The technology that a company uses greatly affects its business processes. When that technology fails, everything ends up hanging in the balance.
Board directors should realize how even simple glitches in end-user systems have serious consequences that affect the whole company, from its public relations to profits. With the popularity of social media, word of such system glitches travel fast. Sometimes, customers figure it out first even before the company does.
A glitch can happen unexpectedly because no system is perfect. But how a company decides to handle the effects of a glitch will make a world of difference.
Let’s look at a few examples of companies that suffered from system glitches and how they handled the situation:
El Al Airlines
El Al Airlines cut the prices of their tickets from $1600 to less than $400 in August 2012. This 75 percent discount was not intentional, though. The airline experienced a glitch that lasted for as long as three hours, during which people managed to make bookings to take advantage of the low (albeit erroneous) prices.
The airline decided to honor the bookings made during the glitch. On top of that, they presented a better deal to their customers: El Al Airlines offered upgrades for non-stop flights for only $75. Even those who got to buy tickets with very low prices were entitled to buy the upgrade.
Expedia sold rooms in a Hilton hotel in Japan for as low as $4 a night in November 2005. The cause of error was a wrong conversion right from Japanese yen to US dollars. The news spread fast, and many people were able to book premium hotel rooms for extremely budget prices.
Eventually, Expedia in partnership with Hilton Hotels, decided to honor some of the bookings: Those scheduled for that same month of November, and those that were bought with a travel package. Everyone else received a $250 voucher. This decision, however, was met with mixed reaction. Customers complained that the voucher was difficult to redeem because of its restrictions. The general consensus was that Expedia should have honored all or canceled all, no exceptions.
United Airlines accidentally posted $0 fares on its website for around 15 minutes on Sept. 12, 2013. People who managed to book flights paid only $5 to $10, and that was already with taxes factored in. The tickets normally cost hundreds to a few thousand dollars.
The airline didn’t reveal how many tickets it sold with the wrong price, but they decided to honor all those tickets booked during the glitch. As a result, the airline received lots of positive publicity.
Verizon suffered a system glitch on Sept. 29, 2013, and it lasted for the weekend. The broadband and telecommunications company unwittingly allowed customers who were looking to upgrade their devices to keep their unlimited monthly data feature and pay for a new device at a subsidized price. Ordinarily, customers need to pay the full price for a replacement phone. As of Sept. 30, the glitch was fixed.
Like United Airlines, Verizon chose to honor the glitch upgrades. Customers who signed up for the deal retained their unlimited data plans for the rest of their contact and also received their new device.
In all these scenarios, the company is put in a difficult position. Honoring transactions made during a glitch is the right thing to do in the eyes of the consumers, but if the losses incurred will hurt the company in the long run, what, then, becomes the right thing to do? And once a purchase is already made, what are the legal consequences the company has to face if it chooses to not recognize any transaction made during a glitch? Also, how will the company manage public complaints from their customers on social media sites? When customer complaints go viral, the image of a company can seriously suffer a hit.
Thus, it’s very important for corporate leaders, C-suite managers, and board members to stay abreast with technology. As much as technology helps run a business, even the smallest errors can become big problems. In the case of a highly visible system glitch, the company needs to be transparent with its customers and turn to clear communication for faster resolution.
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