Lufthansa on why having one agency model ‘doesn’t work’

Working with agencies that are nice to the brand – and each other – is the only way to build the trust needed to achieve your best work, says Lufthansa vice president of marketing, Alexander Schlaubitz.

Lufthansa

Lufthansa believes having flexible, but long-term, agency relationships is key to having the most effective and creative marketing.

Speaking to Marketing Week, Alexander Schlaubitz, Lufthansa’s vice president of marketing, says the success of Lufthansa’s recent ‘Say Yes to the World’ campaign, which launched in February, was only possible because of the long-term relationships the airline fostered with its agencies, based on trust, openness and understanding each other’s motivations.

“It wasn’t ‘here’s the brief’ and three weeks of black box thinking and there’s this big presentation and codified feedback. It was really just about, ‘we’re struggling with this, we’re trying to figure out that’, and everybody coming together. To me that is the optimal way,” says Schlaubitz.

“We always have multiple agencies in this massive convergence game that every campaign represents, so we need to make sure that I know that they’re all going to get along. They can differ and have direct communication about different perspectives, but at the end of the day they should be driven by the same thing and if I cannot trust that then the model is not going to work.”

He believes Lufthansa is fortunate to have assembled a portfolio of agencies that can genuinely work with each other and will operate at different levels of responsibility as and when required.

In the case of ‘Say Yes to the World’ the agency behind the campaign was Kolle Rebbe in Hamburg, working with involvement from DDB in Hamburg and Berlin, while the brand design work was carried out by Martin et Karczinski in Munich.

Schlaubitz argues that brands need this level of flexibility, because you cannot settle on one agency model and believe it will represent the best way of working for the next three years across every campaign.

“I want to have agencies that are real strategic partners, that really push back on us and make sure that they have a strong perspective on things,” he adds.

“I need them to be nice. I used to think that being nice was ‘nice to have’, now I find it to be more and more mission critical, because you do better work. There’s a different level of quality, there’s a different level of risk-taking that you do as a result.”

Driving creativity

The willingness to nurture strong relationships with its agencies appears to have been paying off for Lufthansa, which describes Say Yes to the World as having resonated the best internally of any creative the company has produced.

Focusing on openness and curiosity, the new campaign was initially intended as a tactical piece to promote Lufthansa’s new logo as it shifted further into the premium sector.

However, the pro-globalisation tone of Say Yes to the World rapidly caught on, becoming what Schlaubitz defines as the “closest approximation to a marketing articulation of a purpose”.

Describing itself as a “proud driver of globalisation”, Lufthansa used Say Yes to the World to move the conversation away from the personal benefits of travel to the good it offers society.

“It was just intended to be a tactical launch and all of a sudden when it was rolled out there was so much momentum behind it and so much resonance that we decided to shift over to make that the principle platform, because we think it is really relevant and differentiating for us,” Schlaubitz explains.

Despite taking a positive stance on globalisation, Lufthansa is cautious not to be drawn into the political environment. While rivals like Ryanair have expressed concerns about the impact on air travel of a potential no deal Brexit, the German airline group its taking a more measured approach.

“There are movements and counter-movements and all we want to do is appeal to those  that willing and able to travel, and we want to do the best for job for them,” states Schlaubitz. “We cannot become a political movement, that cannot be our ambition.”

Making marketing the ’empathy centre’ of a brand

Lufthansa’s vice president of marketing jokes that he often refers to himself as the “chief empathy officer”, because having the a comprehensive and empathetic perspective on customers is the goal highest up on his agenda.

He sees empathy as the principle that underlines the “digital revolution” and believes that while it is crucial to bring in digital skills, marketing must represent the “empathy centre of the brand”.

Furthermore, Schlaubitz explains that while Lufthansa is recruiting digitally savvy people to work at its innovation hub in Berlin, it is crucial that the brand does not become “enamoured with the technical” and forget about its original mission.

“A year and a half ago we spent a good amount of time rearticulating why we thought marketing existed within the brand Lufthansa to begin with. What is our original purpose and what is the thing that we think it should deliver as value? And we think that is the ability to understand our customers’ needs,” he explains.

“We’re trying to make sure that we showcase the kind of work we think is emblematic of being empathetic and then grow this coalition of the willing that see the virtue in that.”

Schlaubitz is also keen that his marketers “lift their heads up from their computers” and find ways to expand their horizons. One method is Lufthansa’s CMO Academy, a bespoke training programme with a variety of modules from agile project management to brand strategy.

The programme is designed to achieve a “higher level of intellectual rigour, discipline and transparency”, with its focus on learning lessons and sharing knowledge with other global markets, rather than being obsessed with success.

The benefits of being a house of brands

Success is, however, a big part of the current story for Lufthansa. The airline group, which includes Lufthansa, Swiss, Austrian Airlines, Eurowings and Brussels Airlines, saw profits rise by 33% to €2.36bn (£2.1bn) in 2017, the company’s best year on record. Revenue was also on the up, rising by 12% to €35.58bn (£31.63bn).

CEO Carsten Spohr attributed the Lufthansa Group’s success to its ability to leverage the economies of scale that come from being a large conglomerate, while at the same time operating distinct brands that do not cannibalise each other’s business.

Schlaubitz agrees that success in 2017 resulted from the company’s decision to play the “strategic long game” and represented the culmination of years of refurbishment to all the business class seats across the group’s long-haul fleet, the largest investment in post-war Germany.

Lufthansa decided this investment was needed after seeing customers shift away from brands at the “centre” offering homogeneous product experiences, to either budget airlines or premium carriers.

To ensure it could compete with the low-cost players Lufthansa established Eurowings as its value carrier based principally in Europe, allowing the company to shift its Lufthansa brand to a ‘new premium’ positioning by investing in business class and premium economy seats, and introducing its Signature Service catering within business class.

Two years ago, the Lufthansa Group also shifted into a new matrix structure in a bid to leverage backend efficiencies, while maintaining distinct customer-facing brands.

“We call it multi-brand front facing, because we want to make sure that we still have a distinct offering that is an Austrian offering, a Swiss offering, a Lufthansa offering and a distinct Eurowings offering, but we want to make sure that at the same time, within this hyper-competitive environment, we’re capable of maximising the back-office efficiencies,” Schlaubitz explains.

Lufthansa-
Lufthansa is keen to maintain a stable of brands that sit in both low-cost and premium sectors.

Drawing on the multiple data sources across its various brands, Lufthansa is focused less on personalisation and more on “contextualisation”, the information around a flight from the weather to customer behaviour which Schlaubitz believes will play an important role for the company going forward.

The focus is also on continuing to transform marketing from a cost centre to a monetisation centre, an ambition set out two years ago when the business restructure was taking place.

Lufthansa is still on that journey says Schlaubitz, who explains that his marketers are striving to find opportunities where they can serve customers and generate more money for the business. A recent example is the idea to supply economy customers waiting for trans-Atlantic flights with VR glasses showing them what the premium economy experience is like, encouraging them to upgrade.

Schlaubitz argues that from a brand perspective it is important to balance opportunities to make money with the need not to jeopardise the relationship with consumers.

“Yes we want to make money where possible of course, because this is a very low margin business, but we also need to make sure that we continue having the trust of our customers and building the relationship,” he adds.

“Bringing those two into an equilibrium is part of what the brand has to do.”

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