account openings were off 40 percent. Teller transactions were down 16 percent. Physical visits from customers visiting branches slid 14 percent.

Eeks.

Earnings missed expectations, with earnings per share of $0.96 versus a consensus of $1.

There was some good news, however, that did put some positive pressure on its stock price. Loans on the books continued to grow, and management stated that there is an “inflection point” in the way that consumers view the bank and its efforts to turn around. The new CEO, Tim Sloan, said that, thus far, it’s still a bit of the unknown as to just what the impact might be to profitability as a result of account openings slipping.

But changes are coming, according to Sloan. Branch closures are slated to reach 200 branches this year, with a similar amount or “slightly higher” next year. That comes as Wells has spent time, as Sloan put it, “listening to our customers in terms of how they want to do business with us. They still want to come into branches, but they also are accessing us via online and mobile, and through ATMs, and on the phone.”

Wells also reported that the holiday season boosted card-based spending, with the bank noting record monthly purchase volume, growing 8 percent from Dec. 2015. Active accounts volume was up 7 percent.

British Airways And The Unfriendly Skies

Consumers do not like change, especially when they are thirsty, 30,000 feet above the ground and on a long-haul flight. Such has been the lesson British Airways has been learning the hard way over the last several weeks as it has been trying to phase out the full meals and cold drinks it has been offering to its customers gratis.

Now part of the International Airlines Group (IAG, which also includes Iberia, Aer Lingus and Vueling), BA is operating under a new cost savings regime, which has seen it move to some of the airline industry’s more standard practices, like charging for food and drinks on board. BA is also really innovating in collecting fees from everybody — even customers who shelled out to sit in first class will have to be ready to drop another few dollars if they want to enjoy a Pepsi and some Pringles while they fly.

Are they serious?

Flight crews also are less than thrilled with the new order, noting they haven’t had enough training, the food supplies are insufficient and the payment card readers don’t really work all that well and the airline doesn’t take cash payments.

So, to recap, customers don’t like it, flight crews aren’t trained for it and the tech doesn’t always work well enough to even support the change. Various analysts that have noted that BA has possibly not picked the best solution for getting that revenue engine up and roaring.

So, what did we learn this week? The customer is always right, especially if you want them to continue being your customer. If you give them things they like, you feel the Amazon levels of adulation (though it’s costly). If you make them mad, they might stay mad for a long time. And if you cheap out on the pretzels, well, you learn that thousands of feet in the air is a lousy to place to start a fight with a hungry traveler.

’Til next week.