Tuesday, 29 July 2014

Do Service Quality Improvements Pay Off?

Ryanair is the latest firm to test whether improving service quality--even on a no-frills airline--will attract more customers and boost profitability.

Being 'cheap and nasty' is not the positioning chief executive Michael O'Leary wanted for his Ireland-based airline, yet that's exactly the view many had of Ryanair until last year. Tickets were cheap, but everything else carried a price tag. Or a penalty.

Ryanair flew from secondary airports to keep costs low, part of its stated promise to offer 'the lowest fares on flights to all of our destinations – and that’s guaranteed'.

Facing competitive pressure from easyJet and others, plus ongoing economic challenges in many markets, Ryanair recently announced major changes. The CMO explains that the objective is to 'become as liked as we are useful'. During the news conference announcing the changes, O'Leary held a puppy in his arms to reinforce the new attitude towards service.

To start, Ryanair has simplified its website to make it faster and easier to book a ticket. Now seats can be allocated before boarding, making the process more user-friendly. Most significantly for businesspeople who fly, Ryanair started arranging flights to and from conveniently-located top airports rather than only from secondary airports far from city centres.

These moves are winning Ryanair more passengers and more profits, according to its latest reported results. Today, Ryanair flies some 82 million passengers every year and is marketing its customer-friendly attitude with an eye towards further expansion in the coming years.

Customers are encouraged to follow Ryanair on Twitter or download one of its apps for access to flash sales and more.