Ryanair CMO’s ‘boring’ recovery plan hinges on more targeted upselling
Punchy marketing campaigns and eye-catching stunts aren’t the route to recovery for Ryanair, which today suffered a 29% plunge in full-year profits. Instead, chief marketing officer Kenny Jacobs is going back to basics to improve its website and app.
Jacobs’ self-described “boring” IT plan is pretty simple. It has no problem growing its customer base – it was up 7% in the past year thanks to route expansions – but to partially offset the rising cost of fuel that's hitting profits, it needs those customers to buy more add-on products.
One controversial way of doing this was reducing what a customer gets when they buy a seat on a plane. Changes made last year meant that simply booking a ticket did not guarantee a passenger could keep their cabin bag or sit beside family or friends – those are now categorised as ancillary add-ons, along with checking-in a bag, booking a hotel room or hiring a car.
The average passenger currently buys three of these add-ons every time they fly with Ryanair. But to up that number Jacobs recognises that the right offer must be put in front of the right passenger during the booking process.
“If you've booked to go to Gatwick and back to Dublin on the same day then I won't try and flog you a hotel and car hire,” says Jacobs. “The first thing I'll try and sell you is the Gatwick Express, then the equivalent in Dublin. That kind of basic example is where we're starting. That's what Ryanair customers need.”
For Jacobs, getting back to basics might be “boring” but he says this kind of “personalisation” is a vital way of running its website and app to generate meaningful revenue. And he claims is something few airlines can do as so many bookings are made through third parties.
“If you take an airline like Lufthansa or British Airways, over 60% of their sales don't come in from their own website, it's from travel agents and third parties. That's holding back airlines [from doing personalisation]. 95% of what Ryanair sells is through our own platform - that means we have more data,” he suggests.
“So, personalisation does not mean an email from us saying ‘Happy Birthday here's a discount’.
“We'll be able to collect and use the insight we have on a customer, who they are and what they've bought before, strip out products they're not engaging with and put in products that are more relevant. We’ll hit them with content and offers that are more relevant.”
In post-GDPR Europe, Jacobs and Boxever, the tech firm it’s hired to manage this personalisation journey, will be relying heavily on the data from the 45 million MyRyanair app users.
“At least six times a year I get companies offering to flog me the data of other airlines and what people are searching for on Google. We're not interested. We don't need it. All of the data we have is already in our ecosystem. It's just about using it. It will be logged-in user data, what they've bought with us before and what they're browsing for now. We're using the data to give a cleaner, faster online experience and to cross and upsell.”
As the overhaul progresses, Jacobs will then look to integrate more “social data” for on-site marketing. Ryanair passengers using platforms like Instagram, Facebook and Twitter to share their holiday experiences could have that content pulled into the app for others to see. It’s something fashion brands like H&M, for example, have started to experiment with but Ryanair sees it as a simple way to highlight routes and when people have used one of its add-on services.
The summer of reliability
But a digital upgrade alone won’t help Ryanair overcome a profit slump. Chief executive Michael O'Leary has warned "artificially low prices" and "attritional fare wars" could impact profits for the coming years.
The focus then is on winning that fare war with rival European carriers (eastJet, Lufthansa, British Airways-owner IAG and Air France-KLM) – something Ryanair is confident of as it has “the lowest cost base” – and improving brand affinity with on time flights and fewer cancellations.
“We're a very functional brand. Passengers don't choose us because they love us. They choose us for price, reliably and the route network,” continued Jacobs.
“Everyone is talking about digital, but we could have the most personalised website, chocolate fountains at the boarding gate and Ed Sheeran playing live on our flights…but if your flight is delayed you don't give a shit.
“So, it's the summer of reliability. Our biggest thing we're working on, including the marketing department, is making it a boring summer of fewer cancelled flights, best on time performance. We want this to be a boring summer with good performance.
Reliability really drives customer sentiment for airlines as much as low fares.”