The Name-Your-Problem E-tailer

Priceline.com has name recognition that only eBay and Amazon can rival. But while the other two companies have mixed in positive reports from time-to-time, even as they struggle against the downward flow of stock on the Nasdaq, Priceline hasn’t been able to get our attention with much of anything but bad news.

Executives like chief financial officer Heidi Miller leave. Licensees such as WebHouse close. Planned expansions are tabled. Another batch of employees is shown to the door before the last batch has left the parking lot.

Priceline may not impress investors or analysts anymore, but that’s a result of its principal problem, not a cause. What Priceline must do is get busy impressing its customers — and quick.

Even if, say, Priceline executives were to actually reverse the trend and start to stay with the company, it wouldn’t matter. If customers don’t start getting more excited about the name-your-price idea that captured the online imagination a year or so ago, it’s all over.

Who Matters?

When Priceline warned a month or so ago that its fourth quarter revenue would be down, red flags went up all over the place. Travel service revenue down? During the busiest travel time of the year?

The logical conclusion, it seems, is that customers are not using Priceline again and again. Rest assured, that has put Priceline on very thin ice with analysts. Most have nothing higher than a “hold” rating on the stock. None was surprised by the latest layoffs.

But it’s worth noting that one analyst quoted by multimedia news network ON24 mentioned the word “customer” five times in less than half a minute. Priceline, the analyst said, needs to improve customer image to spur growth, to create repeat customers and to boost margins.

Did you get that? It’s all about the customers. Amazingly, Priceline is still struggling with this question, two years after becoming one of the early players — indeed, one of the early leaders — in e-commerce.

A Glimmer of Hope

The good news is that finally, Priceline might be starting to clue in.

Buried beneath the announcement of the job cuts, and the wise decision to give up expanding into cell phone service and other areas, was the news that customer service is going to be a focus of the reorganization.

The company does not say what form this initiative will take. The only specific change that Priceline mentions is an upgraded Web site. That’s a start.

But anyone who does even a modicum of shopping online knows that customer service needs go way beyond the Web site alone. When a crisis strikes, you want to be able to count on getting a live person on the phone. And if you think crises arise when you are buying a book online, consider the logistical nightmares bound to occur when you’re dealing with air travel.

A Long Way To Go

Imagine: You’re stranded in an airport a thousand miles from home. Your luggage is 33,000 feet above the ground, on a plane headed who knows where, and you missed your non-transferable connection for some reason. Customer service in this situation needs to be not just adequate, not just good, but incredible.

I know from personal experience that Priceline users understand going in that there will be limitations that come with being able to name-your-price. But many of those same people are still surprised at just how limiting the process is.

After all, times are still pretty good (maybe a downturn helps Priceline more than other e-commerce companies), so who wants to deal with waiting to get your price matched and hemming yourself into specific travel times, airlines and the like?

Ultimately, customers just might be tired of jumping through hoops to save some money.

Simplify, Simplify

If Priceline wants to survive, it needs to move forward with one simple goal in mind. Starting the very second customers engage the customer service arm of the company, they should feel like the Priceline army is being mobilized on their behalf.

It’s late in the game for Priceline to suddenly start fighting the customer service war. But hopefully not too late.

What do you think? Let’s talk about it.