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What’s behind the special relationship Virgin has with its customers? Is it just the Branson factor? Steve Ridgway, Virgin Atlantic’s CEO, talked to Phil Dourado.
Learning Points
- The leader of your organization sets a tone and style for your people, one that is often subconsciously (or overtly) absorbed to become the culture
- Style is not enough, though, to win customer loyalty. Customers want authenticity and integrity. Branson, like Southwest Airline’s head, Herb Kelleher, combines both style and substance
- A charismatic leader can generate a ’halo effect’ around an organization
- But, a halo is not enough: the values that leader represents have to be developed throughout the organization to win and keep customer loyalty
© eCustomerServiceWorld.com
About the author
Phil Dourado is Web Content Director at eCustomerServiceWorld.com He has written on business, technology and society trends for leading publications on both sides of the Atlantic, from The New Scientist and Daily Telegraph to the National Inquirer (!) He is a former editor of the UK journal Customer Management and was founding editor of its US sister publication, Customer Service Management journal
Further Reading
See ’Richard’s Guiding Principles’. This list of principles is handed to every Virgin employee. It’s in the Fast Guides Section of the
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Further reading
Richard Branson’s autobiography, Losing My Virginity, is a Recommended Read in our
eBooks Store
Need A New Culture?
Jealous of the Virgin culture described in this article? To find out how to emulate Branson, browse the culture change consultancies in our
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Customer-focused organizations, they say, are able to speak with one voice. The culture of the organization almost oozes through the conversation, whether you are talking to the chief executive or receptionist. I should not have been quite so phased, then, when I first spoke with Steve Ridgway, Virgin Atlantic’s CEO (formerly the airline’s VP, Customer Services), and found he sounded uncannily like Richard Branson himself. I hadn’t expected the ’one voice’ culture to be quite so literal.
It wasn’t just that the lack of pretension, the slight whisper in the voice and the straightforwardness were Branson-esque, though all of this was true. Five years previously, Richard Branson had called me to complain about an article I had written on the airline industry in the business pages of a UK newspaper, in which Virgin was inadvertently misrepresented.
After a surreal thirty seconds in which I refused to take him seriously, believing it was my friend, Bob, pretending to be Richard Branson (how many Chief Executives ring freelance journalists at home to correct something the journalist has written?), I realized with a gulp it was the bearded one himself.
Complaint
It was the nicest complaint I had ever had. I’m not even sure it was a ’complaint’; more a polite but firm observation that something I had written was open to misinterpretation in a way that made Virgin look bad. No insistence that he be given space in the next issue of the newspaper to correct the error. No demands. Just a reasonable explanation of his point of view. After putting the phone down, I called my then editor to let her know what had happened. "What a nice man," I said to her. "So, will you ever write anything unpleasant about him or his companies?" she asked. "I doubt it, after that phone call," I said. "Clever, then, isn’t he?" she smiled down the phone.
And it was happening again. Not only does Steve Ridgway sound just like Richard Branson; you instinctively warm to him and trust what he has to say in the same way millions of customers around the world warm to Branson himself. What is it that makes us lower our guard?
From music empires to airlines to (in Europe) radio stations and cellular telephones, Virgin’s brand extension just keeps on going. The clothing and cola sides of the empire have been perceived as flops, and train travelers have fumed at Virgin Rail’s performance record.
But, there remains an aura around the organization, particularly the long-haul airline, that is easy to interpret as a halo effect that comes from the regard the public has for Branson. There is undoubtedly a unique customer trust in Richard Branson himself that gives Virgin a head start in each new market it enters. So, is Virgin’s ability to present itself consistently as the customer’s friend all down to the affable personality of one multi-millionaire?
The cult of Virgin
"I’m not sure it’s entirely the Branson factor, if you define that as people responding just to Richard," says Ridgway. "It’s more that a certain culture comes to exist in each of the companies he starts." It has been said before that the cult-ishness of Virgin derives from a feeling among outside observers that this is a club they would like to belong to.
The ’club’ mentality, incidentally, with all its connotations of membership and belonging, is exactly the relationship leading organizations around the world are struggling to establish with their customers as a counterweight to consumer fickleness in increasingly competitive markets.
"There is definitely a club feeling about, say, Virgin Atlantic," affirms Ridgway. "You feel it particularly among customers in our Upper Class (Virgin’s version of First Class). "It comes across in a fierce loyalty - our loyalty levels are around 98% - and in a keenness to make word of mouth recommendations, coupled with a slight hesitancy, as if customers feel they don’t want to let too many people in on a secret they’ve discovered."
"The ’halo effect’ of the reputation of our Upper Class service then extends to affect people’s perceptions of us as a whole."
Defined in terms of Bain & Co.’s famous customer loyalty ladder (prospects at the bottom, advocates at the top), most of Virgin Atlantic’s customers seem poised on the top rung. Professor Adrian Payne of the Cranfield School of Management tells a story of how he conducted an impromptu experiment with a 500-strong audience in an attempt to define advocacy: an experiment that bears out Ridgway’s point.
Payne asked the audience to put their hands up if they were fans of Virgin Atlantic. Hundreds of hands went up. He then asked them to lower their hands if they had ever actually flown with the airline. Eighty or so hands stayed up. These people were advocates of an airline they had never actually flown with.
David & Goliath
Word-of-mouth recommendation is one explanation for this. The public perception of Virgin is another. Although a significant operator in each of the markets Virgin enters. Branson has an uncanny knack of positioning himself as the David against a corporate Goliath, whether it be British Airways or (in Europe, where Virgin Cola is heavily promoted) Coke. A dirty tricks campaign carried out covertly by mavericks within British Airways against its upstart rival was shrewdly publicized as widely as possible by Branson, enhancing his image as the consumer’s friend, struggling honorably against self-serving, grey-suited corporatism.
This ability to get consumers to identify with Virgin, and with Branson in particular, was illustrated at the CREDO conference on customer retention in Paris, France. Delegates were asked who they would most like to be in the world. Most said themselves. Next highest on the list was Branson. A recent opinion poll by researchers MORI found that Richard Branson, Nelson Mandela and Winston Churchill were the three figures British people would most like to have a conversation with.
For organizations wanting to emulate this profile, Professor Payne’s advice is to cultivate a sense of shared values with your intended customers. As for how you do this, Steve Ridgway’s answer has a neat symmetry to it: if you want your customers to be advocates for you, then first of all you have to be advocates for them.
Consumer Champions
"If you look at what set us apart from the rest of our sector when we started up, it was that the industry was dominated by anonymous government-backed airlines. They were operationally-driven. With Virgin, we created an airline that was just as hot on safety and procedures as the others. But, the ascendancy of consumer champions among the people running it was extraordinarily high compared with the rest of the industry," said Ridgway.
By moving into a hidebound industry as outsiders, Virgin’s young senior managers brought to their task a perspective that was shared by another critical group who felt themselves to be outside the core considerations of what was then a monopolistic and protected industry: the customers.
In this kind of situation, the usual injunctions to "listen to your customers" and then craft a service around what they say they want do not necessarily apply, says Ridgway, for one simple reason: they often don’t know, because they have no reference points. It’s up to you as the service provider to be creative and innovate.
"So, not only do you need to be customer champions yourselves, you need to be able to package that to express it," he says. When Virgin set up its Clubhouse lounge at London’s Heathrow airport, research among customers into having a ski machine, toy train set and a famous hair salon in the lounge, in Ridgway’s word "bombed" (customers were unimpressed when asked if they would want these things).
"We went ahead anyway. Sometimes you have to go beyond the research, because consumers don’t know what’s around the corner until you’ve introduced them to it. Yes, use research to check, but not to generate ideas."
As for the all important people who convey the Virgin culture to its customers, Ridgway says: "We used to know intuitively the kind of people we needed. Now we have focused on defining these characteristics, which we call Virgin Competencies. You can give people technical airline training, but things like Virgin Flair, which is one of the competencies, is difficult to describe, let alone train somebody in. It blossoms. You allow it to blossom by encouraging among your staff the desire to be responsible and make decisions, through a culture where there is no blame if they extend themselves and occasionally get it wrong."
Virgin competencies
Other Virgin Competencies include: Achievement Drive; Attention To Detail; Teamworking and Building Customer Relations. Virgin Atlantic’s hierarchy is, unsurprisingly, flat, encouraging a sense of responsibility. "There are only two layers below Directors." points out Ridgway.
But it’s Virgin’s broad definition of customer service that other organizations could perhaps learn most from. "We structure our business so that customer service is almost ’marketing’ with a small ’m’. People have an enduring image of customer service as a part of an organization; the part that has ’phone lines and handles complaints and customer support," said Ridgway. "But, more organizations need to realize it is a mainstream, not a departmental, issue."
Ridgway stresses that any definition of "customer service" and "front-line staff" needs to take in everybody. "If one of the personal video screens fails to work on a ’plane, our research shows a palpable drop in customer satisfaction scores. You can’t whitewash that kind of thing with clever marketing. We sit engineers who are responsible for maintaining the video system in the plane and show them the results, so they realize they are as exposed to the customer as we are."
© eCustomerServiceWorld.com
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Source:
| Phil Dourado is Web Content Director at eCustomerServiceWorld.com He has written on business, technology and society trends for leading publications on both sides of the Atlantic, from The New Scientist and Daily Telegraph to the National Inquirer (!) He is a former editor of the UK journal Customer Management and was founding editor of its US sister publication, Customer Service Management journal |
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