Case Study $7\mathrm{.}1$The evolution of easyJet's online revenue contributionThis historical case shows how the easyJet website $($Figure $7\mathrm{.}11)$ became the main sales channel for easyJet from its launch in the $1990$s$.$ How the Internet was used for service delivery and marketing communications is also described. This case study has been retained since it is a popular case illustrating the benefits of management commitment to a planned, well$-$resourced strategy to help grow digital channels and to trial new online prod$-$ucts. By $2013,$ over $98\%$ of seats were sold online and easyJet still incentivises people to book their cheap flights online through a $7\mathrm{.}50$ discount for each leg of a journey. easyJet was founded by Stelios Haji$-$loannou, the son of a Greek shipping tycoon who reputedly used to'hate the Internet'. In the mid$-1990$s Haji$-$loannou reportedly denounced the Internet as something 'for nerds', and swore that it wouldn't do anything for his business.This is no longer the case, since by August $1999$ the site accounted for $38\%$ of ticket sales or over $135,000$ seats.This was past the company's original Internet contribution target at launch of $30\%$ of sales, by $2000.$ In the period from launch, the site had taken more than $800,000$ bookings since it was set up in April $1998$ after a shaky start of two sales in the first week and one thousand within the first month. In March $2000$ easyJet increased its online discount to $2\mathrm{.}50$ for a single trip $-$ a higher level of permanent discount than any other airline. By September $2000,$ Internet sales reached $85\%$ of total sales. Since this time, the growth in proportion of online sales has decreased. By $2003,$ over $90\%$ of all sales were online.The company was originally set up in $1994.$ As a low$-$cost airline, looking to undercut traditional carriers such as British Airways, it needed to create a lean opera$-$tion. To achieve this, Haji$-$loannou decided on a single sales channel in order to survive. He chose the phone.At the time this was ground$-$breaking, but the owner was encouraged by companies such as Direct Line insur$-$ance, and the savings that direct selling would bring.Although Haji$-$loannou thought at the time that there was no time to worry about the Internet and that one risk was enough, he was adaptable enough to change.When a basic trial site was launched, he kept a close eye on how popular the dedicated information and booking phone line was $($having a web$-$specific phone number advertised on the site can be used to trace the volume of users on the site$).$ A steady rise in the number of calls occurred every week. This early success coincided with the company running out of space at its call centre due to easyJet's growth. Haji$-$loannou related, $\text{'}$We either had to start selling over the Internet or build a new call centre.So our transactional site became a $10$ million decision.'Although the success of easyJet could be put down solely to the founder's adaptability and vision, the company was helped by the market it operated in and its chosen business model $-$ it was already a $100\%$ direct phone sales operation. This meant it was relatively easy to integrate the web into the central booking system.There were also no potential channel conflicts with intermediaries such as travel agents. The web also fitted in with the low$-$cost easyJet proposition of no tickets, no travel agents, no network tie$-$ups and no in$-$flight meals.Customers are given a PIN number for each order on the website, which they give when they get to the airport.Sales over the Internet began in April $1998,$ and although easyJet's new$-$media operations were then handled by Tableau, a few months later easyJet took them in$-$house.The Internet is important to easyJet since it helps it to reduce running costs, important for a company where each passenger generates a profit of only $1\mathrm{.}50$ Savings to easyJet made through customers booking online enable it to offer at least $1$ off to passengers who book online $-$ this is part of the online proposition.The owner says that 'the savings on the Internet might seem small compared to not serving a meal on a plane, which saves between $5$ and $10,$ but when you think how much it would cost to build a new call centre, pay every easy et reservation agent $80$ pence for each seat sold $-$ not to mention all the middlemen $-$ you're talking much more than the $1$ off we give online buyers'.What about the risks of alienating customers who don't want to book online? This doesn't worry the owner. He says I$\text{'}$m sure there are people who live in the middle of nowhere who say they can't use the Internet and will fly Ryanair instead. But I$\text{'}$m more worried about keeping my cost base down, and finding enough people to fill my aeroplanes. I only need $6$ million people a year, not all $56$ million.'PromotionThe Internet marketing gurus say 'put the company URL everywhere'; easyJet has taken this literally with its web address along the side of its Boeing $737$s$.$ easy Jet frequently varies the mix by running Internet$-$only promotions in newspapers. easyuet ran its first Internet$-$only promotion in a newspaper in The Times in February $1999,$ with impressive results. Some $50,000$ seats were offered to readers and $20,000$ of them were sold on the first day, rising to $40,000$ within three days. And, according to the marketing director, Tony Anderson, most of these were seats that otherwise would have been flying along at $600$ mph $-$ empty.The scalability of the Internet helped deal with demand since everyone was directed to the website rather than the company needing to employ an extra $250$ telephone operators. However, risk management did occur, with a micro$-$site built for Times readers $($www$.$times.easyjet. com$)$ to avoid putting a strain on easyJet's main site.Anderson says, 'The airline promotions are basically designed to get rid of empty seats.$\text{'}$ He adds, $\text{'}$If we have a flight going to Nice that's leaving in $20$ minutes' time, it costs us very little to put some extra people on board, and we can get, say, $15$ a head for it$.\text{'}$ Flight promotions are intended to avoid attracting people who would fly with easyJet, so advanced booking schemes are intended to achieve that.A later five$-$week promotion within The Times and The Sunday Times newspapers offered cheap flights to a choice of all easyJet destinations when $18$ tokens were collected. In total, $100,000$ seats were sold during the promotion, which was worth more than $2$ million to the airline. Thirty per cent of the seats were sold online, with the rest of the transactions being completed by phone; $13,000$ orders were taken over the Internet in the first day alone, with over $15,000$ people on the site at one point.The website also acts as a PR tool. Haji$-$loannou uses its immediacy to keep newspapers informed about new promotions and offers.The website is also used as an aggressive tool in what is a very competitive marketplace. Haji$-$loannou says, 'Once we had all these people coming to our site, I asked myself: Why pay a PR company to publi$-$cise what we think when we have a captive audience on the site?$\text{'}$ For example, easyJet ran a competition in which people had to guess what BA's losses would be on $\text{'}$Go$\text{'},$ its budget rival to easyJet $($the figure turned out to be $20$ million$).$ Within minutes of the BA results being announced on $7$ September, the easyJet site had the $50$ flight$-$ticket winners from an incredible $65,000$ people who had entered. In a similar vein, a section of thesite was entis air's head had sair, giving easydet's wiew that Swistirs asad had persuaded the swiss government to licence on the Gene granted a commercial scheduled lied itselt the Geneva $-$Barcelona route. easy et also called itself The web's favourite airlinete. $1999,$ a direct count ant to British Airways' slogan of The world's avourite airline, for which it enjoyed acourt battle.The creation of a mobile sitein an interview with Peter Duffy, the easyJet marketing director, the potentia of mobile marketing was empha$-$sised $($Marketer$,2013)$:Mobile was clearly a huge growth area. In some Mediterranean countries mobile is often leapfrogging broadband as a way to get online. So we set about making a mobile website where you could do all the things you can do on easyJet.com: buy from a website, cancel a flight, shift a flight, and do all those things in six languages. We have seen tremendous demand for it$.$ The app has been downloaded $4\mathrm{.}3$m times. Today $5$ per cent of revenue comes through mobile $-$ that's not insignificant for a $4$b company.Peter Duffy has also introduced a conversion rate optimisation program. He says:When I arrived, my first observation was that we had $400$ million people going to the website; $90$ per cent of sales come through it$.$ If we could improve conversion by just a small amount it was probably the most effective thing we could do commercially.At any point in time a dozen to $20$ tests can be running based on a series of ideas for how the company can do things better, inspired either by watching our customers or looking at where customers are dropping out of the process, or where there is a new feature like allocated seating.easyEverythingeasyJet has used the 'easy' prefix to trial additional services as part of the easyGroup. Trials include: easyHotel $-$ budget hotels from just $9\mathrm{.}99$ per night; easyCar $-$ a network of global rental companies that use economies of scale to keep prices low.Today, most non$-$flight services such as holidays, car rental and insurance are directly related to travel, often provided by partners.ImplementationThe articles report that Russell Sheffield, head of new$-$media agency Tableau, which initially worked with easy Jet, had an initial problem with colour! $\text{'}$He says there was a battle to stop him putting his favourite colour all over the site.$\text{'}$ The site was intended to be highly functional, simply designed and without any excess baggage. He says, 'The home page $($orange$)$ only had four options $-$ buy online, news, info, and a topic of the moment such as BA $"$GO$"$ losses $-$ and the site's booking system is simpler to use than some of its competitors'. He adds: 'Great effort was put into making the navigation intuitive $-$ for example, users can move directly from the timetables to the booking area, without having to go via the home page?The site was designed to be well integrated into easy Jet's existing business processes and systems. For example, press releases are fed through an electronic feed into the site, and new destinations appear automatically once they are fed into the company's information system.Measurement of the effectiveness of the site occurred through the dedicated phone number on the site, which showed exactly how many calls the site generated, and the six$-$month target was met within six weeks. Website log file analysis showed that people were spending an average of eight minutes a time on the site and, better still, almost everyone who called bought a ticket, whereas with the normal phone line, only about one in six callers buys. Instead of having to answer questions, phone operators were doing nothing but sell tickets.Source: Based on Revolution articles: EasyJet site a success in first month,$1$ August $1998$; EasyJet promotion sells $30,000$ seats, $1$ November $1998$;Say hello to Mr e$-$Everything, $13$ October $1999.$ Marketer $(2013).$Questions$1$ To what extent was the Internet revenue contribution of around $90\%$ achieved 'more by luck than judgement'?$2$ Explain the proposition of using the Internet for the customer and define the benefits for the company$\mathrm{.}3$ Explain how easyJet uses the website to vary the different elements of the marketing mix and as a marketing communications tool$\mathrm{.}4$ Use a news source such as www$.$ft$.$com or review its investors' relations site to find out how easyJet has extended its Internet applications.