05 Aug Is there a Customer Service lesson in the past 12 months from Ryanair?
2013 was a challenging year for Ryanair. In September , Which magazine published results of Customer Satisfaction of 100 Brands in the UK with Ryanair scoring lowest with a rating of 54%. This was quite a damning result of a comprehensive survey of over 3000 members of the British public. To be 100th in a rating of Customer Satisfaction is never good for any brand and this report, which was widely circulated, was not good news for Ryanair.
Two months later in November, Ryanair announced a second profit warning within months giving already nervous shareholders a twitchy time in what was becoming a very competitive low-cost airline sector. It had been quite a while since Ryanair had to make a double profit share announcement. Although Ryanair blamed a combination of stiffer competition, weak consumer spending across Europe and a fall in the value of sterling relative to the euro…..it was obvious that negative customer satisfaction was having an impact on Europe’s biggest low-cost airline.
What happened next was certainly a change for Ryanair.
Although many expected the company to go back to an all-out offensive of offering €5 one way prices on many routes or similar price drops so as to generate passenger movement as well as damage competitors, it was a focus on customer service which surprised us all. Ryanair always had been a low-cost and no-frills model and it was within costs and no-frills that they always found their fix.
Michael O’Leary in a series of interviews and releases gently got the message out that they were going to act on several issues of “enormous demand” which had come through by means of the Airline’s new customer service feedback initiative. The colourful CEO hinted quite strongly that perhaps Ryanair had been over the top with carry-on luggage and other passenger issues and that Ryanair would now listen more carefully to customer feedback and make changes that would make it easier to Fly with the airline.
It was announced that from February 2014 it would move to fully allocated seating on all its flights. Passengers who did not want to pay €5 to select their preferred seats would be allocated seats in the 24 hours before the flight.
The new measures also included a second small carry-on bag and a 24-hour “grace period” to allow passengers correct minor booking errors.
It also made upgrades to its website, including an improved booking path, which reduces the amount of “clicks” to make a booking from 17 to 5.
These changes were a considerable move in a different direction for Ryanair and that wasn’t all. Irish and UK TV advertisements were launched showing smiling staff assisting passengers and suddenly the public were aware of changes in approach by Ryanair.
The booking path on the website was certainly less hassle and easier to book. Passengers were no longer subject to having there bag measured and turned back with millimetres over the width and common sense was now being used with a smile. Minor booking errors which often occur, can now be changed within 24 hours at no cost and staff have improved their previous ways, even if much more can be done.
This author does not suggest that Ryanair are now a best practise example but it is widely accepted that changes have been made in the customer’s direction and satisfaction levels have increased in general terms. Ryanair have taken on board customer feedback and have created a series of changes suggested by their millions of passengers as well as those who had left the business.
The past six months has seen this change in customer service approach result in more positive comments about Ryanair than in any other time in recent history. Once again, this is not to suggest that sinners have become saints overnight but it must be acknowledged that Ryanair have won the hearts and minds of customers in bigger numbers than previous with the second cabin bag and website booking path in particular.
Where does that take us to now?
11 months on from that 100th position in the Which magazine customer satisfaction report which were followed by two consecutive profit warnings, Ryanair last week reported a knock-out set of results which caught themselves and analysts by surprise. Pre-tax profits soared 152% to €197m with revenue climbing almost 11%. The carrier said that it would be returning €520m to shareholders via a special dividend.
Although there are other contributing factors to this rise in fortunes, there is no doubt that the Ryanair Customer Service initiative and the increased Customer Satisfaction has played a positive part in its profit results. The link between customer satisfaction and share price indication is not something new of course. The American Customer Satisfaction Index (ACSI) which tracks the leading companies in over 20 sectors is one which is watched closely by analysts and is seen as a predictor of performance and share price both upwards and downwards.
As Ryanair management set out their stall in the autumn and winter of last year in changing customer service direction, there would have been shark investors and stock market players predicting a positive change in fortunes and placing their money in the right place.
How this now pans out from here on will of course be an interesting observation of Ryanair. The airline have been very shrewd in widely publicising the fact that the changes have been made as a result of their customer feedback initiative thereby sending out the image that the customers are now designing the service standards.
The lessons for many businesses will be that the customer has a voice and when the voice is not heard, company fortunes can take a tumble or two and even worse. If however the business reacts to what the customer is clearly asking for and if that is within reason and without serious threat to margin…..then greater things can and do happen.