Service Guarantees: The MakeMyTrip Journey

This is part 2 of my series of posts on Service Guarantees.

Part 1 is The Power of Service Guarantees, and talks about the concept.

This part talks about how our experience with guarantees at MakeMyTrip (MMT)

At MakeMyTrip, we were faced with a double whammy with regards to trust. We serve the Indian market, which has learnt to distrust pretty much all brands. (With rare exception like the TATAs).

On top of that, we were trying to shift the hotels booking business online. Given the fragmented nature of hotels business in India, lack of standardization, and close-to-zero coverage of hotel star ratings, consumers were naturally wary about their hotel experience. Therefore they wanted to book a hotel only with an agent they could trust.

Which meant we needed to up the stakes in the trust game. MakeMyTrip was already the dominant online travel agency, with a huge share of the domestic flights bookings. But trust was (relatively) easier in flights – there was little that could go wrong. Hotels was a whole different ballgame.

Hence we thought about using service guarantees as one of the tools to build consumer trust. But also to hold ourselves to higher standards and achieve operational excellence. And get to significantly easier decision making on aspects related to experience and operational excellence. The choices for all teams would become much simpler – should we fix that bug that results in cancellation policy not being shown correctly to users? Well, the cost of not doing that is Rs. 5 lakh a month. You now had a way to compare ROI across projects on the same metric!

We started tentatively. The first guarantee was in the flights business.

MMT Guarantee 1: Guaranteed tickets

Once you pay, your ticket is guaranteed.

(We won’t ask you for a rupee more, and we will get you the ticket.)

What’s the big deal about this? MMT showed a price, customer paid it, then MMT is bound to deliver the goods, no?

Well, not quite. MMT is only an agent – the flight is being sold by the airline. And airline ticket prices are dynamic, changing on the fly.

So, sometimes the ticket price would change between the time we showed the customer the price and the time we received payment. Sometimes we had issues with the payment gateways such that we thought payment had failed when it had actually succeeded. At other times, there was a tech issue in booking the ticket with the airline. The ticket would then have to created manually, which, of course, meant delays and price increases.

Sometimes we were actually just lazy and ended up showed older prices to consumers.

So, making this guarantee meant that MMT would have to bear the price difference if the price rose in the interim. There was a direct monetary loss due to the guarantee.

This one step ensured that all improvements to this stage of the consumer journey were linked to the cost of this guarantee. If the cost was high enough, we would have to go fix all these problems. If the cost was low, it meant that very few customers were impacted, and we could live with the problem, relying on the guarantee to fix the experience for these users.

This approach worked well – some of the bigger underlying issues got fixed and the cost came down to negligible levels.

While this fixed an experience issue for customers, it wasn’t much of a talking point. We couldn’t expect customers to care about these challenges – to them, this was par for the course.

We had to do more.

MMT Guarantee 2: Instant Refunds 

The next area we picked was slightly more difficult, but addressing a bigger pain point for consumers. This was related to refunds.

Given that the transaction sizes in travel are high (averaging about Rs 8000 per booking), customer anxiety about refunds is very high. Till they get money into their accounts, they are worried. What if something goes wrong and I don’t get my money?

For quite a few customers, even the liquidity is a concern. Sometimes they need the money right away, to make a different booking. Processing refunds quickly, therefore, is important.

But there are lots of reasons for delays in refunds – both internal to MMT and external (delays at travel partners like airlines, and delays at banks and payment gateways.).

Making refunds faster thus became a priority for the support product and operations teams. While most refunds were already getting processed within 24 hours, there were quite a few that would take many days: the long tail was fat and rather long. At first, we focused on improving the worst-case: get rid of the tail, and bring everything to within 24 hours. Then we started working on reducing 24 hours progressively to 12, then 6, and so on.

At some point, we asked ourselves –Why can we not process refunds instantly, and make that a promise to consumers? Would that not be revolutionary for consumers? This is something that no one had ever done before. And given the high amounts involved, the best way to reduce the anxiety was to just kill it completely.

This led to our second service guarantee – Instant Refunds.

This became a significant initiative: product, tech, support, supply teams all had to come together and solve multiple problems to achieve this. There was just something about processing refunds instantly that appealed to everyone, and the prospect of the guarantee brought in an urgency. 

We had to work with our airline partners on new tech integrations. We had to find multiple new hacks for a number of use cases where airlines were unable to develop the tech on their side. We also pleaded with, cajoled and pushed some of our banking partners for automating the refund process for net-banking payments.

But mostly, we had to just change our way of thinking. Turned out that a lot of the constraints were only in our minds. We had just never asked ourselves this question before! A big chunk of the refunds were completely in our control- we just had to simplify our processes and technology.

(A short detour: Instant refunds solved only one part of the problem. MakeMyTrip was now processing refunds instantly. But the money didn’t reach the customer account instantly: between the payment gateways and the banks, it could still take from a few hours to a few days more. At the time I left, we had started exploring Truly Instant Refunds – getting your money to you instantly, using UPI. UPI itself was still relatively new, it was not yet clear if they had an API for this use case, and this would have meant additional cost to MMT, so this was still in the exploratory stage.)

We were now processing most of the refunds instantly. But we didn’t have the guarantee ready yet: what was the compensation if the refund was not processed instantly?

The answer to this question led us to our third service guarantee – this would require a huge transformation, and could be a significant talking point for the brand.

I talk about it in Part 3 of this series: MMT Promise: A customer support Promise