Companies We Admire: Virgin America
By Ken Rosen
When Virgin America first took off, I flew it quite a bit…as personal research. I was intrigued by the audaciousness of starting an airline tied to the brash reputation of Richard Branson’s Virgin. I remain impressed. There’s an old joke in tech: “How did God create the world in 6 days?” “He didn’t have an installed base.” We believe this applies: Virgin America is what happens when you start from scratch and…
- Know aircraft design
- Knowthe stateoftechnology
- Take the habits of fliers seriously
- Analyze the true incremental costs of amenities
- Consider how amenity “costs” introduce profit opportunities
A few examples of where this leads to better decisions:
- Individualized entertainmentsystem (“Red”), even in coach = satisfaction and eyeballs. As an obvious point, people like controlling their media. Beyond that, a compelling entertainmentsystem delivers eyeball for targeted advertising potential. Years ago, I was interested in airplane cabin advertising, especially first class. Passengers had only one channel on a big screen and many watched. With laptops, iStuff, etc., those days are gone. Red’s compelling content (you can overdose on inspiration from TED presentations alone!) seems to capture more eyeballs than any other airline system I’ve seen…opening the door for monetizing those eyeballs with advertising and cross-promotion. Of course, having numerous channels fights with mass advertising to the whole cabin, but as an advertiser, I’d prefer to pay less for fewer, more tailored eyeballs.
- Clever video for mandatory safety presentation= more people watching…repeatedly. Only VA’s rendition gets this effect. I don’t know if it means more VA passengers will live through an accident, but I do know it glues eyes to the entertainment system leading smoothly to a few precious minutes of full-cabin ads. Who’s advertising now?Google,Progressive insurance, and the chic Moran hotels — pretty good company. That said, I’m surprised they haven’t created a few new versions to ensure frequent fliers don’t zone out.
Ok, we’re taking off now…
- Tons of food and beverage selections available VIA theentertainmentsystem = advertising and co-promotion. With lots of choices, you need a multipage menu. A menu means advertising and co-promotion opportunities. This month, it boasts ads for a new tea brand and one of the available movies…and those pages bring in cash.
- Food and beverage order VIA theentertainmentsystem = no shrinkage. Over the years, I’ve gotten a LOT of free drinks from flight attendants. I’d guess around 10% — definitely over 5%. My smile isn’t that great, so I’m not sure why, but it’s true. I like it, but in Hospitality, this is called “shrinkage.” And according to the National Bar & Restaurant Association, it can cost 10-23% of revenue! When I ordering is the only way to communicate my beverage desire to the flight attendant, presto chango, no shrinkage. And it feels like a value-add to me!
- No carts in the aisles (well, far fewer) = less sense of restriction — even if you never move. Plus, because you order what you want when you want it, you get personalize refreshment timing.
- Happier crew members = better, more pleasant service. I’ve been so intrigued by this, I’ve bugged numerous crew members. It’s grandmother research, so sure, there are exceptions. But the difference in job satisfaction vs. the larger U.S. Airlines is profound. And it shows in the service. The reason for the difference is a topic for another post, but I asked a flight attendant early on “What’s different?” Her answer: “They talk to us…and they listen.” Easy, hmm?
- Power to each seat = one more reason to pick VA rather than buying a special cable for the times you upgrade on the right United flights. It’s still a new, wild feeling to work on my laptop and listen to myiPhonewhile working in the airport and on the flight…and get off and go to meetings with a full battery.
- If you knew all about your industry (you might), all about technologies to support your offering and brand promise (you can), and all about what your customers crave (you should…you really should), what would you do differently?