Ryanair profits slide despite claimed better digital customer experience

Profile picture for user slauchlan By Stuart Lauchlan May 19, 2014
Summary:
Given Ryanair’s previous image as being customer-indifferent at best, sceptics were always going to have a field day with CEO Michael O’Leary’s protestations that the airline really means it this time when it comes to improving customer experience.

a-group-of-drunk-dancing-scots-forced-a-landing-on-a-ryanair-flight
So, remember that pledge from Ryanair CEO Michael O’Leary that the budget airline had learned its lesson and wanted to be loved by its customers?

The trouble with making such commitments is that, given Ryanair’s previous image as being customer-indifferent at best, sceptics were always going to have a field day with O’Leary’s protestations that the airline really means it this time.

See also: Ryanair boss on digital transformation: "We really mean it!"
Feb 5 2014diginomica.com

It also opens the floodgates to forensic examination of every presumed ‘leopard never changes its spots’ incidents, such as making online check-in available only between seven days and two hours before departure for those not taking its regular or premium seat reservation option.

That means that passengers on a week long holiday cannot issue their boarding cards before taking off on the outbound journey and need to take tim rout of their vacation to make sure they're covered for the return journey.

Then there were the media reports that the airline is making passengers sign a waiver. agreeing not to hold Ryanair responsible for damaged suitcases, a charge the carrier denies.

Whatever the case there, a new policy  of allowing passengers to bring a second smaller bag on board has been exposed as only applying to the first 90 passengers in line for the simple reason that there isn't enough overhead locker space. With capacity seating of 189 people on each plane, over half of passengers face having to do an unexpected check-in of baggage anyway.  Ooops!

For his part, O’Leary - announcing a 6% drop in profits this week - seems content that there are signs of improvement:

“On the customer experience side, we moved allocated seating, a much simpler, easier-to-use website with a fare finder facility which customers are really responding very favorably to.

“Our website, which was worst-in-class is now moving very rapidly to being becoming best-in-class. You can now get through it very quickly to make a booking.

“The fare finder facility is unique and something that passengers are responding very, very favorably to. In fact we note that one of competitors - Easyjet - recently announced their plans to copy our fare finder, but they won’t have it for a number of months yet.”

Meanwhile the My Ryanair registration service which hosts customers’ details is taking off, adds O’Leary:

“We are up over 2 million passengers and in early of mid-July, we expect to rollout a new specially-developed mobile app, as well as tailoring our website, apps, phones and smartphones.”

Marketing man

Back in January the airline hired its first Chief Marketing Office (CMO) in the form of Kenny Jacobs, whose previous roles include marketing at Moneysupermarket.com, Tesco, Metro Cash and Carry, Accenture and Procter & Gamble.

Jacobs has identified digital outreach as a top priority, but in an interview with Irish Examiner last week, let slip that the Ryanair is struggling to attract the tech talent it needs to deliver on this.

The firm has made hiring 200 IT professionals a key plank of its customer experience overhaul, but Jacobs told the newspaper:

“I’m finding it hard to recruit the people we need to transform the airline. We are looking for tech marketers, DRM specialists, and data scientists. We are getting responses and we are offering competitive packages but we are in competition with the tech brands.

“We haven’t started using the data in this way yet. I have seen the way that it can be done in my experience with development of Tesco Clubcards.”

See also: Loving the customer is key to Ryanair's digital makeover
Jan 2 2014diginomica.com

He’s being given some decent money to play with, a tripled marketing spend of €35 million across 2014. O'Leary says:

“These campaigns will continue throughout the year, as our marketing and advertising spend rises to approximately €35 million, up from just €10 million last year, although this spend is still less than €0.50 per passenger."

And what’s that going on? O’Leary says:

“We are rolling out an extensive TV and outdoor advertising campaigns to support these customer experience improvement to other new digital platform.

“I think the byproducts are the results we are already beginning to see. Forward bookings for the summer period from April through to September are running about five percentage points ahead of where they were this time last year, even with the big events like the World Cup in the middle of the summer. So we are much more firmly booked further out.”

Coming up is a business traveller-focused product, backed up by a major advertising campaign.

The service will consist of a changeable tickets, flexi-tickets out and back, fast track through security at most of major airports, free reserved seating, and a free check in bag.

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O’Leary also promises that if a passenger has a flexi fare and a customer service related problem arises, then the passenger’s going to get the benefit of the doubt:

“We are not going to be arguing. If you are one of our flexi passengers, we are not going to be arguing which bag is one kilo over the extra. We will be identifying you as a premium customer and trying to look after you as a premium customer.”

This from a man who once declared:

“People say the customer is always right, but you know what - they're not. Sometimes they are wrong and they need to be told so."

Meanwhile the battle royal continues with Easyjet which beat Ryanair in March by carrying 5.1 million passengers, up by 4.8% year on year, while Ryanair saw traffic drop by 4% to 5.2 million.

Howard Miller, Ryanair’s deputy CEO, argues that the gap can be closed:

“They had a better website and slicker digital marketing and were seen as being warmer, cuddlier and friendly, whereas we were seen as being a bit aggressive, which is something we’re trying to address. But we can catch up with them very quickly.”

Verdict

Too early to tell, but CMO Jacobs has his work cut out still.

Ryanair remains an easy target for those who want to see its avowed customer focus turn out to be smoke and mirrors.