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Richard Branson on Why Biggest Doesn't Mean Best

September 12, 2011
URL: http://www.entrepreneur.com/article/220297

Richard BransonEditor's Note: Entrepreneur Richard Branson regularly shares his business experience and advice with readers. What follows is the latest edited round of insightful responses. Ask him a question and your query might be the inspiration for a future column.

Q: Do you deliberately pitch the Virgin brand as good value? If your prices are competitive, is it still possible for the public to regard your products as "the best in the world"?
-- Bobby Hall, Australia

A: Not only can a small company be the best, but it has to be the best to stand a good chance of thriving in today's competitive world. Then, once it reaches the top spot, it has to strive to do better every day, to ensure customers buy its products or services. Large scale can bring a company many advantages: a hefty marketing budget, established brand awareness in target markets and dependable distribution networks. But, luckily for the smaller players, a business's size does not guarantee better products or great service.

Twenty-seven years ago, when Virgin Atlantic had just one secondhand 747, we were able to compete with British Airways, which had a large fleet, a massive marketing budget and the dominant position at Heathrow, the U.K.'s leading airport.

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We set out to be the cheapest on the block, but only in our specialized niche. I had learned from the collapse of Laker Airways, the British budget airline, that competing on price alone was not a good strategy in the aviation industry. Since its profit margin was meager, the company was vulnerable to larger competitors' price attacks. Instead, we provided "first-class service at a business-class price," which allowed us to generate the profit margin we needed to continue investing in the business while earning a reasonable return.This strategy made a virtue of our airline's small size and modest start, shaping a very strong culture based on great customer service and our not being afraid to try new things. Virgin Atlantic's size was an asset: We were nimble and could innovate quickly, whether we were introducing new entertainment systems, better food, chauffeur-driven cars or our quirky lounges. There was no bureaucracy to slow us down, so we could direct money and resources to the right areas quickly and effectively.

Our small size also meant that we built close relationships with our customers. A business's key asset in this area (size brings no benefit) is its people. Back then, many great people applied to work for us because we were a small group and had more fun. They were so important to our success that we quickly learned to focus on staff retention, and this paid off. Our employees knew from experience how to provide the best possible service.

Without a large frequent-flyer scheme or network on our side, we learned to rely on our two strengths: customer service and personality. We drew attention to our unique offering through our famously cheeky ads, which were topical, timely and often poked fun at our competitors. This attracted notoriety and generated brand recognition.

Overall, we made sure we provided great value for money, building a loyal base of customers who identified with the Virgin brand. Our company soon won market share from British Airways; in essence, we had used a small business's budget to create a big brand. And in the long run, Virgin Atlantic has become one of the strongest brands in aviation.

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We applied what we had learned when we started up Virgin Blue in Australia and Virgin America in San Francisco. Virgin's culture was now firmly focused on developing products and services from the customer's point of view and trying to do things better than anyone had done them before. We always try to shake up an industry by showing just how high standards ought to be.

Virgin America will never be the same size as American Airlines or United Airlines -- two of the biggest players in the industry -- but we can out-maneuver and out-think them. The onboard experience we provide to our customers is very different from that of the legacy carriers: we provide great entertainment, free wireless Internet service and great food.

Since its inaugural flight in August 2007, Virgin America has won a number of awards for service and quality. During Virgin Atlantic's first years, we would have been obliged to launch a massive newspaper, television and billboard campaign to draw attention to these achievements, but advertising has changed a great deal over the past decade. Now we can use the power of social media -- with the help of clever viral campaigns, e-mail communications and online advertising -- to generate support, coverage and sales.

This change means that a company's large size is no longer a guarantee of its continuing success. With the playing field more level, big brands can no longer rely merely on expensive marketing campaigns to generate sales. Smaller players can build their global presence by using social media and word-of-mouth to promote their services without spending a lot of money.
This has helped smaller players to punch above their weight. Biggest does not mean best, and it never has. Now, even if they don't have the biggest wallets, small companies can achieve recognition as the best in the world.

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