Category: strategy

Qantas gets it wrong with Effiency

Posted on by Steve Sammartino

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!”

Quirky Fact

Posted on by Steve Sammartino

The revenue from car parking & retail at Melbourne Airport – exceeds the revenue generated from Airplane operations…

Airplane operations = $171 million

Car Parking & retail = $183 million

The car parking componant was $70 million two years ago, though the Australian Pacific Airports Corporation has chosen not reveal the revenue split recently. Seems Jerry Seinfeld was right when he said the whole travel saga was a trick to sell the $7 tuna sandwiches!

The question for startups is this: Where is your extraneous revenue hidden in your captive audience?

The Best Social Networking tools

Posted on by Steve Sammartino

We often wonder which are the best social networking tools to promote our business. In many ways it’s all and none.

There’s no shortage from which we can shoose from a business perspective: My space, Facebook, Bebo, Youtube, Blogging, Twitter, Live streaming TV, Ranking sites like Technorati, delicious and Stumbleupon, Virtual world spaces like second life.

The list is endless. In fact wikipedia lists the most notable (well over 100) here.

The best ones to engage and use aren’t those necessarily with the most people, the most features or the most anything. The best ones to use are those which you use properly. The way in which they were intended. There’s no point having your brand or startup on any of them – unless you engage the crowd in the conversation ‘they want to have”.

What does this mean?

It means be there often – turn up, and talk.

It means listen to them – it’s their place not ours.

It means share the information people want to have shared in ‘that’ forum.

It means, give first to them, and expect nothing back.

It means learn from their wisdom.

It means show your personaility and have an opinion.

It means create value to them, whatever value means in that forum.

It means be part of a dialogue, not a monologue.

In real terms all these tools are, is a personification of yourself, startup or brand. Don’t engage in behavior you wouldn’t engage in while in the real world. We mustn’t act like an Amway Sales Agents on line. If it’s bad form in the real world, it’s bad form in the on-line world.

If we just put our brand on all of these spaces and don’t get involved – it’s a waste of time for all parties involved. We are much better off embracing one or two forums and using them often and consistently. Going there, isn’t the same as being there. They are not shortcuts to brand fame. In fact, they take longer, but can be of greater value.

Given that the web is a conversation – we must embrace it and have manners. If we’re patient it’s worth the effort.

UGC & Crowd Sourcing – Beware the Homer mobile

Posted on by Steve Sammartino

There is plenty of buzz around UGC (User Generated Content), Crowd Sourcing and Mass Customization at the moment. And the truth is I am a sucker for it. I embrace it, love it and really believe it is an economic revolution. In fact many of the new features we’ve implemented on rentoid have been at the suggestions of our members…. but there is a downside.

We need to be aware that not every consumer knows what they are talking about, and not every idea we get from the crowd happens to be a good one. The crowd can get it wrong occasionally. Yep – there are people out there with ideas that just might send you broke if implemented.

If we are building a forum for people to create & share their own stuff on like Youtube or Etsy – that’s when it’s a cool idea to let the crowd take over. That’s when it’s cool to build the forum and get the hell out of the way. But when it comes to them designing and creating products for others – we need to keep our heads. In fact if there is one piece of advice startup blog can give is know which business you are in:

A) Are you building a forum for them to connect on?

or

B) Are you building a product for them – with their input?

If you are doing the latter – that’s when you need to be wary of the Homer mobile.

Instead, what we need to do when we want the crowds input is look to our “lead user group”. The lead user group is our base of fans who are knowledgeable, expert, style leaders or simply influential. These are the people we need to listen to when UGC is part of the mix, but not the whole story.

Trophy Ideas

Posted on by Steve Sammartino

Trophy Ideas shouldn’t be your first attempt at a start up.

Definition: Highly original and ‘expensive’ business concept which could change the behaviour of consumers, business or the world and make you rich in the process.

Trophy ideas are typically capital intensive and have long lead times to get up. They usually involve external capital. They’re often the domain of inventors. The reason that trophy ideas are onerous is that they don’t succeed very often and they take up the two most valuable tools we have, time and money, and lots of it. Sometimes people dedicate large portions of their life to trophy ideas. But we only ever here about the successful ones. An example might be the Dyson vacuum.

Here’s some startup blog advice if you want to go for a trophy idea. Do it after you’ve had some smaller successes first. Do it when you already have passive cash flow from another startup, business or investments. We should all pursue things that are worth doing, the trick is knowing the right time to chase them.

Territory

Posted on by Steve Sammartino

I just saw a stray cat enter our backyard much to the distain of our moggy. You know what happened…

There was a lot of hissing, a couple of left jabs with claws out, bushy tails and the obligatory chase up over the back fence.

Territory is about physical space, location, proximity to food, water and shelter. The basics which sustain life. Our cat was simply protecting what it needs to survive. Humans do it too. And so should your business or startup.

Cats are pretty smart. They know that there isn’t really enough room for two in most houses. It’s no different with brands. Great brands are always territorial. When the local alley cat turns up for a feed, the incumbent brand wont move to the left and share the food bowl. There’ll be fight, every time.

But the trick is this, brands are only territorial about their house (read here key distribution point). If you’re getting a great feed elsewhere, they won’t even notice. You can build some momentum and cashflow before they notice you’re gaining size and power. If you want to get off the street like your local alley cat, stop living day to day, then you and your startup have to find a new place without a cat. Be nice to the owners (your customers / audience), offer them something emotional and they might just adopt you.

Quirky fact: Boring = Profitable

Posted on by Steve Sammartino

Unless you are from the US – you have never even heard of any of the 10 oldest businesses in the USA. Nope, not one. There’s not a sexy brand among them. They include boring industries like, banking, ingredients, manufacturing inputs and insurance.

You can check it out by clicking here.

The important insight for Start Ups and investors is this:

The boring stuff is almost always more profitable than the sexy.

Why: Because exciting, sexy stuff attracts lot’s of competitors and people want to play there. They want to play there because it’s fun, it’s in the papers, it’s featured in business forums and leverages over-riding social trends. Then it gets busy and the cream disappears – (read here abnormal economic profits) . It’s no different to the house prices rising in popular suburbs and the yield declining. Simple economics discovered centuries ago.

So what? It’s vital we know the difference between sustainable & exciting. The most important factor for survivial is profit – end of story. Sure, profits can be made in any industry, but chances are there’s more profit in the areas everyone else forgot about.