Start Up Blog

Brand in decline – Qantas

Posted in entrepreneurship by Steve Sammartino on March 5, 2012

I’ve been loyal to Qantas for a very long time. Initially because it was superior (certainly in the post Ansett environment) more recently because of irrational reasons and lack of choice. These days are now officially over. But rather than bore you with the number of brand fails I have had to endure, I’ll share with you the catalyst event which has now resulted in my decision.

Qantas regards itself as a full service airline. For these reasons I have been a loyal brand user – to the point where I have become a Gold Frequent Flyer. The bundle of benefits included features like high frequency of flights, safety record (although that is questionable now), lounge access at airports, on board service, on board entertainment, a global alliance flying scheme to name a few things.

When traveling on business I really like knowing I will get a meal when leaving directly from work, time is limited and it is one less thing I need to think about. It was good to know my 7pm flight two days ago included ‘Dinner‘ pre-flight as can be seen below. So there can be no disputing, what Qantas believe they are providing.

Unfortunately when dinner arrived – it didn’t quite meet my expectations.

In fact, I feel insulted by Qantas that they call this dinner. It’s plan rude. If you asked someone out for dinner – would you buy them a sandwich? If you had people over for dinner, would you give them a sandwich?

When you insult customers they eventually take their business elsewhere.

This decision to save less than $5 on a hot dinner has resulted in Qantas losing my $25,000 I spend on air tickets per year. As now I will fly Virgin Australia domestically (now full service with decent lounges) and Singapore Airlines when going overseas (who are now linked to Virgin in Frequent Flyer schemes).

Yes, by trying to save $5, Qantas have just lost $25,000 from a Gold frequent Flyer.

For me it comes down to brand promise. It isn’t that I want too much, but what I do want what the brand promises me. And when the brand attempts to deceive, or save cost against their promise – that is when I look to other providers.

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Creating Brand Loyalty

Posted in entrepreneurship by Steve Sammartino on April 4, 2009

Here’s a list of brands for which I am personally brand loyal with. And to the right of each brand I have a given a reason.

Brand & reason
Qantas Domestic:    They are the only full service domestic airline in Australia.

Ripcurl Wetsuits :   They are simply the best quality, and the warmest. I will never, ever switch as the cost of getting it wrong is $600+ mistake. I also love the brand history.

Collingwood FC:    I am a fan and I support the club, in this category performance wont create switching, but it does reduce my purchase frequency

iphone: I love it’s seamless funcationality and integrating so much, I find it hard to believe a better option will ever exist. I don’t even mind putting up with a few dropouts

Crumpler Bags: I love their design, and functionality, I also love the story of how they started and the fact the owners are from my local city.

Seth’s Blog: I know I’ll get a golden entry aroud once a week.

Twitter: It’s the only social network which suits my attitude & lifestyle. I like it’s brevity & immediacy.

Google Search: Works best. Would switch if better one came along. On occasion I now search on twitter for attitudinal & results based on timeliness.

Lavazza Coffee : Best tasting Roast & ground coffee after trying many others.

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If we are fortunate enough to have a level of brand loyalty, then it’s equally important that we understand why we have it. In the case of Qantas, it’s more serendipitous than through providing a super product. Notice I’m only loyal with domestic travel, I’ll switch to Singapore or Cathay on international travel. Other brands like the Collingwood football club suffer from reduced revenue rather than losing market share. And Google, well they are only as good as their product where the switching costs are extremely low…. Once upon a time I was loyal Yahoo search…

The point for startups is simple. The reasons for brand loyalty are varied. Generating it is almost always related to having an awesome product. If our product isn’t awesome enough, then we need to ‘Awesomize it’. Only then will the brand story matter. Once we get loyalty our next job is to build a wall around it where switching costs are too high.

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Qantas gets it wrong with Effiency

These 3 photos where taken at Melbourne airport on a Friday night.

This is of a quick check (self check in terminal)of which there are 22.

This is of the the bag check in staff of which there were 3 working. (They have spaces for 22 employees)

And the this photo is of the ensuing crowd and chaos.

(the crowd goes around the corner it’s at least 100 deep)

I asked the staff member if she’d like some help tonight – she seemed flustered with how busy she was. She said “of course, but it’s ‘cheaper’ this way”. Then I asked if she thought “quick check” was quicker. She said “definitely not”.

So here’s the thing – Qantas make money out of the quick check. The save on overheads. On the balance sheet it makes sense. But what is the ‘real cost’ of doing it?

What it does is, is actually diminish what they actually provide at a differentiated level. It reduces their product from “service” to “travel”. They further commodify themselves against their low cost airline competitors. They make us ask why we are actually flying qantas and paying a premium…

- Is it the food service? – Not likely, given the food is most often a gourmet cookie & juice.

- Is it the service in the air? – Not likely, given their staff are less polite than budget airlines.

- Is it the airplanes? – Not likely, given all domestic players use the exact same aircraft.

- Is the the baggage allowance? – Not likely, given the allownaces are the same 20kg’s to tohers.

- Is it the terminal ambience? – Not likey, given it’s shared with jetstar.

- Is it their safety record? – Not likey given recent scares & that no major aircraft has ever crashed in Australia.

- Is it the inflight entertainment? – Maybe, but it’s a stetch these days given we all have mobile entertainment devices in our pocket.

- Is it the Frequent Flyer points?  Maybe, but it’s marginal at best.

- Is it the Qantas Club? yes – if you are preapred to pay the $775 per annum.

And it can’t be their ground service, given the example above on a Friday night.

Qantas need to ask themselves some hard questions about what they actually offer – as a long time loyal customer, it’s waining quickly. Their point of difference is in a massive state of decline.

Here’s what Qantas ought do if they want to avoid further decline:

  1. Offer Hot meals & drinks every flight. Not just at dinner time. If we are travelling we didn’t have time for dinner or lunch, regardless of when our flight was. We are just as hungry on 7pm flights as we are on 6pm flights. It’s not the food which costs the airline, it’s serving it up. So, if you are going to serve it. Make it worth the effort.
  2. Make the ground experience comfortable and convenient. A few more staff members on the cehckout is a nice start.
  3. Provide free wifi to anyone with a boarding pass.
  4. Have a ‘no tricks’ Frequent Flyer program where any seat on any flight is available, and not for ‘extra points’ – we’ve already paid a premium for our tickets – remember Mr Qantas?
  5. Have separate terminals for your Budget Airline (Jetstar) and your Premium Airline (Qantas).
  6. Sing out loud in your advertising about how different the Qantas experience is. Make us feel special.
  7. Charge the price needed to make it profitable. You’ll be surpirsed how many of us will be preapred to pay for it.

It’s about time Qantas started to focus on it’s customers and forgot about it’s competitors. Eventually we all morph into what we focus.

I’m sure Qantas will tell us this isn’t possible – but tell that to the person who pays twice the price for a Mac book pro versus a Toshiba with the same configurations.

Startups out there: “Beat your competitors – don’t be them!”

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