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United Builds Its Credibility Account

NEW YORK ( TheStreet) - When I was in journalism school, 35 years ago, we talked a lot about credibility.

Credibility is something you build brick by brick, day by day. But it can all come tumbling down with a single mistake.

I've seen that throughout my career. An attention deficit can be a huge burden to a journalist, because although I may have written more interesting copy than my co-workers, I also made mistakes. I paid for them with my jobs, and lost my credibility.

Which I then proceeded to build back, brick by brick and day by day.

In the age of social media, we're all journalists. And we all have credibility accounts that can be quickly depleted, based not just on our actions but on how we react to things. When we screw up, it's better to take the hit than to deny the stupid things we do.
[Read: <a target="blank" data-add-tracking="true" href="http://www.thestreet.com/story/12038050/1/5-stocks-ready-for-breakouts.html"><em>5 Stocks Ready for Breakouts</em></a>]

That's an important lesson for California schoolchildren, but also for the school district claiming that, in monitoring their social media use, it's "protecting them." It's an important lesson for countries like Turkey and China, too. Credibility doesn't mean control, it means honesty and respect for opponents.

This is an important lesson for any business, especially one marketing consultants like to describe as "customer-facing." An airline, for instance.

United Continental Holdings' (UAL - Get Report) United Airlines faced a test of credibility last week. For 15 minutes, it accidentally gave away some tickets booked at its Web site. Purchasers paid only the 9/11 security fee, totaling $5 or $10.

The airline decided, after some consideration, to honor the tickets.

The result was stories such as this one, on a Patch site near the company's Chicago headquarters. It was about a family getting a Disneyland vacation for just $60.

The goodwill from stories like that, United concluded, was worth the financial hit.

The Bureau of Transportation Statistics estimates there are 643 million passengers booked each year on U.S. airlines. That's about 1.76 million per day. Given United's 15.8% market share, we can figure it got about 278,000 of them.
[Read: <a target="blank" data-add-tracking="true" href="http://www.thestreet.com/story/12037863/1/larry-summers-social-medias-whipping-boy.html"><em>Larry Summers: Social Media's Whipping Boy</em></a>]

But if the glitch lasted only 15 minutes, one-ninety sixth of a day, perhaps only 3,000 tickets were given away. At an average cost of $300, the loss may have come to $900,000. When you have sales of more than $37 billion in a year you can afford that, far more than you can afford rescinding the tickets in full view of everyone.
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