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What are you known for, why do your customers support you?

Let’s take a step back and consider two well-known and two of the few consistently profitable airlines – RyanAir and Singapore Airlines. If you have flown with these two carriers you'll be struck at how the same product (in this case getting you safely from point A to point B) can be so hugely different. Whilst a loyal Singapore Airline traveler would be disgusted at everything they experienced with RyanAir, from the cramped seating, the long walks and the abrupt service, your hardy RyanAir traveler would be equally appalled at the price of a Singapore fare and the pretentiousness of the brand. Singapore fits in nicely with all our common sense. But what of RyanAir? How can we reconcile these facts?

  1. RyanAir is named as a worst-ranked brand year-in an year-out, based on ease of customer use of a company's products, services, interactions and communications.
  2. RyanAir carries more than 30 million more passengers than its nearest competitor, Lufthansa at 50 million, and is yet again the world's most profitable airline.

What are Singapore Airlines known for? What's important to their customers?

SingaporeAir Attributes

Branding Message:

You are special and we are special, we're the world's favorite airline. You love flying with us so much you'll want to cut your vacation short just to be pampered in the way you deserve. Nobody understands you quite like we do, we're not for the masses, but for the discerning select few, to whom style, elegance and sophistication are no stranger. To capture that aspirational segment they “Make every customer feel at home when they fly with us. This has always been the cornerstone of our service philosophy." "Our customers’ preferences have always been the foremost consideration in the duration process for our new products."

What are Ryan Air known for? What's important to their customers?

Ryan Air Brand Attributes

Branding Message:

We have one and only one way of doing business, no matter who you are. The frail and the bulky (babies and prams) are not welcome, in fact we'll charge you more if we think you're over-weight! if you want love and attention get a dog, our business is about making air flight affordable and available. we carry more passangers than anyone else, with a lower carbon footprint than anyone else with fewer delays than any other airline. our pricing is more transparent than any other airline. we think that's a smallprice to pay for some operational efficiency and occasional abruptness.

Michael O'Leary is a no nonsense man who sets a very clear and uncompromising direction for the business and for its customers. he's the kind of man who'll remind you that when taking time to pick sides, you risk getting shot whilst sitting on the fence. His is a business that has broken down the management of value drivers and the removal of value destroyers to an exact science. Watch how he releases results to the market. He encapsulates everything that SAA takes 172 pages to do in 4 key metrics compared with previous periods:

  • The total number of passengers
  • The Load Factor
  • The Ave Fare per Traveler
  • The Ave Revenue per Traveler

Only one of these requires explanation: Load Factor, which is Production as a % of Capacity, similar to occupancy in Hotels. Behind these simple metrics lies well defined operational metrics. All of these are available on a real-time basis (they have telemetry in the airplanes as they fly!) Every SME can and indeed must do what RyanAir does in terms of a few but excellent measures to track scalability, efficiency and your value drivers. Here's what RyanAir use: Note, there are not too many and they might look complicated but from a Value Tree perspective they are really simple. in a similar manner an SME should always have.

  • A unit measure of capacity - rooms, or training hours or widgets
  • A unit measure of production - ZAR per room, ZAR per hour, ZAR per widget, ZAR per employee
  • A load factor - or utilisation rate - % rooms used, % hours billed, % widgets sold
  • Discounting or price discipline - actual rev/expected revenue
  • Margin or cost:income ratio or expense ratio expressed as a %, ie 14c of each ZAR of revenue goes to fixed costs

Meaningful Tracking Measures

Measure Purpose Description Calculation
Available Seat Mile (ASM) the unit measure of capacity One seat (empty or filled) flying one mile is an ASM

System ASMs are simply the sum of each of these individual segment calculations
A 145 seat plane, flying a trip (or segment) of 500 miles = 500 x 145 = 72500 ASMs
Revenue Passenger Mile (RPM) A unit measure of production A paying passenger flying one mile creates an RPM
System RPMs are the sum of this calculation for each of the revenue segments
100 passengers flying 500 miles generates 100 x 500 = 50,000 RPMs
Load Factor Production Compared to Capacity or measure of production utilisation For an individual flight, divide the revenue passengers on board by the aircraft capacity;

To calculate system-wide load factor, divide RPMs by ASMs;
RyanAir have Load Factor per year of ~ 90%
American Airlines ~ 80%
SAA ~ 70%
Yield Revenue per Passenger mile A measure of Revenue To calculate system yield, divide passenger revenue by total RPMs

To calculate a customer's individual yield, divide ticket price by mileage
expected industry value should range between 10-15cents/mile

whilst an individual sea6t yield wlll hjavge a wider range up to 30c/mile if a ticket for a 500mile trip costs 78US, then the yield is 78US/500= 0.156 or 15.6c/mile
Revenue per Available Seat Mile (R/ASM the measure of how much revenue we generate per increment of capacity Multiply load factor times yield to g
Cost per Available Seat Mile (C/ASM): much it costs to fly one seat (empty or filled) one-mile. .
To calculate unit costs, divide total operating expenses by Total ASM capacity

When you understand why your customers buy your products you can focus on what they need and what you must deliver with your very best efforts, at the same time you can place less emphasise on those other attributes you may have considered more important previously.

If you chose a customer intimacy model, perhaps because SMEs struggle with price against the economies of scale of larger competitors, then be very clear on what Customer Intimacy is and requires. A move to customer intimacy should not be predicated on the harsh realisation that you cannot compete on price. For an SME there still needs to be a developed market for which you will meet some need other than price. Here's a very generic example that allows you to generate discussion and get to a first cut of what might be required.

Competencies for your Brand

To become a brand which is you will need to develop these competencies which require excellent delivery of these capabilities
Customer Centric Innovative Solutions Easily Accessible Footprint with few barriers to purchase (KYC)
An ability to predict changes and adapt & deploy quickly
Product Variety and Differentiated Attributes/Features
Excellent Customer Interface Engaging, Affable,Advisors able to build trust and esteem
Well spoken, intelligent frontline, comfortable with all segments
Credible Product Ambassadors supported by reliable back and middle offices
Deep Client Insights Clear differentiated articulation of expressed and unexpressed needs
ability to connect product to a deeper emotional need
Relationship Management and a Sales Contact Strategy

Use different methods/representations to get people to interact with the team and to share their thoughts. Time invested to allow different styles of thinking to participate is important, and don't allow the quiet voice of wisdom or dissent to be drowned out. In these workshops with various parts of the business it should be stressed that the more senior members have a duty not to persuade or convince but to make sure the difficult questions get asked, with them doing more listening than they are used to.

understand what it is you wish to be
This should generate some thought and is sufficient for the moment, now we can cover the world of brand and emotional connections.