Ryanair is an
interesting brand to place under an evaluation microscope. The fact that it has
established itself as an consistent offender when it comes to negative brand
perception hasn't seemed to of damaged its stability. In fact if you didn't
know the low cost no frills airline recently announced a record £481 million in
profit for 12/13.
The more passionate
customer service connoisseurs among us would argue that Ryanair as an
entity should really not be doing this well. How can a company, which spends so
little time on customer satisfaction, and so much resource on squeezing extra
revenue out of its customer base, continue to enjoy expansion, growth
and substantial market share?
Let's be crystal clear
on Ryanair’s brand perception. If you thought Ryanair
scores positively as a brand with a strong focus on satisfying
customers through a low cost model you would be wrong. One of the most common
words you will find linked with Ryanair brand perception is 'deception'. Take
for example the company website which ranks the worst in terms of ease of use
for all UK travel companies.
Virgin might focus on
the Rockstar holiday, JetBlue may pride itself on its on-board customer comfort
but Ryanair makes absolutely no bones about the fact that first and foremost it
is a low cost, high revenue margin operation. You will notice that whereas
Virgin is noted as taking a more customer-centric approach Ryanair instead
focuses on driving traffic to the website, currently in the tune of 1.2 million
customers a day. Makes sense when you consider a complete lack of consideration
when it comes to customer service strategy or any investment in understanding
how the rising influence of social media will change the way consumers behave.
You might think that in this day and age a CEO would take time to listen to its
customers. It's clear from the below blog that Ryanair have no time to liaise
with 'idiot bloggers', a strategy which some have described as 'analogue
marketing in a digital world'.
Surely this defies all
logic? A brand can't place so little emphasis on the customer and continue to
enjoy strong profit and growth. How can this model be sustainable? Surely
sooner or later Ryanair will suffer for a complete lack or respect in
maintaining a strong and loveable brand?
You would certainly hope
so however that depends on a few factors changing in the market it currently
operates in. The Brand Avenger would argue that in order for Ryanair to begin
to feel the pain in terms of sales then one, or a combination of all
three of the following things would have to happen.
1) Price would have to
decrease in importance when it came to choosing an airline to travel.
It is far too easy
nowadays for a consumer to use a search engine such as Skyscanner and search
for the cheapest possible option when it comes to flying. There is no denying
the fact that holidays are expensive and as many see the flight as a
means to an end it will normally be travel where customers look to tighten the purse
strings. Would many be willing to pay extra dollar dollar bills for a promise
of better service or increased comfort? Has any brand connected so well with
airline consumers that it justifies an increase in spend? The answer is no.
When it boils down to it Ryanair will always continue to win if they can
successfully maintain a lower price than the nearest competitor. Brand
reputation maybe in tatters but then again the consumer isn't really buying the
brand in this instance.
2) There would need to
be an increased number of competitors serving the same routes as Ryanair to
give the customer more choice.
More competitors, more
options and more choice for the consumer. It is a simple case of supply and
demand! The Brand Avenger would assure you the service could be much worse if
the market continues to lose suppliers.
Let's take the above
example into consideration. Ryanair purchase AerLingus, swallow up all brand
assets and the consumer has to fly with the same company to reach their
destination. This of course leads to complete control for the company and
complete loss of power for the consumer.
If Ryanair are ever
going to pay for its non-existent investment in brand strategy it will only be
when customers have a choice. They have a choice of supermarket, of restaurant
and of clothes store but when it comes to airlines how many companies can truly
offer the routes and price Ryanair currently do?
3) A competitor would
have to truly embrace a customer centric strategy to retain the loyalty of
customers.
We should be careful
when using the term customer-centric in any sense when analysing the aviation
industry. Whereas it is true Virgin invest a considerable amount of time and
resource on marketing strategy focusing on service and comfort it does little
to truly win the loyalty of its most frequent flyers.
Despite significant lip service and hefty marketing budgets focused
on service Virgin have yet to understand the full value of the customers that
spend the most on their service. If they did then Virgin would be tailoring the
lowest prices fares and significant promotions with the
largest discounts to the most frequent of flyers rather than trying
to acquire new flyers. The largest retailer in the UK knows that three quarters
of sales revenue is generated from customers who stay loyal to their brand. In
a market heavy on competition and with the rising power of word of mouth
marketing there is no reason why the same concept couldn't work for an airline
as long as they were willing to fully embrace a customer-centric ethos.
Let's finish with a
quick review of the above article. The Economist argues that 1 in 5 of
Ryanair's passengers are travelling for business, which equates to 17.5 million
customers a year. This is a segment of customers who is clearly a significant
revenue generator but also one of the segments that Ryanair could be in
greatest risk of losing if market conditions change. At the start of this
article The Brand Avenger wondered why Ryanair continued to do so well despite
such poor brand perception and I think the analysis of the business
consumer sums up the reasons quite nicely. Until someone, somewhere can come in
with a matching price with a greater emphasis on customer service with minimal
hassle much like the rest of Ryanair's customer base the business trade will
continue to flow. However, Ryanair need to realise that this model cannot be sustainable
in the long term. The only way it would be is if they were to become a complete
monopoly and competition authority bodies won't allow them to do so. Sooner or
later some brand, somewhere will do what Ryanair does cheaper and better and
when that happens, much like the 1 in 5 business crowd all of Ryanair's
customers will leave the brand without an ounce of regret or any feeling of
commitment. After all, it’s nothing personal, it’s just business.
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