City & Gild: Does low cost have to equal low expectations?
Easyjet has announced that it is cutting its expected pre-tax losses, with CEO Carolyn McCall attributing its success to “progress against strategic priorities”. One of those key priorities is allocated seating, introduced by the budget airline in November 2012 and very well-received by its customers.
I have the frequent displeasure of flying Ryanair and have for many years laughed (as it is the only solution) at the bunfight of people queuing for an eternity at the gate and pushing each other out of the way to get on the plane. It is an indignity matched only by chief executive Michael O’Leary’s apparent disdain for his customers. But now even Ryanair hasn’t been able to ignore what a hit Easyjet’s policy has been and as of February this year, it joined the allocated seating club, announcing that it is "listening to customers".
In achieving low-cost, O’Leary’s strategy has seemed to be that low cost must equal the poorest of experiences. He has even in the past (I’m sure for the sake of PR) considered standing room only on his planes. O’Leary claims that most people “just want to get from A to B… You don’t want to piss [your holiday money] away at the airport or on the airline.”
Yet Easyjet has hit upon a strategy and insight which I have long pondered: low cost does not have to equal poor experience and low expectations. Allocating seats is an administrative task and therefore a cost, but with modern automation, the marginal cost versus the massive difference in experience must be negligible. The success of Easyjet versus Ryanair suggests that this is the case.
In branding I understand the need to communicate and signify where a product sits in the marketplace, but I’ve never understood why low cost needs to look cheap. Better design costs little in the grand scheme of things. Easyjet is grey and orange: it says value, but it isn’t cheap. Ryanair is a potentially nice blue, but it is offset by the nastiest yellow the airline could find. It looks cheap, expectations are set very low and then they are delivered against. It would not have been much more expensive to design an aesthetically more pleasing environment that still communicated low cost. It is lazy to think that the consumer who wants low cost or good value is willing to put up with poor experience.
This week it was announced that there would be a Pound Pub launching in Stockton-on-Tees, a test for a potential national chain. Beer will be £1.50 a pint, half the local average price. What’s interesting is that the beer will not be watered down, it will not be thrown at you by a rude barman or delivered in a chipped glass. The pub is achieving this price point by taking away expensive and somewhat peripheral benefits – live football matches on big flat screens, for example. The target for the pub is the kind of people who used to go to working men’s clubs, in other words, regular people who just want a low cost pint and a good chat on a pub stool and nothing more. I expect this pub experience will be good, it will be made by the people, not the tat adorning the walls. It will be no frills and low cost, but it will not be a negative or poor experience, or it won’t survive.
I applaud Easyjet for putting value and good experience into low cost. We consumers want a bargain, but we don’t want to be taken for fools. Ryanair, I’m very glad you’re listening.
Simon Massey is global chief executive of strategic branding consultancy The Gild, www.the-gild.com