This week, the budget airline Ryanair reported unexpectedly positive results, with profits up 32%. These were unexpected as earlier this year the airline was forced to put out two profit warnings.
This round of positive profits were partly attributable to the warm reception of the company’s Business Plus product, as well as the low price of crude oil in recent months. It is also largely due to CEO Michael O’Leary’s vow earlier this year to cease “unnecessarily p****** people off” and be nicer to his customers. Examples of this p****** off included threats to charge passengers up to £5 to use the loos on planes, as well as to introduce “standing tickets” whereby some passengers didn’t get a seat so as to get more people on planes.
As one might have expected, this vow worked well, and Ryanair enjoyed a rise in passenger numbers of 12% in the current quarter, and 20% in the final three months.
The fact that his vow of nicety worked seems to have been a surprise to what some have termed: “the loud mouthed” businessman. Indeed, his new strategy has proven to be so much of a success that he has announced his intention to continue being nice to his customers – thank heavens for that.
Rather than sharing Mr O’Leary's surprise that his nice strategy worked, we're rather surprised that he hadn’t realised the customer centric approach had always been necessary.
In any walk of business, whether capital markets or otherwise, placing the individuals / organisations that you service at the core of everything you do is essential for commercial success, to earn a good reputation, survive the initial years and thrive in the later years.
In an age where consumer loyalty has been work thin, corporate competition is at its peak. Companies are accountable for all that they do – social media is the first place a disgruntled customer will share any tales of woe. Companies must value their customers and work their entire business models around them. This will keep them happy and therefore keep them as customers. Supermarkets such as Tesco and Sainsbury are famously battling the same issue as Ryanair, and in response have been working to tailor their customers’ experiences to be second to none.
Similarly, whilst companies can benefit from treating their customers well, publicly listed companies must treat their shareholders so. With more and more companies coming to a market that is slowly but surely recovering, publicly listed companies must reward their shareholders to ensure that they stay the journey. The companies that perform best on the London Stock Exchange are those that place their shareholders at the fore by paying out regular dividends, communicating effectively and only making business decisions that will positively impact their shareholders.
The fact that Ryanair’s results made the news is not notable; they are a large, consumer facing company. The fact that Michael’s statement was featured in most headlines, however, is notable as it shows exactly how important placing customers / shareholders at the fore is.
Businesses should be constantly communicating exactly how they are placing their customers and shareholders at the fore so as to ensure that their good work is not going to waste. As pointed out by Forbes contributor Micah Solomon, visibility is one of the seven most important elements of having a truly customer centric business model. These days customers like and need to be rewarded for their loyalty, and so will be scanning the headlines for the companies that will do that. Stories of customer reward schemes and so on will therefore catch the eye and possibly custom.
There is an old saying that is often bleated by the elders of the world: “manners don’t cost you a penny”. This week’s headlines have never proven this point more effectively, even showing that in the case of Michael O’Leary, good manners can even gain you a lot. We look forward to seeing a bright future for the newly focused Ryanair.
This week Abchaps attended a very interesting event hosted by UK – Israel Business who hosted Avi Hasson, Israel's Chief Scientist, part of Israel's Ministry of the Economy. The event was attended by the UK Ambassador to Israel and the Israeli Ambassador to the UK. The panel discussed the huge trade links between the two countries and Israel’s highly successful tech sector and opportunities for English companies to tap Israeli expertise as well as Israeli companies to take advantage of the UK market, in particular the capital markets in London.
We also enjoyed Sanlam Securities' networking event and the Recombu Awards.
Chris Nicholls, previously an executive previously director at JP Morgan Cazenove, joined Deloitte as a partner of the equity capital markets team.
KPMG expanded its Cyber Security Business by appointing Rob McElvanney and Steve Bates from IRM, and Lawrence Munro from Nebulas Solutions Group.
Guy Hill joined Sanditon Asset Management as its Senior Investment Director of the European investment team. He was the London head of Swiss equities team at Helvea.
The Lord Mayor’s Show is taking place on Saturday 8 November, with a procession from 11:00 – 14:40. The parade takes the flotilla, dancers, drummers and over 7,000 participants throughout the City of London. The evening is rounded off with a fireworks display over the Thames in the evening.
If you haven’t quite put Guy Fawkes celebrations to bed just yet then let us recommend the Battersea Park Fireworks. Tickets are £10 a pop but definitely worth while, with one of London’s best displays on offer. The bonfire is lit at 7:30 so make sure you leave plenty of time!
If you are a ruby fan, then head to the Famous Three Kings this weekend. 16 screens worth of Autumn International delight as England take on the All Blacks at 1430, Wales face up to the Wallabies, Scotland face Argentina and then finally at 1730 the Irish play South Africa.
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