A negative brand experience with Malaysia Airlines can be a lesson for all brands

Although this post is almost inevitably a branding lesson for Malaysia Airlines, it’s also a branding lesson for any company that doesn’t appreciate the importance of retaining customers.

At the risk of stating the obvious, customers are key to a brand’s success. After all, you can’t build a brand without customers although there are probably some advertising agencies that would dispute that.

Retention not aquisition should be at the heart of any Malaysia Airlines restructuring

Retention not aquisition should be at the heart of any Malaysia Airlines restructuring

Loyal customers are generally the most profitable of all. And as I wrote in my book, if you have enough loyal customers and look after them, you don’t need to spend the equivalent of the GDP of a small Scandinavian country on advertising to keep selling to new people.

Just think about it. If every customer you ever had came back over and over again and never left you, it would hardly matter how slowly the numbers built up. Fast or slow, your business would grow.

If every new customer became a convert for life, most of the risks would be taken out of running your business. Simply put, you’d be able to plan your sales and production, predict your cash flow, know when to open and when to close, recruit the right people at the right time and know exactly when to commit yourself to a new factory or, in the case of an airline, new aircraft.

Branding means looking after your customers. If you do, why would they leave?

Branding means looking after your customers. If you do, why would they leave?

In a situation like that, the only way is up. Unfortunately, though, it’s not going to happen. Customers don’t just come. Repeat business and customer retention rates are never going to be anywhere near 100 per cent in practice. Customers will leave too. But the absolute key to building a brand is getting more of them to stay.

And the reason why is because once they’ve become a customer presuming the experience from their perspective was a success, they are likely to come back again. According to one report, once a customer buys something, there’s a 70% chance of him coming back. And, once he’s back, he’s likely to stay.

repeat-customers-are-more-likely-to-convert

So how do you get more customers to stay? Obviously, by offering something that’s more attractive than the offer your competitors put up against it. Actually it’s easier than that because quite often a loyal customer will be oblivious to what the competition as to offer anyway.

But that’s not as easy today as it was 20 or even 10 years ago. There are companies out there who can manufacture what you manufacture more cheaply. There are companies out there who can get the same product as you to the market more quickly and in smaller or larger quantities than you.

Unless you are very lucky, there’s only really one advantage that you have over your competitors and that is your company’s relationship with your customers. That relationship, managed properly can never be duplicated.

And good relationships are the key to repeat business. Once Malaysia Airlines returns to profitability, and take it from me that it will do and ahead of target it will then need to start rebuilding it’s brand.

Customer experiences must be improved at Malaysia Airlines

Customer experiences must be improved at Malaysia Airlines

And if it really wants to rebuild its brand, and continue to make a profit once it starts to increase prices, which it will have to do, it must start to place relationships with existing and especially loyal customers at the heart of its turnaround strategy.

Malaysia Airlines must be prepared to invest in getting to know its customers by collecting the right data about them, developing relationships with them and then leveraging those relationships to generate higher sales and the referrals that will bring in more customers.

Malaysia Airlines must understand that building businesses today requires a relational, rather than a transactional, approach to doing business. This will be an almost 180 degree change in direction from the way it is managed at the moment.

The customer who is attracted to the airline because of a discounted fare but has no relationship with it will walk away the moment he sees the same thing cheaper somewhere else.

But customers who feel they are getting something out of the relationship, beyond the individual transaction, will stick around.

That ‘something’ the customer gains will depend on its ability to deliver emotional, economic and experiential value to every customer. And this is going to be hard because a lot of customers have now experienced the competition.

Branding isn't transactional, it's relational

Branding isn’t transactional, it’s relational

This is where branding gets complicated because it requires C level executives and senior management to refocus and move away from the ingrained, traditional ways of running a business. And for Malaysia Airlines it will mean tearing up the very strategy that got it back to profitability.

Most difficult of all, it means they have to give more responsibility to front line staff, many of whom they frankly don’t trust to do the right thing.

And much of that lack of trust is based on the fact that those management and C level executives see staff as a cost not an investment.

Even after the massive cull that has seen more than 6,000 workers retrenched, the carrier is staffed with people who simply don’t have the skills to represent the brand at this critical time.

But it’s also because whilst the ‘turnaround’ focus has been on slashing costs, the organization still suffers from a traditional, top down approach to managing the business.

A case in point is yet another depressingly familiar experience with Malaysia Airlines. As I’ve said many times before, I fly fifty times a year domestically with Malaysia Airlines and anything from two to ten times internationally. I’m not a major customer but I am a loyal one and continued to fly with them through the dark days of 2014.

If you are a regular reader of this blog, you will know how loyal I’ve been to Malaysia Airlines. You’ll know how I flew repeatedly following those 2 tragic events of 2014 and despite the fear and the mess the management and government made of engaging with the global media, family of those lost in the disasters and other stakeholders, I kept flying.

I don't expect to be treated like a VIP but I expect to be appreciated otherwise I'll take my business elsewhere

I don’t expect to be treated like a VIP but I expect to be appreciated otherwise I’ll take my business elsewhere

But like just about every other consumer, my loyalty shouldn’t be taken for granted. And if the quality of the product provided deteriorates and there is no attempt to reach out to me in a human way during that process, then it’s only logical that I’ll start to look for other suppliers. If those other suppliers deliver value to me, why would I go back?

Malaysia Airlines never reached out to me despite my loyalty. I wasn’t looking for much, perhaps an unexpected upgrade here, an invitation to use a lounge when travelling economy or perhaps some bonus miles as a gesture of appreciation.

Sure there were times when I picked up a few bargains during travel fairs but they weren’t personal and required me to invest hours of my time sitting in front of my computer waiting for the page to load.

Since 2014, the brand continued on its downward spiral to ignominy thanks to a ‘transformation plan’ that resembled the cast of a disaster movie as they stripped everything out of a plane in a desperate attempt to keep it in the air.

The quality of the product, the aircraft, the offering, the service, the ability of the brand to deliver value to me and on my terms degenerated to such an extent that I’ve finally started to cut the umbilical chord and over the last 12 months, I’ve booked me and/or my family on British Airways, Emirates, Singapore Airlines, Silk Air, Air Asia and most recently, Malindo.

All of the bookings are on routes served by Malaysia Airlines and only one of them because Malaysia Airlines was full on that sector.

Last week I was flying Malindo on a domestic sector that I always fly Malaysia Airlines. My Malindo experience wasn’t perfect (For the first time ever, my flight departure time was brought FORWARD which could have caused havoc with my work schedule) but my expectations weren’t high anyway.

Although I wasn’t even travelling on Malaysia Airlines, I still managed to have a negative experience with the carrier.

Let me explain. When I got to KLIA I thought I’d try to use the Malaysia Airlines business class lounge. After all I was flying business class and besides, I’m a gold member of their frequent flyer programme (FFP) and have been as long as they’ve had one.

In case you are unaware, the top two tiers of the Malaysia Airlines FFP are Platinum and Gold. To be a Platinum member you need 100,000 Elite Miles or 130 Elite Sectors.

A tale of two toiletry bags. Emirates offers a brand experience

A tale of two toiletry bags. Emirates offers a brand experience

Malaysia Airlines does what it has to do

Malaysia Airlines does what it has to do

To qualify for a Gold card which is what I have, you need 50,000 Elite Miles or 50 Elite Sectors. If I’m not mistaken, you get 2 elite sectors for each business class flight and one for each economy class flight. This means I’ve travelled at least 25 times in business or 50 times in economy.

My most common route is KL to Kuching so let’s say for the sake of argument that all of those sectors were KL to Kuching. The fare to Kuching is about RM1,000 for business class so at a minimum I’ve spent RM25,000 to get those 50 elite sectors. Not a lot but if you add it to the other fares it starts to add up. To become a Platinum member I’d need to spend about RM65,000.

When I got to the Malaysia Airlines lounge I asked if I could get a cup of coffee. Long story short, the receptionist said I couldn’t and nor could a Platinum member however, and here’s the kicker, anyone can access the lounge for RM200 (US$50).

As you can imagine, this wound me up. Royally. I support a brand through the most difficult period of its history and encourage others to do so but I can’t get a cup of coffee in the lounge.

However, someone who has never flown the airline before and may never do so, can drop RM200 at the door and sit in the lounge as long as he likes.

That simply doesn’t make branding sense. Whilst the motivation for doing this is obvious, isn’t it a bit shortsighted? It was the last straw and I wrote this in my business class seat on an Emirates flight to London.

Sitting next to me was my wife and in economy were two of our kids. We spent about RM30,000 (US$7,500) on this trip but would have spent it on Malaysia Airlines. During the trip to London we met up with a group of about 20 Malaysian all of whom, bar two had flown in on Emirates.

Now I’ve flown the ‘world’s best airline’ it’s going to pretty hard for Malaysia Airlines to win back my business. Even my wife who travels more than I do and is a true patriot and blindly loyal to Malaysia Airlines admits it’s going to be tough to go back.

You could argue that not allowing me to use the lounge for 10 minutes has cost the airline perhaps RM250,000 a year from my family. Every year for the next say 10 years. That’s RM2,500,000 of lost revenue.

Of the group we met, 2 travelled first class on Emirates, 10 travelled business class and the rest economy. How much has that cost Malaysia Airlines? And it doesn’t take into account anyone who reads this or listens to my rants offline. Was it worth losing all that business over RM200? Of course not.

So what should Malaysia Airlines have done?

When the latest turnaround plan was developed, instead of the Chairman announcing there was no need to rebrand, there should have been a strong commitment to the brand.

The Chairman doesn’t understand what constitutes a brand and what is required to build a brand. He probably assumed a rebrand was a new name or logo or positioning statement implemented with a global advertising campaign pushed out across all media for as long as the budget would allow.

Whilst Malaysia Airlines is restructuring it's brand is being sacrificed

Whilst Malaysia Airlines is restructuring it’s brand is being sacrificed

Someone on the restructuring task force should have been able to educate the rest of the team on what constitutes a brand and its importance during the turnaround process. As mentioned already, emphasis should have been placed on delivering value to customers and not simply slashing costs.

More responsibility should have been given to those staff on the front line who were interfacing with the few customers still travelling on the airline.

The FFP should have been revamped immediately with personalized communications, ongoing engagement through unique dialogues to build an ecosystem of supporters willing to discuss the brand positively.

A concerted effort should have been placed on creating positivity about the airline. A transparent approach to building a new narrative, openness and humility should have been the foundation for any communications, not poorly thought out advertising campaigns.

Instead, with no one guiding the brand, much of the narrative around Malaysia Airlines has been negative, related to the 6,000 plus personnel that have been laid off and the replacement of modern aircraft with old, worn out planes.

Pictures appeared online of masking tape used to fix breaks in the business class cabins of old 737s on routes that had normally been served by much newer aircraft.

Unlikely to inspire confidence in the Malaysia Airlines brand

Unlikely to inspire confidence in the Malaysia Airlines brand

IMG_4538

Discussions and complaints raged about the lack of alcohol on flights of less than 3 hours and then the departure of the CEO after only a year or so of a 3 year contract generated more negativity. More recently, the new CEO made headlines for his comments about charges at terminals one and two.

Non stop negativity surrounding Malaysia Airlines is destroying the brand

Non stop negativity surrounding Malaysia Airlines is destroying the brand

Now I expect a lot of people reading this will say I’m being petty and besides, the airline is right. They need to have rules in place and if the front line staff were given freedom to make such decisions, it would be open to abuse.

Others will say that few airlines will let travellers into a lounge if they are not flying with the airline and they are probably right although many of them would let a frequent flyer use the lounge. Bbut that’s not the point because unlike the Malaysia Airlines brand, the majority of these airlines don’t have a broken brand.

But most importantly of all, branding today is about small steps, it’s about the small things that matter to customers. There is no more ‘big idea’ or other traditional mass media solution that speaks to everyone in the same way.

If you want to restore a broken brand you need to focus on many, many little things to make sure the brand get’s fixed quickly. Move the narrative away from negativity to positivity, from mass communictions to personalized collaboration.

Emirates is a classic example of an airline that understands branding. It spends a phenomenal amount of money building its brand. Not just through communications but in the experience and relationships.

I flew from London to Kuala Lumpur via Dubai and both sectors were full, despite the fact that a week before an Emirates 777 had been involved in a crash in Dubai.

Despite suggestions of a deeper issue at DXB, Emirates investments in its brand meant it had plenty of equity in the bank. Crucially, this meant there was little negative news to write about the carrier following the crash.

The event and the fall out was managed effectively and efficiently. Fortunately other than one brave fireman, there were no fatalities and the international media had little interest in building a story around the crash.

That’s one of the many benefits of real branding. The equity you have comes in handy when you need it. A week after the crash, it’s business as usual at Emirates.

Compare that to Malaysia Airlines, two years after the twin tragedies. It’s still struggling and continues to slash prices and the quality of the product.

Malaysia Airlines will return to profitability thanks to labour cuts, more old aircraft, new supplier deals and low oil prices. But unless it learns some harsh branding lessons and starts to invest in its brand, it is unlikely to stay profitable for very long and will struggle when it begins to increase fares.

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15 thoughts on “A negative brand experience with Malaysia Airlines can be a lesson for all brands

  1. One of the rare long entries here by Mr Osbourne. Having read your book, I fully understand the value of customer loyalty and retention to a businesses’ long-term viability. It’s quite appalling to hear your story about the “RM200 Golden Lounge access pass” because it shows Malaysia Airlines is more concerned about flocking itself to anyone who’s willing to pay and treat their loyal customers as a cost.

    Liked by 1 person

    • Hi Dan. Thanks for dropping by and commenting. I’m glad you agree because it’s a short sighted approach to an issue that desperately needs addressing before it’s too late. But until the Chairman understands what is a brand, I doubt it’ll happen.

      Liked by 2 people

  2. You talk a lot of typical PR bs, masking the simple incident of your self entitlement and you not understanding simple lounge access policy.

    The fact is you cannot walk almost all airline lounges without flying them or their partner/ alliance. Some airlines allow that only at the very top elite level, which your are nowhere near.

    So, get off your high horse and learn how to read the rules.

    Liked by 1 person

    • Lenny, you completely miss the point. Forget other airlines. Do a bit of research on Malaysia Airlines. It has run its product into the ground. It is a shadow of its former self. It has borrowed billions from the tax payer. It is losing business to upstarts like Emirates. It needs customers desperately yet values US$40 over a long term relationship with frequent flyers who spend millions with the airline. That doesn’t make branding sense. As I’ve said in my follow up post, the mistake I made was to personalise the trivial example I gave. That was a mistake.

      Liked by 1 person

  3. The rules are pretty straight forward and clearly spelled out on for their loyalty program. Elites are only granted access to the lounge when traveling on a Malaysia Air flight (which you were not). This is nearly universal across airlines (U.S. airlines don’t even allow their elites to access the lounge for free when flying domestically). So you are upset that they were following their stated lounge policy and wouldn’t give you a freebie? If the tables were turned and you were enjoying the quiet of the lounge while waiting on your MH flight and they decided to let all OneWorld Elites into the lounge, regardless of which airline they were flying that day, wouldn’t you even more upset that MH decided to ignore their stated rules and make the lounge a crowded noisy experience?

    Liked by 1 person

  4. you werent flying malaysia or oneworld why would you be allowed in the lounge? Can i buy something at Walmart and return it to Target because i spend a lot of money at target? Youre an idiot

    Liked by 1 person

  5. This post has nothing to do with Branding as you claimed, what you are talking about is the level of treatment received as a loyal custom. So this discussion is about Loyalty.

    There are obviously good and bad loyalty programs so you need to set your expectations straight.

    1. Loyalty programs are used to generate returning customers for their ‘product’. In this case with MH, their product is the flights. So if you fly alot, they reward you in MILES which in return can be redeemed for flight tickets. If you want other things than flight tickets then you can opt for golden lounge vouchers or a other souveniers (I recall they had)

    2. Same goes to hotel chains. You get rewarded with points for room nights (their products). I can’t believe you will try to storm into the Grand Hyatt KL Club Lounge demanding a cup of coffee simply because you think you are ‘Loyal’ to them ?!

    3. Everyone knows Enrich isn’t the best FFP out there, so what’s your program with them following their rules? You really expect them to bend the rules for you? Review your flight patterns/history to determine if you should get special treatment? Seriously…? IF they really wanted to take their loyalty program to the next level they would have a ‘Concierge’ desk or some sort to handle such requests

    In any case, I understand that you are upset so if that’s the case you should just take your business elsewhere. MH will not miss you

    Liked by 1 person

    • Talfred. This post has everything to do with branding. Loyalty is at the heart of branding. Perhaps you still think branding is about logos and creativity, about acquisition not retention.

      1) there’s much more to loyalty programmes when used properly. but most brands in SE Asia anyway see them as a cost not an investment. they much prefer to invest their money on acqusition rather than loyalty.
      2) WTF?
      3) Every airline should (and I think most do) have a simple record of your flight history. Your concierge idea is a great one

      You are right, MAB is losing hundreds of customers a day, they won’t miss me.

      Liked by 1 person

  6. Sweetie….you’re flying a different airline and expect to use the lounge just because you’re a Gold Card member? Platinum folks can’t even use the lounge when they are traveling on a different airline.

    Maybe next time you should start reading the membership rules and stop acting like an arrogant self-entitled brat.

    Liked by 1 person

    • That’s right, platinum members who spend millions with the airline can’t access the lounge if they are flying with another airline but someone who has never flown the airline and may never fly it can gain access to the lounge for US$40. That doesn’t make branding sense. And just for the record, I didn’t expect to use the lounge but I thought it wouldn’t do any harm and could do a lot of good for the brand if the airline let me use it rather than someone who may never fly the airline. If you don’t agree with that then we’re not on the same page.

      Like

  7. My favorite part of this post was when the author talked about how much he spent flying business on Emirates, while his family sits back in coach- what a pretentious asshole!

    Liked by 1 person

  8. Pingback: Even brand consultants are human |

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