Michael O’Leary, the arrogant yet charismatic CEO of Ryanair, announced last week that the company would strive to improve customer service.
“We should try to eliminate things that unnecessarily piss people off” and “A lot of those customer services elements don’t cost a lot of money … It’s something we are committed to addressing over the coming year,” O’Leary said on Sept 20th 2013.
Market conditions have changed
Why Ryanair is now finally addressing customer complaints is the result of massive changes on the market these last years.
Shareholders have eventually understood that a lot of those customers complaints are costing money to the company: it’s not only about customer satisfaction (or rather customer dissatisfaction). It’s about switching behaviors that impede customer loyalty and decrease customer lifetime value.
A few years ago Ryanair was really competitive in terms of pricing. You could really fly at much cheaper fares than any other airline. When customers had no choice but to fly with Ryanair they were willing to accept rude employees’ behaviors. But times have changed. All major airlines have by now undergone the changes to offer better fares and consumers have, in the same time, realized that the total costs to fly with Ryanair were much more than the mere price of the ticket. In a sense the judgment by the European Commission to have the Ryanair website display an all-in price (including thus taxes and fees which were previously hidden until the last step of the purchase process) was a key to unlock the market and change consumer behaviors.
Consumers taking total costs into account
Customers are now in a better position to compare prices and are also increasingly taking the total cost of flying with Ryanair into account. The once interesting “decentralized” airports used by Ryanair are increasingly seen as a downside. Operators of car parks have long understood how much money a captive audience can bring. Consumers have no choice but to pay outrageous parking fees which, once added to the price of the ticket, can make Ryanair less or not competitive.
Advice for your marketing strategy
Ryanair’s business model was copied from Southwest Airlines but O’Leary forgot that Southwest’s success was also due the service quality. Now that sales are being hit and that consumers’ rage is affecting sales Ryanair has no choice but to change. Yet, it may well be too late. The image of Ryanair in customers’ minds is that of a company that should be hated. Few companies have indeed opponents starting website called “IhateRyanair.com”. This says a lot about consumers’ attitudes and their willingness to change their mind.
I doubt that Ryanair can expect a sudden and quick improvement. Habits are long-lasting and are now well rooted. This story should inspire you if you’re considering starting a new venture. Product quality and service quality are two required components for a long-lasting success. Don’t forget any of them. More importantly don’t forget that neither service nor product quality are sufficient by themselves. A touch of emotion should be added.Tags: customer loyalty, customer satisfaction, marketing agency belgium, marketing strategy