Ryanair boss on digital transformation: "We really mean it!"

Profile picture for user slauchlan By Stuart Lauchlan February 4, 2014
Summary:
"In our old model, we would have said, ‘Hump you, you can take it, it's the same for everybody, if you don't like it, bugger off.' Not any more, says Ryanair CEO Michael O'Leary.

“If you're asking the question, is it real or just a PR stunt, then, it's absolutely real!”

It's possible that Ryanair CEO Michael O’Leary is getting a tad impatient with the cynicism expressed about his budget airline’s stated intention to become more customer-friendly.

Or as he rather brazenly positions it, the airline’s:

“series of initiatives to further improve our already industry-leading customer service.”

As survey after survey has cited Ryanair’s customer service as industry-leading in a highly negative way, it’s a typically brash claim from O’Leary.

But old habits die hard and frankly we’d all expect little else.

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A critical plank of this transformation is the firm’s much vaunted digital strategy which kicked off at the end of last year with a new easier-to-use website which reduced the booking process from 17 to 5 clicks.

This was followed up in December by the launch of the MyRyanair customer registration service to allow users to register and store personal and payment details.

Next up: mobile boarding passes in place by April, a new travel product by the end of May and a mobile app by the end of June, which as O’Leary pitches it means:

“moving from a mobile app that doesn't work to one that will be the state-of-the-art.”

Ryanair has also become the first budget airline to partner with Google's European web search function, currently available in most of the major EU markets but with more EU countries to follow. O’Leary explains:

“We think the Google Flight Search function will become the price comparison website of choice for consumers all over Europe.

“Everybody keying-in cheap flights or low-cost flights around Europe will see Ryanair's flights and inventory.

“And the important thing in the ranking in the Google system on short haul is that the lowest fares are ranked top of the page, and therefore, we would expect to be ranked top of the page in 99.9% of all searches.”

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O’Leary says that the feedback from customers since Christmas has been good:

“The website has materially improved, moving from 17 to 5 clicks to make a booking. There's been very positive feedback on that. The second carry-on, small carry-on bag, very positive feedback on that.

"We would expect similar very positive feedback from the allocated seating, which starts this weekend. Every customer is seeing what our real tangible change is on a daily basis.”

A long haul

But he admits that it’s a long-haul journey for a short-haul airline:

“This process started almost a year ago. So there's a major investment going on behind the scenes here in radically revamping the way we interact with customers.

“For too many years, we've relied on the fact that we have a huge price advantage over everybody else, and therefore, it doesn't matter how bad our website is, people will simply stick on us all-day long.

“Now we have 81 million people who will stick on it all day long, but over the next year or two, we intend to go after that floating 10 or 20 million of passengers who actually are willing to pay a premium to avoid a less-than-optimal website.

“We're going to continue to invest heavily in our IT platform, in our digital marketing, in the way we improve the website, and make it easier for our customers to get the lowest fares so that we can get them on and off the website quickly, which creates more opportunity for other customers to come on the website and secure the lowest fares as well.”

The increased spend on digital marketing is interesting. Ryanair currently has the lowest unit cost in its sector in terms of both marketing costs and IT costs around two euros per passenger.

The intention now is to triple the advertising and marketing budget from EUR 12 million last year to around EUR 36 million while a drive to recruit more IT staff will also see the tech budget increase with the focus on keeping website and front-end development in-house.

Tv advertising will accompany another overhaul of the website in April as well as generally reinforcing the new messaging around the brand. At least in part there is still a need to convince people that Ryanair really means to change. O’Leary concedes:

“There maybe some kind of skepticism as to whether it's real or just a publicity stunt on our part.

“This is not a kind of some sort of warm, cultural re-branding exercise. They are very real and very meaningful changes both in terms of our flight practices, our fees, our charges, the customers are seeing on a daily basis every time they either book with us, fly with us or interact with the website.

"There is kind of a myth out there that Ryanair is immovable. We have never changed since 1997 or whatever, 1987. We may be a little bit slow to change, but once we get the message, nobody changes faster or quicker than we do. That comes from having a very flat management structure and a pretty young, average age within the company.”

But overhauling customer service practice opens up new opportunities, adds O’Leary:

“You have a large slug of the traffic, doesn't pay for it's own ticket, is not particularly price-sensitive and does want a slightly different service, which is, they don't want a free seat, they want a seat in the front of the plane, they want another reserved seat.

“They want certain aspects of service, which in our old model, we would have said, ‘Hump you, you can take it, it's the same for everybody, if you don't like it, bugger off.’

“Going forward, we now want to welcome, instead of telling that 10 million or 15 million people to bugger off. We say, ‘Look, come to us, if you want a specific allocated seat, we have an allocated seat for you. You want to carry a second carry-on bag, done. You want a business type product where you get fast access through security, done.’ We want to cater to all of those markets.”

But does he mean it?

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This is all about a proactive, positive change, insists O’Leary, not a knee-jerk reactive response to problems:

“This is an airline that carries 81 million passengers. We have an 82% load factor. We have a plus 90%, close-to-on-time performance record and enormous repeat business. This works.

"We service 81 million price-sensitive customers we have. It works. This is not something that's broken that somehow needs to be fixed.

“We do generate a lot of media coverage which is all this kind of damascene conversion stuff. We’ve been ‘torturing’ people for 28 years, and now we've suddenly woken up, we're going to be nice to people.

“We've always been nice to people for 28 years by not charging disproportionately high airfares, by giving them on-time flights, on brand new aircraft and delivering a brilliant service.”

Verdict

Good words, good theory, good plan.

Time will tell.