What Can We Learn From Ryanair’s Change Of Heart?

Amidst the slavish devotion to customer experience and the ideology of customer-centricity I find Ryanair refreshing and instructive – including its recent change in stance towards how the organisation treats its customers.  What can we learn from Ryanair and this change in stance?

Financial fortunes (not customer needs) shape management decisions

I find it instructive that trigger for this change of stance is due to a change in its financial fortunes:

  • profits may miss or be at the lower end of its range of 570m euros to 600m euros (£480m to £508m);
  • a dip in ticket prices and booking levels for September, October and November;
  • the continued success of its competitor (Easyjet);
  • shareholder concerns that customer service issues were hitting sales.

It occurs to me that what is refreshing about Ryanair’s management team is the refreshing honesty about what motivates-drives their actions.  According to this article, Ryanair’s COO and deputy CEO ‘has dismissed the idea of “wholesale changes” at the carrier as it attempts to improve customer service’. Why is that? In the words of the COO

Our model is to satisfy shareholders. There are other models to satisfy passengers.”

I say that a safe assumption, for any publicly listed company, is that the focus on the management team is no meeting the financial numbers. And any talk of customer-centricity has to be interpreting within this context.

The critical importance of the business model and how it shapes organisational actions

In order for there to be a viable business there has to be a viable business model.  Using the business model canvas this means that the following business model elements have to fit together effectively: revenue streams, customer segments, customer relationships, distribution channels, value proposition, cost structure, key activities, key resources, and key partners.

If you take a deeper look at the business model canvas you cannot help but notice that right in the centre sits the Value Proposition.  The organisation has to engage in specific activities to create the value proposition. These activities and the way they are carried out determine the cost structure of the business.  Therefore, it is essential that the choice of customer segments, customer relationships, distribution channels and revenue streams deliver revenues that exceed the cost base and deliver a suitable return on investment.

It occurs to me that Ryanair’s COO understands the implication of the no frills airline model a lot better than the media which has been implying that the Ryanair management team have seen the light and will be making significant changes.  This is what the Ryanair COO is reported as saying:

There is a balance and maybe we have gone too far one way. But the idea there is going to be wholesale changes is wrong.

We need to be better at communicating with customers, but that is no big deal.

When we take €70 from someone for having the wrong size bag we should do it with sympathy rather than glee.

Great advice for all businesses: don’t unnecessarily annoy your customers

I notice that Michael O’Leary (CEO, Ryanair) has woken up to the fact that it is not wise to unnecessarily annoy customers.  He is reported as saying:

We should try to eliminate things that unnecessarily annoy customers.

It occurs to me that this does not go far enough. If you are in a management position where you have the power to shape organisational behaviour then I encourage you to end policies and practices that unnecessarily annoy:

  • your customers;
  • the people that work in your business and create value for your customers;
  • your distribution partners;
  • your suppliers.

Why? Because that which is unnecessary should not be done. Doing that which is unnecessary and annoys key stakeholders is stupid: self defeating in the longer term.

It does not pay to steal in the longer term

It occurs to me that it is worth bearing the long term in mind. Whilst it is possible to escape the consequences of your actions in the short term, this is rarely the case in the long term. In the long term your history catches up with you.  When I was a child my father used to tell me stories to do with human nature. One story, I have remembered vividly, it’s moral was ‘If you steal expect to get caught, sooner or later. The only way not to get caught is not to steal.”

Looking at the Ryanair situation, it occurs to me that Ryanair has been stealing from its customers for many years and this is the year when Ryanair’s management has got caught. And so is having to do something about it.

What did Ryanair steal from its customers? The humanity that one human being expects and counts on another human being to deliver: human dignity.

Digging into ‘customer-centricity’: what is the defining feature of a ‘customer-centric’ company?

My last post (a practical enquiry into service, customer experience and customer-centricity) generated some interesting conversations.  A particularly interesting conversation took place between Bob Thompson and me – you need to scroll towards the bottom and read the comments.  In this post I want to address the key question that Bob raised:

Customer-centricity is at least as vague a term as CRM and CEM. Is it a strategy? A state of mind? A loyal relationship?   Personally, I’ve defined “being customer-centric” as delivering value that customers care about. The end results should be more loyal customers.  But it’s not quite that simple. How do we explain the success of Ryanair, which offers a low-cost service, gets lots of travelers and makes money, but can hardly be said to have raving fans?

If you have looked into that conversation between Bob and myself you will see that I addressed the Ryanair issue.  So what I up for addressing is the question: what clues can you look for that helps you to distinguish a ‘customer-centric’ from a ‘not customer-centric’ company?

Is listening / responsiveness the distinguishing feature?

In this post Bob Thompson asserts that Starbuck is customer-centric because it listened to him.  Bob had an issues with his local Starbucks: “we started noticing that about 30 minutes before the store officially closed, employees brought the tables and chairs from outside and piled them up inside the store. Frankly, it made the store look like “we’re closing” and customers weren’t welcome.” So Bob wrote an email to Starbucks pointing out the issue, he got a response within 24 hours letting him know that the matter would be discussed with the store manager.  And then Starbucks acted on Bob’s email request: “Not only did Starbucks listen, they did something. Fast!  That evening, and all the evenings since then (I checked) the tables and chairs were left outside until closing. And what do you know, there were customers actually using them!

So my question is that if a company makes it easy for you to contact it, responds quickly to your contact and then sorts out your issue / gives you what you are asking for (like Starbucks did with Bob) does that make that company customer-centric?  From where I stand and view customer-centricity the answer is NO.  Why?

Think back to my last post and in particular the issue that arose between the customer and Joe the bartender. Joe acting in the best interests of the customer (including the customer’s wife and three children) refused to serve more alcohol to the customer.  The customer had an issue with this, he reached out to the company, the company gave Joe (the bartender) a telling off, fixed the issue and compensated the customer for his trouble by giving him two free drinks.  What was the end result?  The customer got heavily drunk, drove home, had a crash and died – taking three other people with him.

Purpose-Vision-Mission statements – do these help us distinguish a ‘customer-centric’ company from a ‘not customer-centric’ company?

When you read the following vision/mission statements I’d like you to be present to what emotions they evoke in you as well as what thoughts bubble up for you.   Let’s start:

Ryanair:  “Ryanair’s objective is to firmly establish itself as Europe’s leading low-fares scheduled passenger airline through continued improvements and expanded offerings of its low-fares service. Ryanair aims to offer low fares that generate increased passenger traffic while maintaining a continuous focus on cost-containment and operating efficiencies.”

Yahoo!:  “Yahoo!’s mission is to be the most essential global Internet service for consumers and businesses.”

Microsoft:  “Microsoft’s mission is to enable people and businesses throughout the world to realize their full potential.”

Dell:  “Dell’s mission is to be the most successful computer company in the world at delivering the best customer experience in markets we serve.”

OK, now lets move on to a second set of companies.  As you read these mission statements please be present to how these land for you – what feelings and thoughts do these evoke for you?

Chick-fil-A:  “Chick -fil-A’s corporate purpose statement reveals the heart of our company: “To glorify God by being a faithful steward of all that is entrusted to us and to have a positive influence on all who come in contact with Chick-fil-A.” Chick-fil-A’s mission statement reveals our commitment to service: “To be American’s best quick-service restaurant.”

Southwest Airlines:  “The mission of Southwest Airlines is dedication to the highest quality of Customer Service delivered with a sense of warmth, friendliness, individual pride, and Company Spirit.”

Amazon: “Our vision is to be earth’s most customer centric company; to build a place where people can come to find and discover anything they might want to buy online.”

USAA: “To facilitate the financial security of its members, associates and their families through provision of a full range of highly competitive financial products and services; in so doing, USAA seeks to be the provider of choice for the military community.”

Starbucks:  “Our mission: to inspire and nurture the human spirit – one person, one cup and one neighbourhood at a time.”

Virgin Atlantic: “At Virgin Atlantic, our mission statement is simple…To grow a profitable airline…Where people love to fly…And where people love to work.”

Did you notice the key differences?

Customer-centric companies are in a totally different league when it comes to the game that they are playing.  Did you notice that their mission statements:

1.  start with / draw attention to customers, what jobs they will do for their customers, what value they will create, how they will treat their customers?

2.  speak words that speak to human beings in terms of their ‘concerns’ as human beings: ‘glorify’,’ faithful’, ‘positive influence’, ‘service’, ‘warmth’, ‘friendliness’, ‘pride’, ‘spirit’, ‘dedication’, ‘member’s, ‘worthwhile satisfying employment’,’discover’, ‘financial security’, ‘competitive products’, ‘families’, ‘nurture’, ‘human spirit’, ‘love’, ‘people’..?

3.  are concrete, meaningful and even inspiring to customers (and employees) whereas the mission statements of the ‘not customer-centric’ companies are vague, amorphous, general and generally meaningless and uninspiring?

Customer-Centricity: being of service, enriching lives and contributing to a better world

From where I stand I am clear that the key characteristic that characterise and distinguish a ‘customer-centric’ company from a ‘not customer-centric company’ is that the ‘customer-centric’ company is playing a totally difference game.

The ‘not customer-centric’ companies (including those that espouse customer-centric rhetoric) see customers as tools, as instruments, as means for enriching the Tops and the the people who represent the shareholders. And within that context there is no consideration of the longer term, stewardship of the world that we live in, the dignity of our fellow human beings.  Anything goes as long as ‘rent’ is extracted from customers to line the pockets of the Tops and shareholders.

Under the rhetoric of ‘customer focus, customer experience, customer-centricity, customer obsession’ is the urgency to sell, sell, sell the products that the companies has to sell.  The customer rhetoric is there only because it has become hard to sell because customers are more demanding, more discriminating and their is a high level of competition. The whole edifice is built on fear, greed and the “I-It” orientation towards customers, employees, suppliers, partners, communities in which these companies operate.  In short, this is business as usual – the standard economic/industrial/organisation model that is in place today and accepted as best practice, the smart way to do business.

The ‘customer-centric’ companies are primarily coming from a context of being of service, of contributing to our fellow humans, of making a genuine and worthwhile difference to the lives of the people who touch and are touched by the company- customer-centric companies live a “I-Thou” orientation.   The Tops who founded and/or are running these companies get the importance of making profits.  Yet, that is not the purpose nor the mission of these companies.  To ‘customer-centric’ companies profits are like the air that we breathe necessary to survive and profits are the reward that customers/employees bestow on the company for the service that the company has rendered.  Profits are marker of the level of contribution they make.  And profits are the grain that can be stored today for when the ‘seven years of famine’ strike.

A warning or two

First warning: ‘customer-centricity’ does not necessarily guarantee financial success.  Customer-centric businesses can and do go out of business – all that is needed is a disruptive innovation.

Second warning:  you actually have to live up to the ‘customer-centric’ mission statement to be viewed as being ‘customer-centric’ by your employees and customers.  Starbucks espoused the mission but took all manner of actions that did not fit in with the mission to grow revenues and profits to meet shareholder expectations.  It got into a mess and the man who had formulated, fought for and lived the mission statement (Howard Schultz) had to come back, take over and turn around Starbucks – get the people in the business connected with and living the mission wholeheartedly.  Today, Tesco is where Starbucks was at.  It espouses a fine mission – “Our core purpose is, ‘To create value for customers to earn their lifetime loyalty’. We deliver this through our values, ‘No-one tries harder for customers’, and ‘Treat people how we like to be treated” – and it failed to live up to it for several years and is now paying the price.