The value of goodwill hunting

The value of goodwill hunting
PHOTO: The value of goodwill hunting

The recent report that DBS has overtaken Singapore Airlines (SIA) as the country's most valuable brand will be seen as a big feather in the banking group's cap.

To knock one of Singapore's best-known - and most glamorous - global names off its perch is no mean feat.

Still, what caught my attention was not DBS' success in building up its brand name and earning customers' trust, but a stark warning made by Brand Finance about SIA.

The London-based consultancy said: "Singapore Airlines runs the risk of losing its No. 2 position next year unless some significant efforts are undertaken to grow the value of the brand."

This is ironic: SIA's fortunes seem to be slipping, yet for decades it was the gold standard for pre- mium service against which other local firms were measured.

Five years ago, I wrote in this column that banks should make it a point to learn from SIA on how they can offer a more personal touch to attract customers.

The basis of my suggestion was that bank relationship managers were often badly trained and sometimes offered the wrong investment advice as their objective was to meet sales targets and earn commissions.

To illustrate the great service provided by SIA, I cited the example of a friend who was allowed to switch his return flight from Tokyo to Nagoya by an airline representative in Japan even though his travel agent here had said it was impossible because he was on a budget ticket.

I believe it is such simple gestures, rather than the recent headline-grabbing news about its US$17 billion ($21.4 billion) plane order, that win SIA kudos among passengers.

The strong SIA brand is the reason I choose the carrier, or its Silkair subsidiary when SIA is not available, whenever I take to the skies.

But criticism has been mounting recently over SIA's slipping service standards, including a flurry of letters to this newspaper from readers on what needs to be done.

As an infrequent traveller, I have always shrugged off such complaints as isolated incidents. That is, until I encountered similar problems myself during a recent family outing to Xiamen via Silkair.

I had wanted to take my parents, both in their 80s, to Xiamen to visit their ancestral village.

As they experience difficulties in their movements, I had hoped that they could be seated near the front of the plane.

I called the SIA hotline several times and even e-mailed my request. But to my dismay, they still ended up being placed near the rear of the aircraft, while the rest of my family were scattered elsewhere on the plane.

When I boarded the plane, I found, to my surprise, that the front-row seats normally reserved for disabled passengers were occupied by a young woman and a middle-aged man.

The saving grace was that efforts were made by the cabin crew to try to redress the problem, while the in-flight service was exemplary, recalling the greatness other airlines once aspired to.

The unfortunate episode makes me wonder about the quality of the SIA hotline staff in handling customer requests.

SIA is a world-famous Singapore icon with an enviable reputation for reliability and service.

It is just too painful to watch the goodwill it has painstakingly built up over the decades tarnished by some inept customer service staff.

In my column five years ago, I had noted that in accounting terms, the goodwill which a company builds up translates into a dollar value that measures a company's intangible assets, such as a strong brand name and good customer relations.

Six years ago, SIA was worth over $20 billion. Today, that market value has dropped to $12.6 billion.

No doubt, the drop in market value is a reflection of the poorer earnings reported by SIA. Pro- fit for its financial year ended March 2007 was an eye-popping $2.13 billion. But in its latest financial year, SIA reported a full-year profit of merely $379 million.

Still, I cannot help but wonder if some of that loss in market value had come from self-inflicted wounds that caused goodwill to be destroyed.

When I went to see Mr Peter Seah after he was appointed DBS chairman in 2010, one issue that cropped up was POSB customers' unhappiness over the perceived drop in service standards after the savings bank's takeover by DBS.

He replied that the "key issue is to fine-tune the culture to give Singaporeans the POSB they want, and not the POSB we want them to have".

I am glad that he is making good on his promise, with DBS becoming the most valuable brand in Singapore as the bank's services improved by leaps and bounds.

As a measure of the considerable goodwill which DBS has garnered, its market value has shot up from $29.5 billion to $42 billion in the past three years.

engyeow@sph.com.sg


Get a copy of The Straits Times or go to straitstimes.com for more stories.

This website is best viewed using the latest versions of web browsers.