Wednesday, September 4, 2013

Rebranding Virgin - a "whole of business" activity

"...if one day you stop [mixing with your staff at all levels] because you're terribly busy or terribly important you've lost it. Nothing is more important than bringing your people along"

I was delighted when the Adelaide MBA director asked me to attend, and provide a brief review. Delighted and a little apprehensive. Often when a marketing person speaks of "rebranding" they mean logos, livery, style guides, or maybe even "points of parity" and "points of difference" - classic textbook branding theory.

I've paid attention to these things for a long time, and I know that marketing (and by extension the act of rebranding) is more than brochures and design. It's about knowing who your customers are - or should be. It's about knowing the value they receive when they buy your product and why they chose your product in preference to your competitors.

So when Mark Hassell - Chief Customer Officer at Virgin Australia Airlines - spoke of rebranding Virgin Australia he surpassed anything I could have hoped for. The clearest overall message was:

Rebranding is a whole of business thing  

Sure, in simple terms the Virgin rebrand was pretty straightforward. They went from the low cost carrier that challenged the status quo in the early 1990s to a polished, full service airline with over 20% of its revenue coming from corporate and government.

But Mark made the point that a company can't simply say that they were pursuing the corporate traveller. They had to produce a complete "back of house" to deliver against what this customer segment needed, and to do it better than the airlines that were currently doing it. So while they established a six point strategy that they called "game change" they did more than that. They made sure that their entire staff knew what "game change" was about, why they were doing it and how they fitted in. Mark made his decision to join the company after he walked out into the operations area and everyone - baggage handlers, drivers, refuelers, aircrew - could tell him about game change and were enthusiastic.

Game change was about:

Diversifying Virgin's revenue line: from 90% leisure to over 20% corporate/government within three years
Creating a global network: Beyond the Tasman, being able to offer more to their corporate customers. Alliances with like minded  Etihad, Air NZ, Delta, SIA.
Accessing growth markets: Queensland regional, Regional WA and Perth/East coast. Ultra low cost but not at the expense of the Virgin brand
Maintaining cost advantage: Service the premium market efficiently through investment in new efficient systems and compete well in ultra low cost. Virgin's part ownership of Tiger airways allows them to compete but keep Tiger as its own experience. For instance Tiger flyers do not receive Virgin lounge access even if they're a Virgin lounge member
Upgrading products and services: - Back of house with bookings systems and frequent flyer systems for their new "full service" product
Investing in their people: The basic product of air travel is a ticket, transport and some amenities. This can easily lead to a product arms race and a company's point of difference is the people.

After that, the other things simply flowed. The customer saw:
  • New uniforms
  • Aircraft livery
  • Cabin design
  • Service training for business travel - intuitive service
  • Lounges
So that is how marketing - and branding - can seem superficial. Often the only things a customer sees are the obvious ones but to do it properly involves every single person in the business.

A half a dozen lessons in marketing were contained in that 50 minute presentation. Over the next few weeks I'll discuss how the Virgin Australia experience demonstrates the marketing lessons of:

Levitt's "levels of product" framework - why cut price competitors always have a chance 
The value of research - Multi-million dollar strategies can't be a "seat of the pants" decision

Positioning and competitive strategy - why you can't be caught in the middle
Services marketing - the extra 3Ps of People, Processes and Physical Evidence
Service recovery - 100% satisfaction is possible


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