How EasyJet Plans to Convert Web Surfers Into Highfliers
EasyJet's headquarters are located in a hangar in Luton Airport, 35 miles north of London. The working environment is described internally as a "treat-free zone" -- the carpets and window treatments are plain. There are no plants, no pictures, no individual offices, and the desks that have a view overlook the airport parking lot.
"We are living the low-cost dream," laughs Peter Duffy, the airline's CMO. Yet by paying attention to every penny, EasyJet increased its profit 28% to $485 million for the year ended Sept. 30, the airline's best since it started in 1995.
The business was, Mr. Duffy said, founded on two great concepts: "The deregulation of the European flight market and the internet. EasyJet has had digital at its heart right from the start. It's where you spend least to get most -- we are ruthlessly commercial."
Key to the low-cost ethos is the airline's use of digital to drive efficiency: EasyJet gets 400 million visits to its site every year and is aiming to turn more of the site surfers into paying passengers. "With those numbers, even the smallest changes can make a significant difference," said Mr. Duffy.
Mr. Duffy, who left behind the glamour of Audi for EasyJet two years ago, gets updated sales figures and forecasts every 30 seconds. "It's very leveling," he said, "there's nowhere to hide." And while he may not change his entire marketing strategy twice a minute, he's ready to adjust on-the-ground tactics every day if necessary to keep all routes functioning at maximum capacity.
EasyJet is getting close to 100% online check-in, helping to lower costs on the ground by reducing the number of staff and desks required at airports, as well as improving the customer experience. "A lot of people don't like airports," Mr. Duffy said, "and online check-in is quicker and less hassle."
Despite its digital focus, EasyJet, which operates 600 routes across 30 countries and expects to fly 60 million passengers in 2013, was not at the vanguard of digital marketing before Mr. Duffy joined. "Can you believe we used to send out the same email to every customer in Europe once a week on a Friday? We translated it into different languages, but that was the extent of the targeting," he said.
The airline has rebuilt its database and set up a more sophisticated email campaign. For example, it targeted all customers who traveled with EasyJet during the February 2012 school holiday but didn't rebook for 2013. Each message was tailored to include prices starting at less than the customer had paid the previous year.
Another digital strategy to convert more web traffic into flight bookings is the "Inspire Me" function, aimed at young singles. Using a series of questions about price, timing and destination, this tool helps undecided site visitors choose where to go.
The mobile site and app launched only at the end of 2011, but already 5% of revenue comes through smartphone bookings, and EasyJet apps are downloaded 100,000 times every 10 days. The airline is also studying how phones can be used to communicate with fliers while they are on their journey. "I find it amazing that customers have smartphones in their hands and we're giving information over [loudspeakers] because that's what happened in 1940," Mr. Duffy said.
EasyJet has set up an internal social-media function so that the manager responsible for a particular flight or airport can cut out the middleman and personally log in to update passengers on any problems or delays. That service has not yet become active.
Externally, however, EasyJet has so far been unambitious on the social-media front. It has a Twitter account, sending out standard updates to its 72,542 followers, and on Facebook, the EasyJet page is pretty conventional. "Social media is the next big area to see where we can extract more value, and where we've been far from our best," said Mr. Duffy. "If we can be more in the social-media environment in a way that doesn't irritate but adds value, we will be."
Despite the digital focus, EasyJet has cut online advertising; Mr. Duffy said the company had reduced the digital share of its advertising to 30% of its $75 million budget from 50%. "That 30% includes search and display, but not CRM. We reduced digital and increased above-the-line spend [through agency VCCP] because we found that this balance of the schedule gave us more positive returns," he said.
The overall ad budget has come down 15% in the last couple of years. EasyJet has saved the money by testing and refining search and online display to drive efficiency without affecting sales. By improving the site to maximize conversion rates on existing traffic, the airline freed up money to spend on drawing new traffic. The result is that every dollar spent on media has generated $4 in profit -- a significant figure given that EasyJet makes a per-seat profit of less than $8.
EasyJet is a short-haul airline -- the average passenger travels for one hour and 50 minutes and pays $89 for a seat -- and has no plans to open up to long-haul destinations such as the U.S. But it sells more than $90 million in seats via its U.S. website every year (it's the seventh-biggest country in terms of sales) and it has recently introduced a U.S. home page that lists prices in dollars instead of pounds, talks about "vacations" instead of "holidays," and changes the date format to appeal to U.S. visitors. Even so, the airline has no plans to advertise in the U.S. beyond buying some search.