Michael O’Leary announced a couple of weeks back that he wanted to turn around the ‘abruptness of RyanAir’s culture‘.
So those of you who have heard me speak over the last few years will know that I use RyanAir as a great example of Customer Experience Management done well. Whilst this was initially shocking to many (a few years ago) most people have more recently cottoned on to why and audiences are now beginning to quote RyanAir back to me when I’m looking for examples of CX management.
However the vote as to whether people would invest in them has always been split into two camps.
- Just look at their results – they are a successful business, they are profitable and you said it yourself Martin – they have managed their CX very well – we know what to expect when we travel with them and there is a market for their product. So yes I’ll invest – I think they will continue to provide a good return
- They treat people like [insert your preferred strong words] – of course I wouldn’t give them my money
Personally I believe it really is as simple as Camp Two ultimately being the right answer however the problem is that Camp One were also ‘right’ – at least on the face of it. From a short term investment point of view it was easy to see why money should be put into RyanAir. The reason I believe Camp One have some faulty thinking is explained in my blog post earlier this year on where the money really comes from and why that model is not sustainable in the long-run.
RyanAir have issued a profit warning and are receiving a lot of bad press for their poor customer service. I believe that this is the beginning of the end for RyanAir being a business that makes a profit out of consistently managing their ‘below benchmark’ CX. Their business model is cracking (rising fuel prices, regulatory challenges to their revenues and competitive pressure on price) and their customers have no reason to stay other than for price. We’re not going to see them go bankrupt anytime soon but I think that we will enter an era of discussion of RyanAir as a struggling airline in the face of tougher competition on both price AND service. It is the latter that RyanAir just has no idea how to respond to.
It’s interesting to watch this unfold because it is, for once, shareholder pressure that is forcing Michael O’Leary to address his poor customer experience and also because I believe that despite his declarations he still doesn’t get it.
O’Leary has said that he wants to stop ‘pissing customers off’ and that this also shouldn’t cost any money. From anyone else I’d take that as a simple statement of good practice. From him I can’t help but feel that if it HAD cost any money he wouldn’t have bothered. I simply don’t believe he cares.
Fundamentally he has a company built on his own personal set of values which show no regard for his customers or employees. Changing that culture and turning around RyanAir, is going to require that he leaves or has some kind of personal revelation.
Now this HAS happened before with smaller companies but typically with the big ones the CEO moves on and a new culture comes in. If you want to hear about what a big difference culture CAN make I’d encourage you to watch the video testimonial from Roma Mouldings who attended a 3-Day bootcamp with Zappos Insights – who know a thing or two about Culture’s impact on performance!