Richard King on the Tom Peters blog comments:"European low fares/no frills airline Ryanair flew 5.8 million passengers in June, up a cool 13% on their June 2008 figures.
Meanwhile "the world's favourite airline" British Airways has struggled to attract 2.9 million passengers in June, down 5% over the same period.
Ryanair gets regularly pilloried for its relentless efforts to cut its operating costs, simplify its processes, and find novel ways to charge passengers for "extras"—like using the toilet in flight! BA, on the other hand, continues to get a largely sympathetic press as it tries to persuade its staff to take less pay, in one form or another, to offset their declining numbers and mounting losses."
Everyone complains bitterly about Ryanair but they love their low low prices too much to use a different carrier. 'We' continue to use Ryanair despite what experience tells us.
BA is like a national institution that doesn't always get it right (remember Virgin vs BA) and yet, for many, it gets forgiven because it harks back to some dim, distant idea of being British and being 'the world's favourite airline'. Despite what experience tells us.
Some thoughts:
- low low prices will always find a market - are you a Ryanair or a BA? an Aldi or a Waitrose?
- will BA survive with its old business model? - maybe, maybe not; you mistake me for someone who looks like they care
- will Ryanair survive with its 'newer' business model? - probably yes, and yes I will probably end up using them despite everything I hate about them - short memory, eh!
A quick look at how Ryanair makes its money on a flight helps understand its financial success. Chris Anderson points out that Ryanair makes a loss on most of the seats they sell on their planes, but by offering their customers a whole range of services and products (insurance, upgrades, hotel booking, car hire, etc) the company is very profitable.
The same thoughts apply to the music, book, news, and newspaper industries. And maybe your industry.
Some examples from our clients:
- pubs now make their money on the food and mixer drinks
- public toilet manufacturers now make their money on the maintenance contract
- keynote speaker makes his money from licensing content
- office designer makes her money on commission from product sales
- software manufacturer makes money from giving away the standard version but selling the premium model (see also Microsoft)
- Pilates trainer makes money on back of the room sales
- coffee shop makes money on selling CDs and coffee machines
- blog makes money from Ads.
It is all about giving with one hand and taking with another.
Most of this is not new but it (the trend towards free/cheaper stuff and adjusting your business model to accommodate) will be more pronounced as time goes on.
While it is not a fundamentally new model (I will use that word "paradigm" from one of our comment makers), it is a trend that we will see more and more amongst our competitors.
So,
Where did people make the money in your industry, say 5 years ago?
Where will they make the money in 5 years?
RELEVANT LINKS
Why $0.00 Is The Future of Business - Chris Anderson
Airline Food - blog entry
The Vulgar Mr O'Leary - blog entry
18 comments:
Ryanair is for those scrooge-like philistines who are penny-wise and pound-foolish. Anyone who goes to the trouble of arranging a nice foreign vacation, but then uses such an 'airline,' invariably arrives home needing another vacation or therapy, just to get over the nightmare that was their return journey.
Who would be so horribly insane as to take their loved one's or even themselves through such an ordeal, and pay for it, handsomely?
It is clear evidence that, just as some people wouldn't know a Chateaubriand from a Big Mac, many have no idea of the difference between Virgin, Lufthansa etc and Ryanair.
It's a sad reflection on our current attitudes towards what's important. Any who support such drivel as Ryanair, ought to be executed as the traitors to service they are, and their heads mounted on the entrance to the airports to remind travellers of the madness that prevailed in these times.
The best in my own industry has remained on the path of decency, and still sells exactly what they did 5 years ago, only further developed for the customers needs and for quality. My own company (200 years old) even still has a full lifetime backwards and upwards compatibility model for technology.
This means that we are not the cheapest, unless that is, you look at cost of ownership over time, then we are cheaper than the worst of our market, the cowboys who compete only on bottom line, our very own industry versions of Ryanair.
Of course, such idiotic propositions as appeal to the US style of bean-counter, who just look at a one year ROI, but then we don't work with such people, and I would never like to be encapsulated for hours on a plane with them either. I would worry too much that I've signed my own death warrant, and that of industry and my country.
It never ceases to amaze me that many consumers reduce their buying decisions to the lowest common denominator; those uneducated who have no idea that it is actually cheaper to fly Virgin than Ryanair, when all factors are considered.
Where have all those who appreciate the 'craft' and 'craftsmen' gone? Such like-minded proponents of quality and longevity are still amongst us, but I fear that we are losing the battle, as the lunatics have apparently taken over the asylum....
Hurray - someone else who wants to flog them to within an inch of their lives and then leave the open wounds to be pecked at by the vultures. A nice slow death.
I sympathise with your sentiment 100%, but cheap flights make the trip cheap. You can't get away from that fact, says someone who is a sucker for bargain. And maybe that is the point, I am a SUCKER for a what I think is a bargain.
My gripe is that there is no real excuse for totally crap service - it takes more effort to be rude than to be polite, or do Ryanair only employ people who score highly on the rudenessometer.
Let us start a Campaign for Real Service. The majotiry of great service will nealry always come from the small bsuiness community and not from the corporates. But even successful small businesses will (often) sell-out in the end.
Bonnie
OK Bonnie, but there is a difference between a bargain that is something of greater value sold at an exceptional, one off price, and a bargain that is re-engineered to suit the lowest of expectations.
It's OK to lower prices by cutting the fat, (leaving a little for the winter) but certainly not the muscle and definitely not the skeleton. Yet, this is what Ryanair does, whilst it's bovine customer base keeps spitting and lisping "I give her sanctuary! I give her sanctuary!" Then they complain when they are given a coarse rope with venomous 'service' to swing to their destination "I am not an animal! I am not an animal!" How confusing.
The 'Tourist' class of 200 years or so ago, used to accept that they would travel with the animals, rats etc, for their bargain price. I fear that this is the Ryanair concept. It is out-dated and it is wrong. But it is what is required of them by their customers, the same people who were never meant to be given daylight, let alone a passport. If ever there was evidence that two rights, do not make a wrong...
And Robert "..I will probably end up using them despite everything I hate about them.." What a shame! You will be contributing to the problem then.
I will never, never surrender. I demand to be taken care of when I buy, or I simply won't buy at all. Neither would I dream of buying from someone who does not specialise. I pay more, but I get satisfaction.
It's about mindset, and it starts with one's own. Horses for Courses. You Sow What You Reap. You think, therefore you are. Etc, etc.
@Andrew - You are right about false economics and standing tall. I would sooner pay a fair, proper market price for a service, than have to spend an inordinate amount of time in queues and on the phone putting something right afterward.
@Bonnie - Campaign is a good idea. If you experience bad service from "the corporates" you are dealing with the symptoms of a cheap culture. The workers see you as the root cause of their low salaries. And I think bad service comes from many, small and corporate entities in these days. It's their fault for pandering to the cheap mindset.
@Robert - Surprised to read you have U-turned on you Ryanair stand. Perhaps you'd be wise to first think back to your Hotel experience post? http://robert-craven.blogspot.com/2008/11/making-things-worse-customer-service-in.html
Christian
Don't know what happened to the formatting on this posting. I will re-submit.
Thinking back, I don't think I have used Ryanair for several years now.
Robert
Interesting discussion. Agree with all who disagree with poor service and the short sighted that demand it through price.
Interesting parallel with the previous post "Making Things Worse - Customer Service in Cornwall" recommended above by "Christian".
So Robert you say you have not used Ryanair, but also say that you probably will - do you mean you have changed your mind again about Ryanair and will not use them?
Does your change of heart mean you plan to copy their "business-model" and start selling, eg, cheap toilet paper with good business advice on each sheet?
Tomo
I have used Ryanair in the past (ages ago) but not for ages. I don't plan on using them but couldn't rule it out 100% - the lure of a cheap 'n' cheerful long weekend away somewhere, probably planned etc by someone else. (Say the word 'skiing' and I'm yours!)
Robert
RE the http://robert-craven.blogspot.com/2008/11/making-things-worse-customer-service-in.html posting.
It is interesting how time softens one's anger.
My beef then, and now, was not about price or the fact that they had offered to reduce the bill in the light of the lousy night's sleep.
My beef was about
1) the fact that that they had let out the room knowing that the fan bothered people
2) how they dealt with and treated us after the complaint.
They happened to offer a price reduction to recompense the inconvenience.
But for me this was never about the money.
Robert
Hello Robert,
Indeed, you complaints were justified. But, surely it was initially about the money, i.e. you chose what was ostensibly a 'bargain'. Just as with Ryanair's attitude, the hotel deemed that your rights were immediately de-valued from a full market rate customer's, to a bargain basement one.
As you were no longer paying going rate, and indeed you were frequenting such an establishment as theirs, you were wrongly seen as someone who does not have the same rights as an, eg Waldorf Astoria guest, and are someone who has no idea about standards.
This is the problem with people patronising such a business; it simply drives down the overall level of service in a given industry.
You room was never a 'bargain' to begin with, i.e something of greater market value than you were being asked to pay. It was actually a reduction of price, based upon a complete reduction of standards.
They conned you, and they knew they had done so. Just as Ryanair is doing to others now.
But, I would argue that surely you would have gone to a different hotel, with a proven reputation for consistently good standards, and paid more for it, if it hadn't been about getting a bargain, and therefore about the money?
Back to Ryanair, and to show what O'Leary thinks of his product: "The low-cost model only really works for short-haul flights [...] If we started flying farther afield, we'd have to do something stupid like introducing what I call a 'rich class' to make it pay.."
Remind anyone else of Gerald Ratner?
Andrew
I think you are making assumptions about how we select hotels (or cars, planes etc). We don't always want or need 5* hotels. Sometimes I am happy to go to a B&B where you (can) get real service.
For me 5* fuss can be somewhat over the top.
Bonnie
We all make choices about what we buy. And we don't always buy the best. Or the most rational choice. We area all emotional and irrational beings. We use rationality to justify our irrational decison-making.
Mr Spock might not make the irrational decisons but I'd rather spend an evning with Captain Kirk who is infallible, inconsistent and human.
With limited budgets all of us choose where we will spoil ourselves. And where we can make economies.
I would rather ski with Ryanair than not ski at all. With a family of six the savings are huge. A smaller price to pay quite literally.
Having said that, "Life is a sh*t sandwich and the more bread you have, the less sh*t you have to eat.
Tim
An amusing blog site this.
Guys, Gals, business is business and that's the end of it. All is fair in love and war and so on.
No more commentary required unless you enjoy the sounds of your own voices.
Try working in the real world.
Chris
Chris
The "business is business" argument stinks. It is like people who say they are "people people" as if saying these phrases then gives you the right to behave how you wish.
You are wrong. Just because it is business does not justify immoral behaviour.
Tim C (not to be confused with Tim!)
We all make choices about what we buy. And we don't always buy the best. Or the most rational choice. We area all emotional and irrational beings. We use rationality to justify our irrational decison-making.
Mr Spock might not make the irrational decisons but I'd rather spend an evning with Captain Kirk who is infallible, inconsistent and human.
With limited budgets all of us choose where we will spoil ourselves. And where we can make economies.
I would rather ski with Ryanair than not ski at all. With a family of six the savings are huge. A smaller price to pay quite literally.
Having said that, "Life is a sh*t sandwich and the more bread you have, the less sh*t you have to eat.
Tim
RE the http://robert-craven.blogspot.com/2008/11/making-things-worse-customer-service-in.html posting.
It is interesting how time softens one's anger.
My beef then, and now, was not about price or the fact that they had offered to reduce the bill in the light of the lousy night's sleep.
My beef was about
1) the fact that that they had let out the room knowing that the fan bothered people
2) how they dealt with and treated us after the complaint.
They happened to offer a price reduction to recompense the inconvenience.
But for me this was never about the money.
Robert
OK Bonnie, but there is a difference between a bargain that is something of greater value sold at an exceptional, one off price, and a bargain that is re-engineered to suit the lowest of expectations.
It's OK to lower prices by cutting the fat, (leaving a little for the winter) but certainly not the muscle and definitely not the skeleton. Yet, this is what Ryanair does, whilst it's bovine customer base keeps spitting and lisping "I give her sanctuary! I give her sanctuary!" Then they complain when they are given a coarse rope with venomous 'service' to swing to their destination "I am not an animal! I am not an animal!" How confusing.
The 'Tourist' class of 200 years or so ago, used to accept that they would travel with the animals, rats etc, for their bargain price. I fear that this is the Ryanair concept. It is out-dated and it is wrong. But it is what is required of them by their customers, the same people who were never meant to be given daylight, let alone a passport. If ever there was evidence that two rights, do not make a wrong...
And Robert "..I will probably end up using them despite everything I hate about them.." What a shame! You will be contributing to the problem then.
I will never, never surrender. I demand to be taken care of when I buy, or I simply won't buy at all. Neither would I dream of buying from someone who does not specialise. I pay more, but I get satisfaction.
It's about mindset, and it starts with one's own. Horses for Courses. You Sow What You Reap. You think, therefore you are. Etc, etc.
Vile and vulgar are the words that sprinfg to mind here.
Southwest has tapped into consumer resentment over the fees that other airlines have started to charge for services that used to be free with a commitment not to charge for those same services (e.g. "Bags Fly Free," "No Change Fee") and promotion of that commitment with ads like the one above.
http://brandmix.blogspot.com/2011/04/we-dont-charge-fees-for-stuff-that.html
Post a Comment