Ryanair: How good customer service creates profit

It is not harsh to say Ryanair fails to deliver best practice when it comes to treating its customers. In 2013, the no-frills airline was named by Which? readers as the worst brand for customer service, and in early 2014, consumer discontent finally took its toll on profits as a first drop in five years was posted.

After admitting “falling asleep” as passengers began to turn, chief executive Michael O’Leary launched an ‘Always getting better’ programme in a bid to showcase the “revolutionary change” taking place at Ryanair. Only four months in and results are already being delivered, with the decline stemmed and profits in-fact 11% up on the same period last year.

The direct correlation between good customer service and profitability comes as no great surprise, but the question of how and why the turnaround has been so rapid is less obvious.

According to Parasuraman, Zeithaml & Berry, service quality is the difference between consumers’ prior expectations and actual perceptions of a service. Expectations form from four sources; company promises, implicit clues, previous experiences and word-of-mouth, which in the case of Ryanair, accumulate and create low expectations. To name just a couple of examples, a public outburst by Michael O’Leary in declaring “the customer is not always right and they need to be told”, the Which? announcement mentioned above and no-frills prices do not fill customers with confidence of an excellent service ahead, meaning the threshold of a satisfactory service experience lowers.

Ryanair Diagram 1

To analyse this in more detail, Parasuraman et al.’s five SERVQUAL dimensions uncover how customers review an overall service encounter based on the combination of service attributes:

  • Reliability: e.g. flight arrives without delay.
  • Assurance: e.g. feel safe flying with this airliner.
  • Tangibles: e.g. cleanliness of airplane.
  • Empathy: e.g. policies for retriving lost baggage.
  • Reassurance: e.g. queues managed efficiently.

Parasuraman believes that, for each SERVQUAL dimension, customers have both a ‘desired’ level of service (i.e. the ideal) and an ‘adequate’ level of service (i.e. what they deem to be acceptable as a minimum), with the middle ground defined as the ‘Zone of Tolerance’ (ZOT). Given this spectrum of customer expectation, service providers such as Ryanair must understand that perceptions of their service cannot afford to consistently fall beneath the ‘adequate’ level – as this leads to customer dissatisfaction.

It is important to consider that some service attrributes hold greater weight than others. For example, price (a ‘tangible’) is likely to have a very small ZOT amongst Ryanair customers as they tend to fly with the airline and sacrifice other service attributes for the benefit of a low price. Consequently, unknown charges may automatically result in the perceived service to fall below the ‘adequate’ level. In response, through the ‘Always getting better’ plan O’Leary has pledged to reduce penalties for failure to print boarding passes – which reduces unexpected charges and restores the perceived service within the ZOT to create customer satisfaction and loyalty:

Ryanair Diagram 2

Furthermore, with customer expectations at an all-time low prior to the campaign, a relatively small investment of this kind can deliver more substantial results. Unlike a premium competitor like British Airways, where additional services are expected as standard, the recent introduction of allocated seating at Ryanair (within the ‘responsiveness’ attribute) is unexpected and therefore has potential to create customer delight at the desired level of service:

Ryanair Diagram 3

With this in mind, while customer expectations remain relatively low, there’s no time like the present for Ryanair to continue investing and improving its customer service to drive satisfaction and loyalty.

It is worth noting that the ‘adequate’ service level in the eyes of customers is moveable as they become accustomed to new service standards. The option of a seat reservation will not remain a novelty to Ryanair customers for long, which creates new challenges in maintaining these service standards. This should not put Michael O’Leary off however when considering the rapid and successful impact of the ‘Always getting better’ programme thus far. After all, Ryanair has seen for itself the consequences of slacking on service quality.

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