Many who have flown with Ryanair will have a horror story to tell: forgetting to print boarding passes and getting charged more than their flight to board; booking the wrong flight because the website is so difficult to use, the list goes on… Despite this, people go back to Ryanair time and again. But why? People say it’s because it’s cheap, but, in reality, when it comes to the checkout page, when all the extras have been added on: baggage, tax, insurance, it is not much cheaper than other budget airlines, such as EasyJet. The real reason I believe is linked to people’s perception of value. People equate a cheap experience to value and this is something that Ryanair’s Chief Executive, Michael O’Leary, uses to full effect – from the badly designed website that’s confusing at best and frustrating at worst, the constant sales pitch from the flight attendants, to the over-the-top fanfare when the plane lands on time – the whole experience gives off a ‘low cost’ air.
For a time it seemed that value for money was what Ryanair’s passengers valued most, and because of this, Ryanair was able to build an international airline and brand that has amassed a fortune. For passengers, the real enjoyment lay in their destination, so they overlooked poor flight experiences to get to their destination ‘on the cheap’. That is until now…
I recently visited the Ryanair site to book a flight. I saw that it was completely revamped – it was uncluttered, there was white space and nothing flashing, even the tick box to confirm you agree with the T&Cs, which always tripped me up, was pre-ticked by clicking on the ‘Book now’ button. Amazing! To my complete surprise the booking experience was easy and it was all done in a matter of minutes. It was not that the new site did anything new or clever, it was that the experience was so much better than the old one. It seems that this curious turnaround was not prompted by altruism on Michael O’Leary part, but by Ryanair issuing a second profit warning.
In contrast, EasyJet reported soaring profits this year, which may be linked to a more user friendly website, better customer service, greater flexibility in changing flights, and particularly the introduction of allocated seats. All of this adds up to a better service and consequently a better customer experience, which is why I think this shift is happening. Passengers are now seeing service as the differentiator and where the real value is. The lesson that Ryanair learned was that a poor customer experience comes at a price, and in order to start delivering value again they needed to change and improve their service. This prompted a new website design, a promise to improve customer service, and also the addition of allocated seats next year. However, this new shift in focus does not mean that cost is no longer a factor in passengers selecting a flight, of course it is, but it does mean that people are starting to expect that little bit more from airlines and are prepared to pay a bit extra to get it.
But this is not limited to the travel industry, other industries have also recognised this, First Direct, for example, knew that it would be difficult to differentiate on the standard set of products that banks offer, so they focused on offering great customer service, which they recognised was important. Now their customer service is leagues ahead of their competitors and this is reflected in their NPS score, which outperformed all other banks. What can we learn from this? Cost is important, but service is becoming ever more important. As Ryanair found out, value is not always measured in currency. Offering a cheap product or service does not guarantee you customers if the customer experience is lacking. Understanding what customers value most about the product or service and doing it well will keep them coming back, while a good customer experience will have them telling their friends and promoting your brand. So the takeaway is that you first need a good product that offers customers something of value to hook them in, but without a good service to back it up it may not get off the ground.