Price before peanuts: Rethinking customer service

New economy thinking dictates that almost anything that is manufactured or offered as a service can now be replicated. So rather than focusing upon the core product or service, businesses have to focus upon the peripheral features.

And nowhere is this more apparent than in the hotel and travel industries which rely very much upon intangible factors such as image atmosphere and ambience to attract and retain customers.

Another feature of these industries is that consumers are prone to switching allegiances at whim. Building up customer loyalty can be a problem.

What is Customer Service?

It is said that companies, on average, spend six times as much on attracting new customers than they do on retaining exiting ones. Yet, market research indicates that good service will entice guests to come back. Consider also the Pareto principle, that 20 per cent of customers account for 80 per cent of profits. Essentially, customer service is based upon perceptions and expectations.

Customer service guru Karl Albrecht (2002) identifies four levels of customer service.

• Basic service - Being available to provide information
• Expected service - Being courteous and polite
• Desired service - Putting yourself out to offer assistance beyond that which is strictly necessary
• Unanticipated service - This can include conceivably anything from a box of chocolates on your arrival at a hotel to a card on your birthday. Some airlines give all their passengers a free gift at the start of the flight.

In a nutshell, customer service is about adding value to your business by investing in staff rather than in the infrastructure or resource base. If implemented successfully, your customers will want to come back. In a nutshell, customer service is about adding value to your business by investing in staff rather than in the infrastructure or resource base. If implemented successfully, your customers will want to come back.

The Ryanair Strategy

But sometimes, you can turn a concept onto its head and turn it into a success story in its own right. And this is what Irish airline, Ryanair have done. If you turn up at one of their check-in desks without the correct documentation, don’t expect to fly. Customer service is an expensive frill because it essentially means pandering to the idiosyncrasies and whims of the individual. It’s not that Ryanair offer bad service; it’s just that service isn’t their number one priority. Offering cheap fares is.

According to Ryanair’s flamboyant CEO Michael O’Leary, “we promise nothing other than a safe, cheap flight from one point to another”. In other words, the level of service that they offer is standardised. It’s the same for everyone. When a soft drinks manufacturer offered to supply Ryanair’s passengers with free drinks as a way of promoting its brand, Ryanair demanded that they supplied the plastic glasses as well. “No, we shouldn’t give you a free cup of coffee when we only charge you 19 Euros for the ticket,” retorted O’Leary when quizzed on the airline’s no-frills policy. Ryanair’s customer service department consists of just six people. That’s one person for every two million passengers. In contrast, British Airways employs ten personnel for every two million passengers.

When challenged by an irate passenger at a press conference whose trip to visit his family had been ruined by delays, blank information screens, no refreshments and allegedly uncooperative staff, O’Leary calmly inquired how often he visited his family. “Every few months,” the passenger replied. “And how often did you visit them before Ryanair came along?” Game, set and match! The two men smiled and shook hands.

Ryanair is obsessed with saving money. Staff are expected to pay for their uniforms and even their pens and recently, a directive went out informing staff that they shouldn’t recharge cell phones in the office. It wastes electricity!

Economies are also achieved at an operational level. Standardising the fleet means that they save on maintenance and training costs. Airlines are obliged to comply with certain basic safety regulations such as seat belts, but beyond this they are free to decide what they include in an aircraft. Out go reclining sears, Velcro-covered head rests and window blinds. Dispensing with seat pockets and attaching the safety instructions to the back of the seat means that they don’t have to be replaced regularly. Another budget carrier, Easyjet has extended this by reducing the number of lavatories by one on their Boeing 737s. According to Toby Nicol of Easyjet, “if you serve less food and drink, you will reduce the need for passengers to use the lavatory”.

But the big cost is baggage. Ryanair was the first airline to recruit passengers as baggage handlers. Having boarded a flight from London to Dublin, the captain had over the intercom asked for volunteers to help load luggage. At first, this was taken as a joke. He was, however, deadly serious. The company contracted by Ryanair to load luggage had three men short. Three passengers volunteered and stepped out onto the tarmac to help throw the bags in the hold. They were rewarded with free drinks. “Persuade people that travelling by plane is like taking a bus and they will bring along less luggage and we can reduce our costs even further,” said Michael O’Leary.

Perhaps not surprising, Ryanair encountered a lot of criticism from people who claimed to have been treated shabbily by them, not to mention the occasional law suit and the ongoing run-ins with the Irish trade unions. There’s even a “Boycott Ryanair” website. Michael O’Leary has a natural propensity to shock people and to shun political correctness. “It’s amazing the lengths some people will go to, to fly cheaper than Ryanair” was the caption of one of their ads in 1996, alluding to a recent hijacking in which hijackers had diverted an aircraft by threatening to shoot the passengers. The ad was withdrawn after being deemed to be in bad taste. Yet to Ryanair, even bad publicity is publicity. On the issue of asylum seekers being granted concessionary fares by airlines, O’Leary retorted in a recent interview, “These people get granted political asylum in England and then they think that they can fly around Europe. Well, they’re not going to do it with Ryanair.”

Budget Hotels

You would be hard pressed to find a brand equivalent to Ryanair in the hotel and hospitality industry. That is until Easyhotels was launched. “Easy hotels” was the idea of Stellios Haji-loannon, founder of budget airline, Easyjet. Contrary to what you may think, budget hotels don’t jus cater for three-hour stays. You can check in for the night or several nights if you prefer, like at any other hotel. Also a budget hotel doesn’t mean that they throw the room keys at you. They haven’t dispensed with all the frills. Staff help you with your luggage and are there if you need them. There are, however, additional charges for non-essentials. If you want a television in your room, for example, you have to pay an additional US$9. And you don’t have to bring your own soap!

“Ryanair isn't a brand; a brand should evoke positive feelings.”

Marketing and brand management gurus hate Ryanair. The reason being that they are highly successful and yet they can’t fit Ryanair neatly into one of their dinky little powerpoint boxes or reproduce their customer service strategy as a neat, sequential diagram. The rules of cause and effect don’t seem to apply. In other words, Ryanair doesn’t conform to traditional brand management wisdom. Instead, they have inverted the concept of customer service. As one marketing guru somewhat aggressively articulated it; “Ryanair isn’t a brand; a brand should evoke positive feelings' .After all, let’s face it, it’s difficult to apply jargon such as connecting with the consumer and nurturing emotional bonding to the likes of Ryanair.

Yet, the fact remains that the peanuts that you receive on board a plane are never free. In fact, they are probably the most expensive peanuts you have ever purchased in your entire life. More importantly, the passengers know that too. In other words, when flying with a budget carrier, they know that they’re not paying to be pampered and this has created a unique selling point. According to O'Leary their market standing is now so strong that the company could even withstand a crash! Like them or loathe them, Ryanair is set to become Europe’s most successful carrier.

Next time you’re at a marketing or brand management seminar, ask the person presenting it about Ryanair. Chances are he or she will simply say that Ryanair has no long-term economic viability. We’ll see …

Paul FitzPatrick is a Singaporean PR. He is author of three books, a freelance journalist with News International and runs creative thinking programmes for organizations in S.E.Asia.
Email: conceptsasia@yahoo.com