CRM

I really enjoyed the recent TV programme covering the easyGroup's venture into cinema. The most interesting thing for me was the short section where the philosophy of new ventures was explained. Don't use experts. Just get your people together and work out what customers want. Find out why the existing business model isn't giving customers what they want. Then set up a completer business to do it your way, not the existing way. Make sure it's one where customers, managers and staff can feel that they are working in the same direction - getting/providing more value to all, more profitably to the owners.

In this case, the problem was stated as "Why do cinemas only sell 20% of their seats?" The answer: "They don't use the low cost airline model of aggressive yield management, web booking and radical simplification of the service process". The easyGroup answer - sell seats cheap to early bookers, expensively to late bookers. Don't sell popcorn. Tell the customers to tidy up after themselves to accelerate turn-round time. I love the sheer chutzpah of the approach, and as a regular user of easyJet (not always at lowest fares - last time I could have done it cheaper on BA), I had a lot of sympathy for it.

But then I caught myself thinking - has the easyGroup fallen into the very trap which it claims to avoid? It reminded me of my favourite joke - the one about the difference between an ordinary doctor and a medical consultant. The doctor treats what he thinks you have, the consultant thinks you have what he treats. I'm sure that the easyGroup was partly right in its diagnosis. Yield management combined with web booking must be a better answer. However, at least in the programme - two bits seemed to be missing. One was the demand analysis - are there enough people in Milton Keynes who want to go to the cinema more often, at off-peak times, who are deterred by the price, and who are prepared to use web-booking. In the case of air travel and car hire, nobody would have doubted the effect of poor yield management on deterring customers. The other was the supply side - could easyGroup get the right - most recent - films to show them? For if you can't get them (which was a problem for easyGroup), then you are not in competition with other cinemas, but with DVDs.

I guess if it had been my business (and the reason it isn't is that I am an expert and Stelios is a great businessman!), I might have tried the consolidation model - selling seats of other providers. The easyGroup model is a great one, but I'd love to see it taken to its extreme, where easyGroup just provides the model, and helps other companies simplify their offer so that they can sell a lot more of it, with both sides making more profit. Putting it another way, perhaps easyGroup should move from selling products to selling solutions - the subject of our latest book (1). Stelios could certainly bring a breath of fresh air into many more industries. Perhaps the world is looking for a Stelios Branson - as Richard Branson seems to have learnt the essential art of partnering. I'd love to see Stelios let loose on public services, particularly education, health and even the combined health/financial services problem of our ageing population. Fresh thinking which is tightly focused on the real problem is all too rare, and even if it does exist, rarely followed through. However, Stelios might ask, "Do you want to kill me with the poisoned chalice of public sector services?" Meanwhile, I can dream of easyUni, where students teach themselves, managed by easySolve.

(1) Business Solutions on Demand, by Mark Cerasale and Merlin Stone, Kogan Page 2004

About the Author
Merlin Stone is IBM's Business Research Leader and Director of QCi Ltd and The Database Group Ltd. He is currently moving his professorship back to Bristol Business School.