By Lee Peterson
In 2004, more than 80% of airline passengers walked up to the ticket counter and talked to an actual human being before boarding a plane according to the International Air Transportation Association. Although the industry had been experimenting with self-check-in, such as kiosks, and smartphone check-in since the late 1990s, less than one-fifth of passengers used such options only a little over a decade ago. Fast-forward to today, and the diminishment of human contact with customers because of automation within an industry notorious for bad customer service has been staggering.
Only about 20% of passengers are checked-in by a human agent today, according to some industry estimates, with the rest, or about 80% of airline passengers, using some form of self-service check-in. In other words, the ratio of automation to human check-in agents has been completely flipped. This massive shift in process is not without its upsides. It has likely saved the airlines millions in labor costs. (One study estimates it costs the airlines $3.86 to check-in a passenger with a service employee, opposed to $0.16 with the use of self-service kiosks.) It has also led to a significant reduction in personal contact between employees and customers, making this unprecedented experiment in large-scale automation an important case study for retailers, on the verge of ushering in a similar revolution in check-out.
In 2014, there were nearly three and a half million people employed as cashiers in the US, who earned a median annual income of about $19,000, according to the Bureau of Labor Statistics. But job growth is hitting the skids, and will be slower than any other profession through 2024. As retailers scramble in an overstored environment and face unprecedented pressure on margins, they are increasingly looking to automation technologies to not only cut labor costs, but cut wait times for customers. What can retailers learn from the pace of adoption of self-check-in within the airline industry? What lessons can be gleaned from the airlines industry as retailers usher in this new era of check-out inside stores?
Lesson No. 1: Experiment and test new technologies, but recognize integration throughout a company’s entire footprint will not come easy, and will likely take years to reach scale.
It was only in 1995 when the first self-service check-in option was introduced—that’s when Continental Airlines first installed a kiosk at the Newark Liberty International Airport in Newark, New Jersey. But it would take Continental eight years to bring self-check-in to all the airport terminals where the airline had operations, with the last self-check-in kiosk installed on New Year’s Eve, 2003, in Reno, Nevada.
Lesson No. 2: It’s about more than shortening lines and reducing wait times; self-check in has served as a viable strategy for airlines to establish loyalty with airline passengers.
Establishing mobile check-in has saved airlines significant money on labor costs—one study estimated the cost of airport kiosks at between $6,000 and $10,000, but each kiosk could replace two and a half ticket agents. But this shift is about more than cutting costs, it has created new ways for airlines to cement “switching costs” among key customer segments. Just as the frequent-flyer programs long offered by airlines served as a bulwark against margin erosion, mobile checkout can work the same way in the retail environment, according to a recent study on Omnichannel Retailing published in the MIT Sloan Management Review. “Another way for retailers to create switching costs is to establish privileges and perks for loyal consumers, such as express or mobile checkout, as airlines have done with boarding and booking privileges,” the authors wrote.
Lesson No. 3: Automation isn’t incompatible with high customer service rankings.
It’s not a coincidence that the first airline to establish web check-in was Alaska Airlines, way back in 1999. And it’s also not a coincidence that this airline has been ranked highest in customer satisfaction in the traditional carrier segment for eight years in a row, according to J.D. Power and Associates, proving automation and customer satisfaction can go hand in hand.
Lesson No. 4: The adoption of self-check in technologies does not eliminate the need for human-driven interactions with customers inside stores.
Although the adoption of self-check-in has been rapid, it’s not been complete, even if airlines have decreased staffing levels over the last decade. Despite self-check-in now dominating the consumer experience inside airport terminals, the airlines have not been able to completely eliminate human agents—and still actively staff kiosks with roving agents to help customers use self-service kiosks. There will always be consumer segments slow to change, and uncomfortable with a purely automated process. That applies to retail, too. If a retailer goes to total mobile check-out, customers will revolt. Airlines have never—and likely will never—entirely eliminate the choice of agent-controlled check-in inside airport terminals.
Lesson No. 5: Consumers perceive agents as more empathetic, but not more responsive.
Despite the obvious consumer benefits of self-service checkout, in particular the decrease in wait times in line, consumers still value human interaction during check-in or check-out, but don’t consider human-guided service as more responsive, according a 2013 study of 181 consumers. The study sought to better understand human-computer interaction, especially when it came to customer satisfaction with self-service v. human agents. The researchers, based on an exhaustive review of all available research on the issue, theorized that consumers would rank human agents as providing higher service quality, compared to self-service options. And, in fact, consumers did, but the researchers also found a bit of a surprise in the data: Despite ranking human agents higher for such things as reliability, assurance, and empathy, when it came to responsiveness, the researchers found no significant difference between human agents and self-service technologies.
Lesson No. 6: Retailers shouldn’t wait until they’ve reached 100% adoption rates with mobile and self-check-out before experimenting with other automation strategies within the retail environment.
Despite an estimated 20% of airline travelers still uncomfortable with self-check-in, the airline industry has moved on, and continues to experiment with automation in other areas, including self-service baggage kiosks. Referred to as in-town check-in service, some cities, including Abu Dhabi, Seoul and Stockholm, are testing a service that allows passenger to check in luggage outside the airport. In the same way retail services, such as buy online pickup in store, keep shoppers from waiting in line, this new approach is all about saving people time: In this case, flyers don’t have to queue up at the airport. Its likely widespread adoption of mobile check-out will take years to reach scale, but that shouldn’t stop innovative retailers with a receptive customer base to experiment with automation, and innovative delivery of purchased products, in other areas.
There will always be a delta between what’s possible technologically, and all the ways automation can reinvent and usher in the store of the future, but retailers must never lose sight of where the customer actually is, and how long adoption of new technologies can take. As the history of self-check-in within the airline industry proves, change can be swift, but it also must be gradual, retaining the option of traditional, agent-controlled check-in for a significant portion of consumers.