Ryanair-a branded customer experience?

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We are currently researching leading brands for our forthcoming book ‘Bold brands-how to be brave in business and win. There are some obvious examples that we shall include but one brand that is causing us to pause for thought is Ryanair, the low cost airline.

Our research and experience of working with many leading brands suggests that those organizations that have a crystal clear view of their strategy and communicate their value proposition to target customers will outperform their sector. We also believe that the more focused organizations are in creating a customer experience that delivers their brand promise the more likely it is that they will win share of mind and ultimately, share of market.

Unbundling air travel

There is no doubt about the clarity and single-minded focus of Ryanair; their stated aim is to disaggregate air travel and reduce costs to the point that they are able to sell seats cheaper than any other competitor. By unbundling air travel and forcing customers to pay for each service they use; be that check-in at the airport, hold baggage – and even charging €1 for using the lavatories if plans floated in public to test reaction recently by CEO Michael O’Leary are put into practice – they have turned the airline business model on its head. That is certainly bold in my book.

Ryanair can push this strategy right to the extreme of offering some seats free of charge knowing that they will make good margin on the add-on services they sell and from those passengers who book late and are forced to pay a large premium.



So is their strategy working? In the six months to September 2009 Ryanair reported that profits soared by 80% to £347m after tax despite a 2% fall in revenues over the same period. However, a large part of this increase was due to a 42% fall in fuel costs and the prospects for the next six months are not quite so bullish.

The World’s Favourite Airline?

Never the less, Ryanair is growing at the expense of its competitors.  The airline reported a 17% increase in passenger numbers for September 2009. The airline said it carried 6.12 million passengers in that month, up from 5.12 million the same time last year. Ryanair now claims to be the ‘World’s favourite airline’, a tag line it cheekily stole from British Airways on the basis that BA reported its passenger numbers falling 1.7% in the same period. BA carried only 2.92 million passengers in September compared with 2.97 million in September 2008. BA also posted a £401 million ($663 million) pre-tax loss for the year ending March 2009 and is now struggling with the possibility of strikes over the holiday period as its workforce rebels against cost cutting measures.

If these strikes go ahead they will lead to even greater losses as this is a peak earning season for airlines. No wonder then that BA fears that revenues could fall by a staggering £1 billion this year.

Shares in Ryanair gained 2.9 percent in the week ending December 11th buoyed by an upgrade rating by Cazenove and a prediction that the airline will “outperform” the market. It would seem that the juggernaut will keep on crushing all opposition.

But is Ryanair any good?

So much for financial results but what about operational performance? It is all very well being cheap but is Ryanair any good? Well it depends what you mean by ‘good’ of course. Will you have an enjoyable experience? Probably not. Will you be made to feel valued and well served? Highly unlikely. Will you arrive with your bags?   Well according to Ryanair over 90 percent of its fights were on-time and less than one bag (0.67) per 1,000 passengers was misplaced between November and March while a report by the Association of European Airlines confirmed that 17 percent of British Airways’ flights were delayed and BA lost sixteen bags per 1,000 passengers, more than 20 times the number of bags lost by Ryanair.  (I should point out that Ryanair does not report its performance to AEA and therefore whilst BA’s performance is verified, Ryanair’s is not)

What do customers think?

OK, so they are pretty successful financially and growing market share. Their operational performance would not seem to be a limiting factor but what do customers think of them? The online travel guide TripAdvisor recently polled 4000 of its members and the Irish discount carrier was singled out as the one that members liked the least. Probably most of us have experienced or know someone who has experienced, the cattle truck experience that is typical of Ryanair.  But does that matter?

The ‘Pain-Pleasure’ Gap

My colleague Sampson Lee of G-CEM talks about the ‘Pain-Pleasure Gap’ and argues that the greater the contrast between the pleasure that a customer gets from using a product and the ‘pain’ required to do so, the more memorable the experience.  So the long wait and anticipation at Disneyland merely serves to heighten the thrill of the ride when you eventually get it. The Ryanair travel experience reinforces the trade-off you make for the very low fares and therefore dramatises the value that it provides.

At Smith+co we define a branded customer experience as one that is Consistent, Intentional, Differentiated and Valuable. Let’s take each in turn and apply these criteria to Ryanair to see if in fact, the airline does provide a branded customer experience.

So, is it a branded customer experience?

Consistent. Ryanair certainly demonstrates consistency. This is not an organization that wobbles between one strategy and another.

Intentional. Anyone that proposes to charge for using the lavatory and is willing to face the ensuing public outcry has though very carefully about the intended action and its consequences. The rudeness of Ryanair staff is only exceeded by the rudeness of Michael O’Leary himself.  We always suggest to our clients that leaders must epitomize the culture and DNA of the brand in their own behaviour. Michael O’Leary understands this and demonstrates his disdain for customers just as much as Richard Branson demonstrates his own passion for innovation.

Differentiated. There is only one Ryanair. The airline has set its stall out on the basis of a totally frills-free experience at the very lowest cost. It has opened up the market for many people who could not have afforded to have flown but, unlike other low cost airlines, it doesn’t even pretend to care about service.



Valuable. Value is defined as what you get for what you pay. With Ryanair you don’t get much but you don’t pay much either and to that extent their proposition is very valuable for those customers for whom low price is everything. Let’s face it, you can put up with quite a lot for a short flight if you can get there for less than the price of a McDonald’s.

So according to our definition does Ryanair offers a Branded Customer Experience then? Well no, not quite.

In order for a customer experience to be branded the organization must have intended to differentiate primarily on the basis of the customer experience and designed this to deliver value in and of itself. Whilst the Ryanair experience is distinctive, it has not been designed to differentiate the airline in a positive way from other airlines. It is more a by-product of Ryanair’s chosen strategy of price leadership.

Is this strategy sustainable? Here comes the crunch. I believe that in order for a brand to continue to grow it has to have a loyal following of customers.  There has to be a positive emotional connection between the customer and the brand in order for there to be an enduring relationship. We are much more likely to remain loyal to the brands that we love.

“Nobody could accuse Ryanair of being lovable

Nobody could accuse Ryanair of being lovable and Michael O’Leary might argue that that is not possible or desirable given his business model but I would point to John Lewis and Southwest Airlines, two brands that compete on price but who also have a following of affectionate fans.

Ryanair will eventually run out of new short-haul routes and, in order to continue to grow at the same pace, it will need to consider longer flights and perhaps, even business class cabins. Whilst Ryanair’s business model might still work for longer flights will passengers be willing to accept the same level of experience?

As we emerge from this recession and the doom and gloom associated with the past two years, businesses and consumers will start to feel less strapped for cash. In this post-recessionary environment the appeal of the very low fares will start to be overshadowed by the pain that the Ryanair experience represents.  The low morale and unpredictability of British Airways will make them unattractive because, let’s face it, who wants to pay a lot more for a mediocre experience?

My prediction for 2010? Customers will slowly start drifting back to those airlines that make them feel good again and who can put the fun back in flying. Airlines like Virgin Atlantic for example.

Of course Ryanair’s response may be to try to upgrade its service on the basis that it cannot drop its fares any lower, but the problem is that when you have spent so long forging a strategy and culture that places cost reduction way above customer service that avenue is essentially denied to you. As the old saying has it, ‘You can’t make a silk purse from a sow’s ear.  Cazenove may be saying ‘Buy Ryanair’. My advice, for what it’s worth, is ‘Sell Ryanair’.

Write a comment and tell me what you think. You may have a totally different view and I should love to hear it.



Shaun Smith speaks and consults internationally on the subject of the customer experience. His first book ‘Uncommon Practice- people who deliver a great brand experience’ investigates how leading brands differentiate, his second book ‘Managing the Customer Experience- turning customers into advocates’ is considered to be a landmark text book on how to create branded customer experiences. His latest book ‘See, Feel, Think, Do – the power of instinct in business’ investigates the role of instinct and innovation in customer experience. For more information check his web site or you can follow Shaun on Twitter.

http://www.smithcoconsultancy.com/ , http://twitter.com/ShaunSmith_CEM

©Shaun Smith 2009

12 COMMENTS

  1. Shaun

    The point of no return for many businessmen seems to be reached when they start to believe their own marketing and cease to see the world of the customer through clear, untinted spectacles.

    Michael O’Leary obviously has no problem understanding that there is a large segment of customers who will fly for the lowest fares available (indeed, who may not be able to fly for any fares other than the lowest) and will put up with a great deal of inconvenience as the quid pro quo. O’Leary has no self-induced illusions about needing to ‘brand’ Ryanair’s customer experience; the experience of flying with Ryanair speaks volumes about what it stands for: Ryanair, The Lowest Fares Airline.

    I would argue that Ryanair with its emphasis on highly profitable low-cost operations has established a ‘real experiential brand’ where what you see in its marketing communications, check-in desks and onboard experience is exactly what you get. This contrasts with the artificially branded experiences offered by many of the other airlines, including British Airways, KLM, Air France, Alitalia, Iberia, etc, where the carefully cultivated image that you see is very often a long way from what you get. This gap between the promised experience and the real experience can often be huge, as recent Bain & Co research on the Delivery Gap found out.

    I take almost a hundred flights a year, mostly short-haul. I have switched to Ryanair wherever it is feasible as its lowest cost fares are so much lower than its nearest low-cost rival. On a recent trip taken at short-notice, Ryanair quoted €50 return, versus so-called low-cost operator Germanwings’ quote of €350 and Lufthansa’s of €600! The quid pro quo is the inconvenience, as my nearest Ryanair airport (Weeze) is 90 minutes away by car, (versus the 15 minutes to Cologne-Bonn or 60 minutes to DÜsseldorf) and the very basic service quality on-board. On the plus-side, practically every one of my Ryanair flights has landed on-time or even early. More than you can say for any other traditional European airline. For me, the positives greatly outweight the negatives.

    Michael O’Leary obviously has no probem understanding what many customers want, in delivering it at a profit and in creating a real experience to match. If only his clarity of vision extended to the etherial world of CEx consulting.

    Graham Hill
    Customer-centric Innovator
    Follow me on Twitter

    Interested in Customer Driven Innovation? Join the Customer Driven Innovation groups on LinkedIn or Facebook to learn more.

  2. Shaun, Hi. I suspect that Ryan Air have their strategy spot on. An airline needs critical mass, and the traditional carriers were there for the taking. Grow fast by being cheap. Customers will come anyway, they wont be particularly loyal but in this phase, thats not a worry. I now see that Ryan Air have decided to put the brakes on further growth : http://business.timesonline.co.uk/tol/business/industry_sectors/transport/article6962302.ece
    I suspect that while investors will reap the dividend, we will also see O’Leary unveiling a strategy in Q1 2010 that gently puts in place mechanisms to build customer loyalty. They already have most of the ‘functional’ aspects of a great customer experience – the safety, reliability, baggage etc. I suspect we will see a few more of the emotional triggers too.
    As you say, the biggest challenge may be the culture that is locked into the experience they deliver so far.
    But overall I am in the Cazenove ‘Buy’ camp.

  3. Shaun,

    Nicely written! It’s a controversial article which could stir up discussions and perspectives.

    My comment will focus on the “Pleasure-Pain Gap” which you’d mentioned.

    “As human beings, we all want to maximize pleasure and avoid pain. Pain makes customers feel uncomfortable and drives them away. We can’t afford for that to happen, especially in a recession so we will offer less (no) pain.” However, pain is a necessary ‘angel’ – the same pleasure feels more pleasurable when contrasted with pain and allowing pain frees up resources and releases constraints. In fact, pain may trigger customers to push the BUY button on the spot.

    It just doesn’t sound logical. Think about the queuing up at Starbucks, DIY service at IKEA and flights without meals on Southwest; these are all examples of pain within an experience. Why do customers accept this pain? Because their branding lets customers know that they are not coming to Starbucks for speed and efficiency, they are not coming to IKEA for excellent service and they are not coming to Southwest for meals. Allowing some pain in the process not only helps to set up a contrast with the pleasure peaks within an experience, but also to frees up resources and releases constraints. By maximizing the gaps between pleasure peaks and pain peaks (Pleasure-Pain Gap or PPG), you can reach the optimal point in resource allocation and generate the paramount pleasure peak.

    This phenomenon is further substantiated in other recently completed consulting projects. Potential automotive buyers with the largest Pleasure-Pain Gap (PPG) during a showroom experience showed a significant increase in their propensity-to-buy. On the other hand, those who experienced a moderate PPG, with a higher level of experience ratings and satisfaction on most of the sub-processes, did not show a higher propensity-to-buy. In another case, we were able to correlate PPG with actual buying behavior. In 1,032 face-to-face surveys conducted with customers immediately following their shopping experience in a cosmetics flagship store, customers who reported a significant PPG bought more items and in higher volumes, than those who had only a moderate PPG. Contrast helps when optimizing resources allocated and drives customers to push the BUY button.

    However, be cautioned: Maximize Pleasure-Pain Gap (PPG) not for the sake of creating pains but to trigger intra-experience contrast and release resource constraints.

    To deliver a differentiated, branded experience, you have to select and focus. You must factor in the brand element while you listen to the voice of the customer. Attributes that are important to your customers may not be important to the brand. (In Ryanair case, Service) That means you should focus your resources on those attributes that are important both to the customers and to the brand (in Ryanair case, The Lowest Fares), as long as other attributes don’t fall below what you deem to be an acceptable level.

    Customer-centric could be wrong if you don’t take a paradigm shift from measuring efficiency to effectiveness of experience; if you don’t build in brand values into the experience; and if you don’t have guts to select the critical few to focus on and limit “pain” to an acceptable level.

    Sampson Lee
    Follow Sampson on Twitter

  4. Hi Sampson

    You are right. Shaun’s post does raise some interesting questions and the potential for informed discussion.

    There is little research that suggests customers benefit from experiencing pain in order to heighten pleasure afterwards. For example, Verhoef finds that the negative peak did not influence the assessment of telephone customer service, whereas the positive peak did. And even though the perception of pain and pleasure share much of the same neural circuitry, antinociceptive effects, whereby we endure pain to seek a more pleasureable reward are usually only involved in more important decisions than those experienced in the typical CEx. Even the flying Ryanair CEx! As Kahneman suggests in a recent paper on subjective well-being, this is a complex area that is easily misapplied.

    The idea that you should create a ‘pain-pleasure gap’ whilst attractive from a pop-psychology perspective, is unexplained, in that you have not put forward a reasonable explanation why this should be so, unsubstantiated, in that you have not put forward any reliable data to support your explanation (consulting projects don’t generally produce reliable data), and is downright dangerous, in that building in a pain-pleasure gap into the CEX could result in customer anger with all the financial and legal consequences that could create. For example, UK Treating Customer Fairly legislation would take a dim-view of consciously designing in CEx failure in order to recover the CEx later. Building in a Pain-Pleasure Gap into its CEx is manipulative and could land a bank in front of the Financial Service Authority with a lot of explaining to do. I wouldn’t like to be in the shoes of the CEx consultant in this difficult situation!

    It is important when transferring the results of complex research from one field (evolutionary psychology & neurobiology) to an unrelated field (CEx), not to over-simplify and misapply the original research. And because of the rapidly evolving nature of scientific research, it is also important to re-apply new findings from time to time. Kahneman, Arielly, Lowenstein and others’ original research, where much of this thinking originates from, has attracted a lot of follow-on research in the last 10 years.

    Graham Hill
    Customer-centric Innovator
    Follow me on Twitter

    Interested in Customer Driven Innovation? Join the Customer Driven Innovation groups on LinkedIn or Facebook to learn more.

  5. Shaun, I think you summed it nicely with this:

    In order for a customer experience to be branded the organization must have intended to differentiate primarily on the basis of the customer experience and designed this to deliver value in and of itself.

    It seems clear that Ryanair is focused on providing a basic “product” — a safe flight from point A to point B — at the lowest price. The product and experience aren’t intentionally differentiated, except what happens naturally when you focus exclusively on price.

    In this economy Wal-Mart and other discounters have fared well, for obvious reasons. But Apple has also done well, so there’s room for all sorts of strategies in any economy.

    For now, the price-driven strategy is working and it’s up to the competitors to respond. Because customers are voting with their wallets that they think Ryanair offers a better overall value, including accounting for any real or expected pain in the experience.

    Honestly, I don’t see this as a case study in customer experience, positive or negative. At least not yet. If competitors cut the price gap and provide a better experience, then Ryanair will have to change. And that will probably be the time a new CEO appears to set a new, more customer-friendly course.

    Perhaps then we’ll see airlines like JetBlue or Southwest in Europe, providing a very nice combination of product, price and experience. That’s the opening that Ryanair is creating right now.

  6. Bob

    Sometimes being responsive to customers’, or in this case, potential customers’ needs is vastly more important than creating a puffed-up branded experience.

    According to this article in Brand Republic Ryanair is responding to the difficulties of Eurostar not being abe to deliver its expensively branded experience by offering customers €99 ‘rescue fares’ so that they can return home to London or Paris, to spend Christmas with loved ones. Kudos to Ryanair for being a customer-responsive company. Shame on Eurostar for promising a branded experience they couldn’t deliver and then abandoning customers to a very wintery fate.

    Companies need to think very carefully whether they should focus their energy on delivering a real experience that meets customers’ needs, or whether they should create puffed-up branded experiences that prove hard, and sometimes impossible, to deliver.

    Graham Hill
    Customer-centric Innovator
    Follow me on Twitter

    Interested in Customer Driven Innovation? Join the Customer Driven Innovation groups on LinkedIn or Facebook to learn more.

  7. Graham,

    Your repeated use of the phrase ‘puffed up branded experience’ betrays your prejudices! According to my definition, an experience is not branded if it is not consistently delivered, intentional, differentiated from competitors and valuable to target customers-many of the points that you make in your posts. Once again Graham, I find that our points of view are closer than your rants would indicate to the casual reader.

    For me, Ryanair is following a very clear price leadership strategy. Michael O’Leary has very cleverly dramatised the value proposition through his deliberately provocative remarks and their disdain for anything approaching respect for customers. Their apparent operational efficiency (self measured don’t forget!) is in line with their strategy and is a prerequisite as such.

    The point of my article is twofold: To clarify what a branded customer experience is, and is not, through referencing some of these examples that are harder to define. My view is that because the Ryanair experience is a by-product of their price strategy and has not been designed to offer value in, and of, itself it is not a branded customer experience. Secondly, that as people become less price sensitive as we emerge from the recession we will favour brands that care about more than simply maximising their profits (Southwest for example) Ryanair will have to become more customer focused. My bet though, is that they may well find it difficult to do so.

    As always, thanks for your input and posts. Have a good New Year.

    Shaun

  8. Shaun

    Thanks for your response.

    Yes, I do have a prejudice against ‘puffed-up branded experiences’; the ones that as the Bain study shows, make extensive promises to customers yet fail to deliver against them, particularly when things go a little wrong. Eurostar’s miserable failure to help with stranded customers is a prima facie case in point. And the puffed-up nature of many branded experiences doesn’t stop with Eurostar. A quick glance at the Internet reveals literally countless examples of branded experiences behaving badly, whether banks charging unreasonable fees to their customers, airlines not looking after passengers’ delicate ‘all you can eat’ only includes the first bite!

    We should all be up-in-arms about these sort of puffed-up branded experiences, where what is promised is definately not what is delivered.

    As I have written before, branded experiences sit along a continuum; from inside-out, branded customer experiences where (brand) management decides what the branded experience will look like, all the way to outside-in experiental customer brands where the on-the-ground reality for customers becomes the de facto experiential brand. For me, the key diffrence is whether management is driving the brand or whether customers are. The reality of social media should show us where the power really lies today; with customers. And the damage customers can and will inflict on puffed-up brands caught not delivering the promised brand. These differences are fundamental as we move into the next decade. A decade as likely to be powered by co-creation as by any flavour of CExM. It is high-time that the differences between the two approaches and how they relate to the newer customer co-creation were subjected to an evidence-based discussion.

    As former P&G CEO AG Laffey suggested, maybe it is really time to let go of some of the out-of-date brand thinking.

    Graham Hill
    Customer-centric Innovator
    Follow me on Twitter

    PS. According to the Free Online Dictionary the noun ‘rant’ is… A speech or piece of writing that incites anger or violence.

  9. Hi Shaun,

    Thanks for your article. I really liked it, it’s very “mind shaking”, controversial, of course… but it’s risky!

    It’s for sure a key issue now there is a big debate around Branded Experiences. In my opinion RyanAir has a real Branded Experience.

    We might have still different criteria, mine is very simple: Do you deliver what you offer at all the touch points? If the answer is Yes, then we have a branded experience being delivered.

    The promise doesn’t need to be based on service as we know it. Giving a great price to people and allowing people to fly for cheap is a very good service by its own.RyanAir signature is, as you said, “The Lowest Fares Airline”. Its not “Fly with a smile”; or “Caviar on the wings”. They basically promise “price” and “price” they deliver.

    To be honest they not only promise price, they also promise to be on-time, to be safe and to not lose luggage. And in all those criteria, as far as we know, they are delivering. So RyanAir is actually one of the few airlines actually delivering a branded service. Most of the airlines promise heaven and deliver nothing. That is where we should actually aim or finger, not to someone that promises a “2”, charges “1”, and delivers a “3”. Anyway, here is my opinion, thanks again very honestly for you article which is a great source for an healthy reflexion and debate.

    Cheers,
    Fernando

    EuSouCliente.com Manager

    CEM Consultant

  10. Fernando,

    I agree with you Ryanair is delivering a branded experience.

    Does Ryanair really NOT listen to customers? They may have their own unique way to listen but they definitely understand the critical needs of customers. But as you said they are not trying satisfying them all. Customers concern service and all service-related attributes (and of course smile :)), price, on-time, to be safe and to not lose luggage, etc. There is a long list of critical needs from customers. Ryanair’s always been trying to offer the lowest price and at the same time be safe, be puntual, and keep your luggages, Ryanair knows well they’re (some of) the critical needs of their target customers, and also the DNA of Ryanair (i.e. reflecting Ryanair’s core brand values). They focuses most resource on those critical few attributes but not all. They also understand Ryanair is not everything to everyone. You can’t find good service and ‘smile’ from Ryanair. They focus their resources on a few things that are critical to target customers, and can reflect their differentiated brand values, so that a highly effective branded Ryanair’s experience could be delivered. I’ve expanded the subject of Branded Customer Experience at my recent blog reply to Dick Lee, feel free to comment.

    Fernando, I really like your way of interpretating branded experience (or service), and your example of Ryanair’s focused attributes demonstrates your viewpoint perfectly.

    Have a nice day!

    Sampson Lee
    Follow Sampson on Twitter

  11. Hi Shaun
    Great article- very thought provoking, thank you. I too have wrestled with how to interpret the Ryanair model. I have a further thought:
    If you are ruthless in the clarity of your offering, credibility of this is measured by your customers not in experiencing the strategy (such as being charged to use the bathroom), but in how you respond when you don’t deliver. For example, when flights are delayed or bags are lost. In this scenario, Ryanair do everything they can not to communicate to their customer, by either charging for phone calls in, not providing an email address for complaints, or more bluntly denying or ignoring complaint contacts.
    In this way, I think the Ryanair brand is not consistent.

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