Are you doing a Ryanair? Let me explain how this can affect your mortgage business.
Ryanair is a very successful airline operating short-haul flights all across Europe. We just took one to Girona, not because we wanted to, but because we had no choice. They do cheap very well, and they fly to places other airlines wouldn't touch. They offer cheap fares, no thrills and no customer care.
They know how to keep costs down to keep their fares low and maintain a steady return of customers, even if their experience was less than satisfactory.
O'Leary is astute. They didn't lay anyone off during the pandemic, so they have no re-hiring problem. They've increased their capacity to 119% of 2019 numbers and have very little debt. Cleverly he bought 80% of their fuel needs on the futures market before costs shot up.
They know how to do cheap fares. Hence they are very confident for bumper 2022. Even if they are flush with complaining customers, these people return year after year. Simply because they can fly anywhere cheaply.
So what are the lessons for mortgage advisers? Plenty.
- Very few firms can do cheap continuously in any sector; best not try to be one of them.
- To offer a cheap cost, i.e. no broker fees, you have to be good at containing your costs, just like Ryanair. The big boys can do this. "Stack them high to sell them cheap". You may not be able to compete here.
- Are you trying to appeal to everyone? Ryanair does and can cope. Can you?
- Maybe you better niche your marketplace and charge accordingly. Operate on a smaller scale to give the customer service that they deserve. Ryanair doesn't care about service; I know because we didn't get much on our return trip to Girona from Bristol.
- If you don't offer customer care, watch out since the FCA will be on you like a ton of bricks. Michael O'Leary can handle that; you probably can't.
- There's usually only a little room for the cheap end of the marketplace. The only successful operators are substantial and cost-effective. Look at Lidl in the supermarket business or Ikea in the home furnishings area.
Will we fly with Ryanair again? Probably, the competition hasn't weathered the pandemic storm, so we have little choice. But your clients have a choice; it is best to serve them well and charge.