Good claims management boosts customer loyalty
Lufthansa Cargo scores amazing success after re-structuring the claims team
Something goes wrong. It can happen to anyone, anytime. With airfreight as well. Machine components are damaged on loading, a parcel gets lost, fresh fruit and vegetables are rotting away after arriving late. Forwarders file claims for damages. A case for Claims Management at Lufthansa Cargo.
The team of 14 has been completely reorganised: The claims process has been centralised, the staff have undergone intensive training, the Internet and email are utilised for communications. Written complaints are now few and far between. To the benefit of customers. Claims are now processed in an average of four days instead of up to 100, as in the past. A welcome and intentional side-effect of the new processes is that they improve customer satisfaction: Many, even when their claims are turned down or not fully met, give Claims Management exceptionally good marks. Asparagus, shipped with Fresh/td from Peru arrived anything but fresh in Frankfurt. Somewhere along the supply chain, the delicacy had been exposed to high temperatures. The shipper claimed for 4,023 euros in compensation. Intensive enquiries failed to reveal where the asparagus had suffered in the sun.
Moreover, the forwarder had not entered any details on the crates and AWB about the required temperature for the shipment. So Lufthansa Cargo paid only compensation in part but supplied a detailed explanation. The customer was nevertheless convinced by the transparency and reasoning behind the team’s handling of his damage claims. ”Congratulations. Very Good Team“, was his satisfied response.
“Wording a reply when rejecting compensation without offending the customer is not always easy,“ observes Silke Böhm from the Claims team. Which is why we thoroughly investigate the shipment’s transit along the supply chain to spot or rule out any mistakes. “By giving a full explanation in understandable terms, we have a better chance of customers appreciating and accepting our decisions, she emphasises. In that way, Claims Management becomes an instrument of customer retention.
Customers above all appreciate fast and professional processing as well as the possibility of monitoring and tracking the process on the Internet. Times change, it was not always that way: Compensation claims could only be submitted by post. They were handled by 17 Teams spread across the globe. “A team might consist of one person, or two, the work not infrequently was done on the side,“ says Heide Hoffmann, Head of Customer Feedback Management, looking back. If the one-man team was on leave, the claims were simply shelved, getting other teams to stand in was often not possible.” They had enough on their plate, dealing with their own cases. After all, the process is highly complicated.
The rules governing compensation are spelt out in the Warsaw Convention, the Hague Protocol and the Montreal Convention. The latter was signed by 100 countries in 1999, including the major industrial countries in Asia, America and Europe. The core provision: The maximum compensation amounts to about 21 euros per kilo. That’s simple enough. All else – all the many regulations, explanations, exceptions and restrictions are highly complicated.
The bigger agents, like Kühne+Nagel, Danzas, Panalpina or Schenker, often have claims specialists in their ranks, whereas the other side lacked specialist know-how. The advantage for forwarders was that they were sometimes reimbursed for more than the regulations would have allowed them On the other hand, the disadvantage was that some cases were not correctly processed, they were not given a suitable explanation or claims processing took an inordinately long time.
The issue was treated at Executive Board level in 2007. As a first step, Claims Management was centralised at the Frankfurt hub. Training became obligatory and staff had to have a sure command of the regulations. Even the drafting of a conclusive reply to submitted claims became part of the training programme.
Finally, the quantum leap came with the launch of the central Internet platform -eServices at the end of 2008 and the chance to go electronic with eClaims. Customers can now submit claims for compensation to Lufthansa Cargo with a mouse click, and their claims land immediately at the right address – at Claims Management. Heide Hoffmann lists the gains of online processing: “Round-the-clock data capture, immediate email confirmation of incoming claims, easy data input, listing of required information, electronic processing of accompanying documents, immediate update on processing progress with online tracking".
Lufthansa Cargo’s partners appreciate the switch: Around 80 per cent of all transactions are now handled electronically and per email. The agents are satisfied with the service: In the half-yearly customer satisfaction survey, respondents in the first-half 2011 rated their satisfaction with Claims Management at 71 on a scale of 0 to 100 – higher than at any other cargo carrier competitor. “It’s good to know that we’re so far ahead of the competition, says a delighted Heide Hoffmann. Even more astonishing to the Head of Customer Feedback Management “is the advance we’ve made in the survey in the past few years.” In 2005, we rated a meagre 54 points but then 60 in 2009. The 71 points this year is a rating Heide Hoffmann had never thought possible: “We thought 70 was the absolute maximum.” Even customers we’d earlier offended came up with words of praise.
Customers profit from Claims Management in the new guise. But so does Lufthansa Cargo. Per-claim costs have been reduced because better-trained staff can process more cases than part-timers.
But there’s one myth that Heide Hoffmann dismisses out of hand: “The claims quota is never as high as some assume.” The probability of a shipment leading to a claim for damages is about as likely as a straight flush at poker. Ask experts at the game: They know how minimal the probability is of being dealt a hand that contains five cards in sequence, all of the same suit.