In 2015, Alaska Airlines was the eighth largest U.S.-based airline, and the carrier is now expected to soar to fifth place with its recent takeover of Virgin America. But it’s not just the $225 million in annual cost savings and revenue gains and the added gate space that have made the merger a first-class deal for the company; it’s also what it means for the brand’s identity.
Alaska is already a popular choice for West Coast travelers. The brand has topped customer-satisfaction rankings among traditional carriers every year for the past eight, and it boasts the best on-time performance for the past six years, too.
Still, Alaska’s acquisition of Virgin brings something new: Virgin’s hip, tech-forward persona. It’s an essential part of any entrepreneur’s brand identity, and for an airline (Alaska) dogged for its folksy image, the hip image may be far more valuable than gate rights or personnel savings.
The wings of Alaska’s brand
A strong customer focus is a must for any brand, and Alaska has that in spades. In the past year, the company has added free entertainment, inserted power outlets into seatbacks and improved the quality of its food by partnering with Tom Douglas. With 86 percent of consumers willing to pay a little extra for a better in-flight experience, Alaska is on to a winner.
The company has blended that customer-first culture with financial efficiency. It already has a 33 percent unit cost advantage over its larger competitors, and its sustainability objective for the next four years is to drive down costs even further without skimping on quality. The only thing customers value more than in-flight services? Value.
What does Virgin bring to Alaska?
While Alaska’s reputation is built on cost and customer service, Virgin had two sought-after brand qualities that Alaska did not.
The first was a forward-thinking approach to technology. Back in 2014, Virgin introduced sweeping upgrades to its onboard wi-fi, and it was among the first to introduce touch screens at check-in. Such innovations are particularly important to millennial customers: 39 percent of them have said on surveys that they think technology increases a brand’s value, and 33 percent have called themselves more likely to recommend brands employing the latest technologies.
But it’s not just Virgin’s technological focus that made it a hit with millennials; it’s also the boutique airline’s determination to be culturally hip. Alaska’s customers are passionate about the brand, but Virgin’s cool persona -- complete with mood lighting -- has earned it a dedicated following among younger fliers. And, with the millennial marketplace worth $600 billion a year, it’s was this image that Alaska was looking to swipe.
Build your own high-flying brand.
Most entrepreneurs can’t acquire a competitor to emulate Alaska’s success; they have to bake their own. Here are the four most essential ingredients:
1. Bring aboard a full-time customer advocate.
Every entrepreneur wants to satisfy his or her customers, but Uber took this aim to new heights by hiring a “ senior product manager for customer obsession.” The role isn’t about fielding customer calls or overseeing drivers’ activities, though. Uber describes this person as a “forceful advocate” for solving Uber users’ product concerns.
Think of this person as a defense lawyer who’s always in the customer’s corner. It doesn’t matter whether the customer is right or wrong; it’s the advocate’s job to take customers’ needs straight to executives’ desks.
2. Use loyalty tiers to show value to top customers.
Just 15 percent of customers will offer a brand a second chance after a poor experience, and that's important because the cost of lost customers is an estimated $1.6 trillion. Brands, therefore, must ensure that their best customers feel valued: A tiered loyalty program is a great way to keep them feeling that they're a priority.
There are several ways to approach this, but one of the best on the market today is MAC Cosmetics’ three-tier program that rewards customers according to their annual spend. The right program depends on the business model, and some might prefer to reward people based on how frequently they shop. But not all shoppers provide equal value to the brand; and treating them as such is a recipe for customer dissatisfaction.
3. Take a pragmatic outlook on tech.
Technology doesn’t need to be showy; it needs to be useful. And while the latest app might create a short-term buzz, if it doesn’t help customers enjoy the brand, it won’t last.
Airbnb’s app, for instance, is incredibly functional. Customers use it to explore lodging, book a room and communicate with the host. Hosts can manage their listings and chat with guests. And instead of blowing millions on an app facelift, the brand recently incorporated a guidebook feature that helps customers “live like a local” wherever they go.
4. Make like a millennial.
Earlier this year, millennials surpassed baby boomers as the largest generation in America, and brands increasingly need to reflect their personalities as millennial households grow. So, be hip, rebellious, funny and smart, and put authenticity and creativity at the heart of your brand.
What might that look like? Look to Marriott Hotels, a legacy brand that’s become surprisingly hip. By 2020, the company expects millennials to comprise 50 percent of its guests, and it’s already retooling its image in preparation. It’s rolling out boutique hotels like Moxy, a 108-room property in New Orleans that includes a photo booth, an artist-in-residency program, mobile check-in and a local-minded menu of Cajun cuisine.
Alaska’s Virgin acquisition, meanwhile, promises a fresh look for the brand, but take heart that you don't necessarily need to undertake a merger to build a strong, successful image.
Simply keep the focus on customers, be financially efficient and add some spice, with user-centric technology and millennial-minded features. That’s your brand’s ticket to the bluest skies.