Ryanair CEO concedes being nice to customers does work as profits soar

Stuart Lauchlan Profile picture for user slauchlan November 3, 2014
I should have done it long ago, says CEO Michael O' Leary as he outlines additional digital improvements for the budget airline.

There are usually two ways of looking at everything of course. So it is that in the space of a week, Ryanair has been named the second worst brand in the world, largely due to its appalling customer relations, while reporting a 32% leap in profits, largely due to its improving customer relations and ongoing digital investment.

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Let’s start with the all-too-familiar meme of the budget carrier’s dreadful historic reputation for treating its customers with at best indifference and at worst, contempt.

According to a survey by brand simplicity firm Siegel+Gale of over 12,000 customers in eight countries, Ryanair was named the second worst-ranked brand, based on ease of customer use of a company's products, services, interactions and communications. Common complaints were a badly-designed website, customer service that weighs against the customer and poor mobile apps that make it hard to download boarding passes.

Liana Dinghile, Group Strategy Director EMEA at Siegel+Gale told the media:

Despite Ryanair’s investment over the past 12 months in simplifying its website, mobile app and customer service to correspond with its "Low fares. Made simple" strapline, it seems that the company is ultimately still falling short of its promise.

Oh do you think so? would be the imagined reply coming from Ryanair CEO Michael O’Leary as he turns in a 32% increase in profits to €795 million and cites improvements on all customer experience fronts as paying off, while admitting that being nice to customers is:

a new-found experience I must admit for me, but if it works this well I wish I'd been nicer to our customers much earlier.

Under the auspices of the firm’s Always Getting Better Program, O’Leary argues that the airline has improved:

almost every aspect of the customer experience at Ryanair from every touch point. So from the point where [customers] originally go on the website, which has significantly improved, a new mobile app, a lot easier at check-in, most of the check-in being done online.

The boarding gate is a much more relaxed environment now because of the allocated seating. We're no longer fighting with passengers over the size of their bags. And onboard, our crews and passengers are enjoying that better experience. So we've seen a lot of positive developments.

Digital developments

From a digital investment perspective, O’Leary points to ongoing success at the firm’s Ryanair Labs, set up with a mission to build ‘the best digital travel team on the planet’:

We're seeing now almost biweekly updates or updated and improved versions of both the desktop, the website and the mobile app. Over the next 6 to 12 months, you'll see a number of other developments.

We know they have to come to Ryanair for the flight and the fare, so why don't we keep them on our website for all the other kind of services that are, heretofore, they would have gone to a different website for?

We're looking at making the ryanair.com website not just a website for low prices but making it a much more one-stop travel opportunity. At the moment, we spend a lot of time improving the way we retail things, like airport transfers, the car hires. There's a new hotel partner coming online very shortly.

One feature coming up that O’Leary is particularly keen on is comparison pricing to steal attention away from existing price aggregators:

Come to our website straightaway, and we'll give you the same price comparisons. They'll sit down at the right-hand side while you're booking on. And as you change a data or a flight or a destination, the price comparison technology will change on the right-hand side.

We want to pull you on to our website, where you know you've got the lowest fares. We'll confirm it every time by putting up all of the lower fares of our competitor airlines on that route, on that date, on that flight, and then expanding into other developments, like putting up a TripAdvisor feature on the website, customer feedback, rate the flight, rate the destination, rate your hotel, rate the experience.

What the airline won’t be having is a traditional Frequent Flyer program with plastic cards and points, says O’Leary. But there will be some movement on the loyalty scheme front:

For the passengers who register with us on the My Ryanair registration, big data will enable us to have a much more individualized or tailored frequent flyer program.

So what I see us doing maybe as early as the end of calendar '15 is those passengers, we'll be writing to passengers, thanking them for flying with us in 2015. Those who flew maybe 4 times than last year will get an incentive to fly more than 6 times in 2016. Those who flew 20 times within 2014 will get a thank you of a 50% off a flight in January and February 2015.

So we'll have individual, tailored offers recognizing the volumes for each individual passenger and trying to incentivize each individual passenger rather than a big cumbersome [frequent flyer] program that takes a lot of administration and everything else. The data mining we're doing now will enable us to have an individually designed kind of encourage more flying program with each individual passenger.

Even this exploitation of data represents the new ‘touchy feely’ Ryanair, he adds:

We're not in the old days [where] we'd simply run around and [have] sold the data. What we want to do is to bring more and more people on to the ryanair.com website, more and more people to register. There's a number of different things we're looking at under the Ryanair Labs banner, where we can exploit the data and use or monetize, probably by attracting other partners to come and work with the ryanair.com website to provide other value to our passengers. We'll be able to give them very rich content, very detailed profiles off of an enormous passenger base.

My take

It might not be something O’Leary’s used to, but this ‘touchy feely’ mindset seems to be paying dividends, despite the results of brand studies, so it's something he's clearly going to be getting used to.

What the Siegel+Gale study shows is that it takes a long time to shake off a lingering bad reputation and perceptions can be as powerful as reality. We’re used to dissing Ryanair as a bucket-shop airline with bad service running through and when we’re talking bad brands, Ryanair’s an easy target.

Turning that around is going to be a challenge. Whether passengers are really having a better customer experience remains to be proven over time - and let’s face it, Ryanair’s starting from a low base from which to point to improvements.

But one thing is certain: Ryanair is a commericial success and investors love it.

O’Leary’s doing something right.

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