The champions of low cost see greener pastures – how would you proceed?


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One of the most successful champions of the low cost business model, a business that knows the business of being low cost as well as anyone, doesn’t see it as a sustainable model. I wrote about this issue in a post back in October, but the issue of Ryanair having a more rounded strategy like Tesco, came up again an interview yesterday, Ryanair, chief executive, Michael O’Leary reiterated this point again yesterday stating that “There’s no reason why our average price should be 50pc cheaper than anybody else,” he said. “I think it could easily be 25pc cheaper than everybody else, but that means a different kind of sales mission and a different kind of culture.”

Robert Kaplan the Baker Foundation Professor from Harvard Business School, whose forensic balanced score-card approach to cost analysis and business strategy maintains that the low-cost-price-model is a strategy that can not be sustained, as “there are always lower cost ways of producing those products and services elsewhere”.

O’Leary has gone on record to say that the business model as adopted by British Airways, i.e. charging Hundreds of Pounds for a short haul flight across Europe is broken, this may be true, but equally it is fair to infer that he thinks that competing on price alone is not going cut it.

This is coming from a company who has enjoyed considerable success with the model, they are the “worlds favourite airline” in passenger numbers. In spite of their apparent low cost success, there is a definite realisation that a better route to more sustainable success “a more rounded” model, this is one that would incorporate, customer experience led culture, look to Southwest Airlines.

Many people stated that Ryanair’s model was more or less a direct replica of Southwest’s, but the customer centric culture was a white elephant. It’s interesting to read that this is the message that seems to be getting spread more consistently by the CEO these days, not just the low cost message.

Changing a company’s mission and culture takes a considerable amount of time, it’s a journey that requires a change across the whole organisation. It would be an amazing journey to go on. If you were to go on this journey with them, where would you begin – passenger touch points? Employee feedback? Interested to hear your comments….

Customer Experience Management is now a key battleground in business. If something is not measured it’s not managed. Feedback is the key metric to measure CEM. It is envisaged that this blog will be a portal through which CEM and feedback issues can be shared, the objective of this blog is to try get more evolved thoughts and get insights from others, let’s see what happens….

Republished with author's permission from original post.

David Heneghan
David founded CX Index to help businesses leverage feedback to make more profitable decisions. Through our software platfrom we conduct sophisticated data analysis to help businesses drive more porfitable customer centric decisions. @cxindex


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