Of the world’s top twenty brands, Virgin is the only one to “challenge” and diversify away from its core competencies. The company has businesses in banking, telecommunications, transport, and so on; whereas, compared to the CocaCola company, their product line, successful as it is, doesn’t stray far from beverages. Therefore, the question that must be addresses is how can Virgin do this? How can it be so prolific in comparison to other giant brands of the world? Surely, one man’s endearing personality cannot turn branding on its head to such an extent that the company’s customers will follow him anywhere!?
The challenge starts with the customer base. Branson himself is a big advocate of genuine customer service, that is to say, not as an afterthought in the hope it helps an already established “game plan”, but as a genuine care for customers. A primary example of this is when Virgin America passenger travelling near New York were delayed for a sustained period of time; Virgin America’s CEO, David Cush, personally called many of the passengers, offering free flights and apologising. This service is deeply embed in the ethos of the Virgin group and serves to represent why so many customers are fiercely loyal to the group. It has been said that ‘in many sectors, it (customer service) is the key factor that will make set a company apart from its competitors’. It is a considerable challenge to elevate a relationship, comprised of loyalty and trust, between a company and its customers to such an extent as is seen in the Case of Virgin.
The essence of Virgin’s success is due to a number of aspects; Branson himself, the “personality” of the brand, which represents youthfulness (despite any particular age), energy, efficiency and professionalism, indeed the brand is very much the embodiment of an ideal. To that end, the brand is widely diversified and attracts a broad spectrum of people, exemplified by Rust, Zeithaml and Lemon in the Harvard Business Review, ‘[Virgin] has extended into a wide array of unrelated product, including airlines, music stores… What unites Virgin’s offering is value pricing, high quality and a hip, fun image that attracts a particular customer segment’, thus, as the name and all positive connotations go before it there will already be an established customer base. However, whilst these factors are certainly composition factors that have led to the success of Virgin, it can be seen that careful and deliberate control of the brand and the wider marketing strategy have targeted particular people and particular attention to the customer experience lays at the heart of the value of the brand. Branson has stated that both the customers and employees are ‘Virgin’ people. It is therefore no wonder that Branson has himself stated that ‘loyal employees in any company create loyal customers, who in turn create happy shareholders”.
In the case of Virgin, it is arguable that the reason the customer value proposition is so consistently high as it is because it is not simply a corporate after-thought, or even a conscious strategy, but engrained into the organisation’s DNA. Through a trust in employees that they will embody and drive the values of the brand into all aspects of Virgin’s businesses, a community-like culture has been created amongst employees to perpetuate customer service and the value proposition, as a result of the affinity they feel for the brand, and the other “family-members” (employees).
The value proposition of many of the other airliners is customer orientated. For example, Air France is notorious for poor service; it is almost as if the employees of Air France wish to convey the privilege that the customers have of being even allowed to fly with them. Moreover, the low-cost model airlines of Easyjet and particularly, Ryanair see customer service as very much more of an afterthought. However, within their model, the value proposition does appear to be in the low cost transportation; yet within such a competitive space, with thin margins; arguably, it does seem rather naïve to totally neglect customer service. The example of South West airlines is the clear example of this, where customer service is imperative: staff utilising appropriately energy levels on some flights, managers and staff interacting with passengers to dispel any aggravation at delays, increasing the enjoyment of the journey etc. What is, however, very poignant and interesting to note, is that, all fo this customer service is free. It is common knowledge that increased customisation can reduce profit margins. The solution South West Airlines have come up with is not to indulge passengers in extortionate luxury; but the solution is a blanket service of charm, energy, manners, enthusiasm, cheerfulness, helpfulness and consideration of each passenger’s feelings and concerns; all of which are free. Furthermore, as Payne has identified that ‘the most attractive CR initiatives are those that are of high value to the customer but are of low cost to the supplier’.
Overall therefore, it can be seen that Virgin manages to perpetuate an ethos within it organisation and instil this belief of nurture, care and light heartedness with a professional outlook, in its employees, which is in turn energised into (free) genuinely for its customers. Further, as this ideal is portrayed through the brand, the essence of the company has transferability to is its other businesses and allows for the retention of many customers, and alleviates much of the difficulty of establishing a new customer base in a new sector. This CRM strategy is backed up by core competencies and systems that can identify core drivers of success and so, perpetuate the health of the business, through the use of IT systems, data compilation, Knowledge Management, and appropriate balance of retaining customers and acquiring new ones, in order to develop the business. Collectively, this has been a potent formula for Virgin and it would seem real focus on the customer will always “win out” in the long-run over a short termism CRM gimmick that doesn’t create any real value for customer.