01: What the f..k's going on? This question is the secret to Flight Centre's success






John: Alright well Mel we’re under way. Welcome to Customers Matter. Can you tell me first of all a bit about your job here, your title, your role and where it begins and ends?

Melanie: Okay so I’ve got two titles, COO for the Group and MD for the Australian business. Where it stops and starts is a complete unknown to me and most people around me. But effectively I run Australia both Corporate, Leisure, Travel and all the other business in between. And I’m part of the Senior Leadership Team for the Group that kind of look at the long term strategy for Flight Centre.

John: Tell me a bit about how you got into travel, your journey to top of what I think is one of the most successful businesses really in the history of Australia, and what’s that path been?

Melanie: Okay so I’ve been here twenty-nine years at Flight Centre. I started as a twenty-one year old. I would be what would you call the typical recruit for a Flight Centre particularly in the Eighties and Nineties. I’d been at uni, gone and lived overseas for a year so. I actually did Psychology at uni. Came back and went oh what will I do, saw an ad in the paper for Flight Centre, went that’ll do for awhile, went in, got it and here I am twenty-nine years later. What’s happened though during years is that I started as a Travel Consultant, Team Leader role, Area Leader. I kind of went into lots of different opportunities as they came up and generally asked to do them. Things that I’ve never done before. So I kind have had I call it seven careers within the one company. Which has meant by the way that it’s actually made it quite easy for me to step into the MD COO role because I’ve literally almost run every aspect of the company. We have a view in Flight Centre if you’re successful in one place you can be successful in another. So even if you know nothing about it I’d suddenly be given IT for example thinking oh look you know what you’re doing. So here I am.

John: So those seven different careers what was the shape of each phase and what did you do in each phase? Obviously the frontline clearly.

Melanie: Yeah I did the frontline for about seven years working in shops and to be honest it’s one of the best experiences I think you can have in this company anyways to understand what happens at the place that you interact with the customer. There’s no doubt that has formed a huge part of my leadership thinking later on if you like was formed in those years. I’ve run backend businesses. We have lots of different structures in this company so it’s probably too long a story to go through all of them and they might mean nothing because of the words we give them or the titles. But I’ve essentially run a lot of product businesses so the business that puts product on the shelves if you like of both our shops and corporate businesses. I was doing that for a long time. So on the supply side. I’ve also been involved
in things like the operational you know as I said the IT, the property, those kind of areas. So I’ve understood sort of most aspects of what it takes to get a product, put it in the shop in front of a consultant and sell it to a customer.

John: You mentioned that your first seven years working in the frontline exposed you to customers and shaped your thinking. How has that occurred, what did you take from dealing with customers that now shapes the way you lead the business?

Melanie: I think the understanding that no matter what you think from a big picture perspective this is what happens at the micro level in terms of how the consultant has to sell it. And I must admit that’s always on my mind when someone comes up with an idea and I’m going yeah I don’t if that’ll work when it comes to the actual person to person interaction. But it’s about giving that consultant the best tools and the best support you can possibly give them so that they can actually make a sale or more importantly look after the customer in front of them. I just think it helps you keep grounded in the small things that you often forget about as you move through leadership stages in a company. So I still remember to the detail you know my first ticket I sold, the first stuff up I made, those kind of things and I think that helps create empathy if you like for the people you’re going to influence, the customer and the consultant sales person, so you’re not being glib if you like about some of the decisions you make. The other thing is in a company like Flight Centre where culture is so important that’s where you see the culture at its kind of you know greatest. And there’s no doubt you know that family unit which is our shop unit is at the core of what we do. So for me a lot of what I learnt there is will it work in the family ‘cause if it not don’t bother.

John: So that’s kind of interesting as well because you know Skroo’s been described by some people as Australia’s Richard Branson you know a sort of shy entrepreneur with a very unique kind of philosophy. What’s it been like working with Graham over those years and what have you taken from his philosophy and that experience?

Melanie: Well you can’t call him Graham for a start we won’t know who you’re talking about, it’s Skroo. What’s that been like, oh my god I could rock in a corner in one minute no look it’s been both fantastic and frustrating, but frustrating in way that I feel has spurred me on. He’s most famous line is he walks into room and says what the f*ck’s going on here, which initially you kind of go but you know what it’s a conversation starter and you know I love that the fact that he just pokes things you know just tries to get you talking and through that tries to get ideas. Like we also say in Flight Centre that Skroo loves to throw grenades in and see what floats to the top. And to be honest I kind of quite like that management style because to me no idea is a bad idea you just mightn’t be able to execute some of them. So Skroo makes you think, there’s no doubt about that. The way he goes about that is quite strange and unusual, often over red wine but I’m okay with that. But the one thing that I loved working about with Skroo, which is Flight Centre, is just you know have a go, you know have a go, give it a go, no idea as I said is a bad idea. And I would not have stayed twenty-nine years if I hadn’t had that flexibility and freedom.

John: Now Flight Centre over that twenty-nine years has really evolved and I’d like you just to cast your mind back now to when Flight Centre was young and a disruptor. What was it like then and what drove it, what characterised the business?

Melanie: You know it’s funny we’ve been talking a lot about the last twenty years. We were twenty years public company on the 1st of December I think was our anniversary and we were talking about the next twenty years. And I always say to everyone the heart of Flight Centre is exactly the same as when I started twenty-nine years. The physical nature of what we do has changed radically. So back to that point when I started we were hated by the industry because we were transforming it, reshaping, doing things that were I think actually illegal in those days. I’m pretty certain discounting travel was in fact illegal when I started
but we were doing it. You know we were the first people to get the general distribution GDS system as in computers into the travel industry. We were the first people to put airfare boards on the front of our shops. So previous to that unless you rang an airline or you know did whatever you could and find out what was going and on I think what we did is we made easy to buy travel by making it transparent and just out in the open. Even us putting in the shops in the multiplicity of locations that we did was about making it accessible. It was you know in these dark kind of cupboards in airlines worlds in offices kind of thing. So it was exciting. So you know we used to get booed at industry functions. It only made you stronger. And I think to be honest that attitude then of being irreverent and turning things on their ear was actually a part of what we just tried to do. To be honest as we’ve got bigger trying to keep that spirit alive has been one of our challenges because as you get bigger it is harder to be quick and agile and respond to things and you know you just end up particularly as a public company you’ve got so many other things to think about. So we’re actually trying to recapture that you know frontier spirit if you like but maybe in a way now where we at least have some money and resources on our side.

John: Well that was my next question. You know what is it like now to be a market leader and what does that mean in terms of what you can and can’t do and how you have to do things differently?

Melanie: Look small is good, big is good. And I often say this to guys who come and work in some of the other countries overseas and come to Australia where we’re the biggest part of Flight Centre. So being the market leader is great because you have more resources, you have already some sort of belief in what you do because of where you’ve got to if that makes sense, but then it also has challenges in that you’ve got to get a lot more people on the journey. I would argue the thing I dislike the most about it and perhaps that’s my personality more than anything is the scrutiny that it gives you. The scrutiny is good because you have to be prepared to be transparent and justify what you’re doing but sometimes I think we get a little bit scared of doing things because the scrutiny is there. You know oh stuff it I can’t be bothered ‘cause I’m gonna have to explain to someone. So the ability to be risky is still part of our DNA but your ability to take bigger risks is to be honest the one thing I find challenging about being part of a bigger public company I will say.

John: Could you describe the scale of Flight Centre today because I think a lot of people may not be aware, they’ve got a sense that it’s kind of ubiquitous, but I don’t think people truly appreciate the scale of it?

Melanie: Well as I said when I started there were twenty odd shops and how ever many people I can’t even remember. We have something like eighteen thousand people. We operate on an equity basis in thirteen countries throughout the globe. We have leisure travel, we have corporate travel, wholesale. We also have other brands that don’t even operate in travel be it education, colleges, bikes, etcetera. We joke about not knowing how many shops we have but we actually don’t know how many brands we have but we have a brand count off regularly and last time I’m pretty certain we’re up to about forty-two different brands, of which probably only about sixty seventy percent are in that core travel category. But no more than eight or nine are actually you know the leisure travel. So we aren’t just Flight Centre we are so much more than just Flight Centre the brand.

John: What’s it like facing some of the biggest global disruptors travel?

Melanie: It’s fun because I actually think some of the disruption that’s happened in travel recently and particularly in the digital space, you look at the Ubers, the you know Airbnbs, has actually forced us to go back to some of our roots of being a little bit disruptive ourselves and I actually think we’re now trying to get back to being a disruptor of ourselves as opposed to just the industry because we are the industry now. And I’ve done a look at some of these business in detail I actually think they resonate with actually what we do it’s all about person to person. I mean you look at the Airbnb and Uber models they claim they’re you know just the connector between you know the driver and the customer or the host and the guest kind
of thing. And we have had it for years now discussion around we want to be the world’s biggest and best person to person travel retailer because we want connect the customer with the right consultant or the right knowledge base or the right product. So actually there’s a lot of interesting things that they’re doing that I think has helped make us even go back to being a little bit more disruptive. So no I think they are to be admired and learnt from, is that the right English, learnt from just as much as you might go you know we don’t look at them as stealing our business they’ve actually just made the industry bigger and better.

John: Do you see any of them as the greatest threat? I mean if you looked at Expedia, Airbnb, even Google, others, I mean who do you think poses the greatest threat?

Melanie: I don’t think of them as threats because I’m not sure that’s a productive way of looking at business. They are competitors in some segments but I think a lot of those guys as I said have made us think harder about the type of digital capability that’s in the world today and how we then leverage that to actually give our sales people I call them digital tools of mass selling capability. So they’re not a threat if you look at what you can learn from or borrow from or embrace or work with them on. And you know Google’s a huge partner of ours for example. And even the Airbnb one we’re starting to have discussions with them about how could our you know two worlds potentially collide in a nice way that you know rubs off on each other. And you know those things might take years for anything to happen but you know I don’t think it’s productive to look at them as a threat.

John: You mentioned before that Flight Centre has just celebrated twenty years as a public company which has forced you not only to look back but to look forward. Where is Flight Centre going and what do you think the business will look like in five years and in twenty years?

Melanie: As I said I don’t think who we are in terms of our purpose and our value or psychological kind of make up will change at all in the next twenty years. I hope it doesn’t. But physically we will change. We will embrace more multiple channels of distribution so particularly online. We will go more mobile because that’s just the way of the world. We will diversify further than we are now. Maybe not more brands within the travel sector, although watch this space there’s a few on the radar now, but we’ll probably try and look to diversify in what I’ll call adjacent to our industry. So one of the next big growth markets for us is at destination. So we send thousands of people to key destinations why not own if you like the products they’re buying on the ground. For two reasons. Number one obviously financial we can get another sale and another bit of margin but actually it helps us provide a better customer experience and helps create unique products for our customer. So you’ll see us go more vertical in doing far more at destination. But the other thing you’ll see us do is probably look where we think we can apply our model into maybe a completely different segment. Let me think of one. Home loans, you know borrowing, lending, that kind of stuff. So we think the model we have for our business model would work beautifully in that industry. It’s a bit like bikes. You might think we got into bikes because Skroo likes riding and you’d be totally right. But to be honest our model works beautifully in that bike world and so we’re actually becoming quite successful in that space by applying the Flight Centre business model. So that’s what you’ll see us doing, not necessarily growing just horizontally but growing vertically, and growing into more adjacent segments. But the other thing is we’re very keen on becoming a travel incubator, an incubator of new technology and ideas particularly in the travel industry, so we also want to become the business that people come to because they’ve got an idea that they think might work.

John: What are the challenges in the so called age of the customer? You mentioned in many respects you were customer aligned at your buccaneering pirateering beginnings. What are the challenges today in what is really a world where things are far more transparent to customers than they’ve ever been before?

Melanie: Look you know again if you look at it as a challenge that the customer often knows more than you do in some instances of the cycle you could say that that’s a problem but it’s not really. I think what’s challenging is that you have to spend more money to get to the customer because there’s just so many more channels. So whether it’s digital channels, whether traditional challenges, people still watch TV you know, but they also go online so now we’ve got to be in three places not one. So it’s the expense that that’s giving us or the cost to continue to ensure we deliver on low pricing and value for our customers when
you’ve got much more expensive multiple ways of doing it. That’s challenging because you’ve really got to invest your money in the right places to have the biggest impact but allow the customer to make choices. So that’s a challenge. But you know like I said when I started and you couldn’t get any airline pricing except if you rang an airline and many of them now you can get it anywhere and everywhere. Again I’d like to think that we look at that as an opportunity because does that stimulate the market and get people off buying a fridge per se and into buying a holiday. So if you look at it as an opportunity to get more customers or more customers at different stages of where they’re at then I’m quite happy. But it’s the cost base that’s probably the biggest concern it’s giving us.

John: The thing about the core business of travel and accepting obviously that there is a diversification, what new services can customers expect as they look to the future of travel?

Melanie: What new services. I think customers will get and should look for not just services and products, what I’d call hard products, you know the flight the hotel whatever, but also look for the other things and again we’ll be doing this. So I’ll give you a good example. You make a purchase in travel and often in the back of your mind is a thought that will it go down in the next six months ie if I buy now will I actually rip myself off because of my timing of being organised. So one of the services we’re looking at offering, and there may be a charge associated with that, is we’ll provide a monitoring service that automatically monitors the price of the ticket you bought and if we can then get a cheaper fair that comes out at some point you know and get you on that, there might be a slight penalty on a refund, but I don’t know about you but I’d certainly sign up and pay for that service because I’m getting someone else looking out for my interest. They’re the sorts of things I think customers will be presented with so no just necessarily the purchase of the you know hard travel product but there’ll be lots of interesting other things they’ll be able to buy that will give them surety they’ve got the right product at the best price at the right time.

John: Final couple of questions. The first one, what keeps you awake at night?

Melanie: What keeps me awake at night. I sleep reasonably well most of the time. Possibility. I’m the sort of person that I don’t really worry about things ‘cause to be honest that’s rather useless energy if you ask me but what would get me up at night is if I can’t stop thinking and I’ll get up and start writing a few thoughts down. So to be honest I’m actually being kept up with thoughts of possibility and what might be you know exciting opportunities as opposed to issues. But I will say this the only thing that is concerning me for our group and our company at the moment is in fact that original sales consultant so what I started as. It’s becoming increasingly harder for them to be successful and you know if I can’t create success at all levels of the organisation then you know that actually worries me. The individual at the very front line needs to able to be as easily as successful as it was when I started. I don’t think I was any rocket science but I did well. I want to make it that the average consultant can do well because we’ve given them the right environment, the right tools, the right products.

John: And so what does that mean you need to do for them?

Melanie: Simplify their world. I mean there’s no doubt that travel has become far more complex in the last twenty or thirty years which has a great ability or a great sort of situation there’s lots of choice for people. I meant the amount of products you can buy versus when I started is unbelievable. And the pricing is unbelievable. But that complexity means the person who’s kind of shopping on your behalf does need to know more and look in more places with potentially less return on each time they make a sale. So we’ve got to make it easier for them. So yeah making their world simple really.

John: And finally thinking about managing a business in an age of digital disruption, what are your three tips for anyone in any industry trying to grapple with this?

Melanie: Tips. Well probably only two things really. Number one is don’t resist the digital tools. If you actually look at digital as creating capability as opposed to cannibalising your business it’s actually quite opening in terms of thought provoking. But the other thing is don’t underestimate people’s desire to deal with people. We’re very much social beasts and travel’s very much I don’t know about you I travel to meet people. But you know I think if you think of digital disruption as a way of as I said mentioned before giving your people great tools better tools for them to have a better relationship with their customer then I think it’s very exciting. And on the other equation use the digital disruption to make them more efficient. You know computers should be doing all the non-value sort of creation stuff and allowing people to actually do what they do well which is converse with customers, make recommendations and look after them.

John: Perfect. Thanks so much.

Melanie: Thanks John.

John: I was just going to ask the other thing while I’ve got this rolling and don’t feel obliged but could I ask you a couple of questions about how you found Komosion to work with?

Melanie: Oh those people [laughs].

John: We don’t need to that know if you don’t want but I meant to flag it and realised I didn’t. Yeah so Mel could you tell me what’s it been like having Komosion in and around the business over the last few years? How have you found the company and its people?

Melanie: Well I know some of the people of course. But no it’s been fabulous. John you may remember when you first came into the business you had me kind of up stomping around a room going it’s not good enough. So it’s been great because initially I think what you guys did was help me as a leader in this business go I knew something wasn’t quite right and you helped me define what wasn’t quite right. So you kind of gave certainty to if you like some kind of intuitive concerns I had at the time. You then I think very systemically kind of went through and helped to nail down what those issues were. So you took what was just a you know a bit of gut feel and made it a bit concrete. I think that’s something you did really well. You then helped us develop options. And again that’s something that you know when you’re flitting from one thing to another, actually that is something about the size of the business as well it is very hard to dive into something in a deep way, you guys helped us dive into something in a deep way, forced us to move from what we were doing which do you remember was that very sausage factory approach to marketing, which we knew we had to do, but having you there and paying you to do it forced us to do it. So it kind of at a moment in time helped us realise what we thought was wrong, you just gave it some concreteness and then you helped us develop some actions I think. So I would say you just help us speed up what we would have been meandering around for ages trying to fix. Oh and you’re fun people to work with. We like a drink.

John: We’ve also tried to support the company I guess not only strategically but with some tactical projects. Travel trends, some product evaluation and reconfiguring and so forth. Have those things proven to be useful and do you think they’ll be important over time?

Melanie: Well hard to say if they’ve proven to be useful now because it’s only just you know their kind of inception stage with the travel trends. But already the interest we’ve had when talking to people. But that’s another good reason I think when you have a relationship with someone like we’ve had with you guys for a few years you wouldn’t have even realised this was an opportunity but just by being around us for awhile you went hey I think you could do this in a style that suits you. So to me that’s something I think you understand us and we understand you so you’ve suggested something and we’ve gone oh yeah that’s actually of value. And I do believe that I was just saying before I think it’ll be something that I can use a lot in terms of a lot of the talks I do both internal and externally to help give again some data and some you know real facts and information to some of the things we’re seeing. So yeah no I think it’ll be hugely useful.