THE BLOG
01/10/2013 05:54 BST | Updated 30/11/2013 05:12 GMT

Do Customers Really Want Great Service or Low Prices?

Earlier this month a disgruntled customer of British Airways paid for a promoted tweet on Twitter so that his complaint could be seen by a global audience.

In other recent airline news, a survey by consumer body Which? found that customers believe Ryanair has the worst customer service in the top 100 brands used by British consumers.

What connects these two news stories? On the surface, nothing in particular, but it led me to think about whether customers really value excellent service or low prices?

I suspect that what really irked the British Airways customer was that he had paid for a full service airline and when something went wrong - lost luggage in this case - the customer service just wasn't as helpful as he had expected. But if this had been Ryanair then would great service have been an expectation anyway?

Customers love to hate Ryanair. The company has thrived by offering a low cost price that usually cannot be beaten by the competition. But is the price the only important factor when booking a flight?

Ryanair believes that their customer service is better than the Which? survey suggests. A spokesman said that last month they received fewer than 1 complaints per 1,000 passengers and 99 per cent of all complaints were answered within a week.

Regardless of who is right, can any business today afford to just not bother with service, under the assumption that the customers will keep buying if the price is right?

Ryanair is now one of the largest airlines in the world. When measured in terms of scheduled passengers carried it is a bigger business than national carriers like Air France or KLM. But other surveys - such as the American Express Customer Service Barometer - regularly suggest that customers will pay more for better service.

The American Express research in 2012 suggested that two thirds of customers would be prepared to pay a higher price for better service. But can this be correct when so many still book their travel on Ryanair?

About a decade ago, many British bank customers were outraged to find that their customer service calls were being answered in foreign call centres - particularly in India. I can remember a US bank offered their customers a choice when customers called; we can pick up and serve you immediately if you don't mind the call going to India or we can answer your call locally if you are happy to wait. Most customers chose the quickest option regardless of the outrage in the media about foreign call centres.

As any researcher knows, people will answer a survey in one way and then behave in another. Customers generally insist on a high level of support and service, even saying that they would pay more for a better service, but then they fly with Ryanair and shop in stores like Ikea - two companies that have thrived in recent years without any visible focus on providing a high quality of customer service.

Nobody wants to experience a terrible level of service when handing over cash for a product or service, but there are clearly some very different business models that can all be successful. Ryanair has succeeded by offering great deals at a low price. British Airways is now attempting to compete on price, they are now offering discounts to passengers not checking bags, but with their brand heritage they cannot afford to cut back on service - too much.