John: Alright, Mel, we’re underway. Welcome to Customers Matter. Can you tell me first about your role here, your title, and where your responsibilities begin and end?
Melanie: I hold two titles: COO for the Group and MD for the Australian business. Where those roles start and stop is a complete mystery to me and most people around me. Effectively, I run the Australian operation—including Corporate and Leisure travel—and all the businesses in between. I am also part of the Senior Leadership Team for the Group, focusing on Flight Centre’s long-term strategy.
John: Tell me how you got into travel and your journey to the top of what is arguably one of the most successful businesses in Australian history. What did that path look like?
Melanie: I have been with Flight Centre for 29 years. I started as a 21-year-old and was a typical recruit for that era: I had finished university—studying Psychology—and lived overseas for a year. I saw an ad in the paper, thought “that’ll do for a while,” and here I am nearly three decades later.
During those years, I progressed from Travel Consultant to Team Leader and then Area Leader. I moved into different opportunities as they arose, often being asked to handle things I had never done before. I’ve essentially had seven different careers within one company. This made stepping into the MD and COO roles much easier because I have run almost every aspect of the organization. At Flight Centre, we believe that if you are successful in one area, you can be successful in another—even if you have no prior background in it. For instance, I was once given responsibility for IT simply because they felt I knew what I was doing.
John: What was the shape of those seven phases? You obviously started on the frontline.
Melanie: I spent seven years on the frontline working in shops. To be honest, it is one of the best experiences you can have in this company to understand the interaction with the customer. That experience formed a huge part of my later leadership thinking. I’ve run “back-end” businesses and product businesses—those that put products on the shelves for our shops and corporate sectors. I spent a long time on the supply side, as well as in operations like IT and property. I’ve come to understand most aspects of what it takes to source a product, put it in front of a consultant, and sell it to a customer.
John: How does that frontline exposure to customers shape the way you lead the business today?
Melanie: It provides an understanding that no matter what you think from a “big picture” perspective, you must consider what happens at the micro level—how the consultant actually has to sell it. Whenever someone proposes a new idea, I immediately wonder if it will work during a person-to-person interaction. Leadership is about giving consultants the best tools and support so they can look after the customer.
It keeps you grounded in the details you often forget as you move through leadership stages. I still remember the first ticket I sold and the first mistake I made. That creates empathy for the people you influence. In a company where culture is paramount, you see it most clearly in the “family unit,” which is our shop unit. If an idea won’t work in the “family,” we don’t bother with it.
John: Graham “Skroo” Turner has been described as Australia’s Richard Branson—a shy entrepreneur with a unique philosophy. What has it been like working with him, and what have you taken from his philosophy?
Melanie: First of all, you can’t call him Graham—we won’t know who you’re talking about! It’s “Skroo.” Working with him has been both fantastic and frustrating, but in a way that spurs me on. His most famous line is walking into a room and asking, “What the f*ck is going on here?” Initially, that’s startling, but it’s a conversation starter. He pokes things to get people talking and generate ideas.
We say Skroo loves to “throw grenades in” and see what floats to the top. I actually like that management style because it implies that no idea is necessarily a bad idea; you just might not be able to execute all of them. Skroo makes you think, often over a glass of red wine. The flexibility and freedom to “have a go” is why I have stayed for 29 years.
John: Looking back to when Flight Centre was a young disruptor, what characterized the business then?
Melanie: We recently celebrated our 20th anniversary as a public company. While the physical nature of what we do has changed radically, the heart of Flight Centre remains the same. When I started, we were hated by the industry because we were transforming it. We were doing things that were almost considered illegal then, like discounting travel.
We were the first to bring the GDS (Global Distribution System) computers into the travel industry and the first to put airfare boards in shop windows. Before that, you had to ring an airline to find out what was going on. We made travel easy to buy by making it transparent and accessible. We moved travel sales out of dark offices into multiple convenient locations. We used to get booed at industry functions, which only made us stronger. Today, our challenge is keeping that irreverent “frontier spirit” alive as a large public company with significantly more resources.
John: What is it like to be a market leader now? How do you maintain that spirit under public scrutiny?
Melanie: Being the market leader is great because you have more resources and a foundation of belief in what you do. However, the challenge is getting a larger number of people to join you on the journey. Personally, I dislike the level of scrutiny. While transparency is good, it sometimes makes people scared of taking risks because they don’t want to explain themselves to everyone. The ability to take risks is still in our DNA, but taking large risks as a public company is definitely more challenging.
John: Could you describe the scale of Flight Centre today?
Melanie: When I started, there were about 20 shops. Today, we have approximately 18,000 people and operate in 13 countries. We have leisure travel, corporate travel, and wholesale. We also have brands outside of travel, such as education, colleges, and bikes. We have about 42 different brands, of which only 60 to 70 percent are in the core travel category. We are much more than just the “Flight Centre” brand.
John: What is it like facing global disruptors like Uber or Airbnb?
Melanie: It’s fun. Disruption in the digital space has forced us to return to our roots and start disrupting ourselves. When you look at Airbnb or Uber, their models resonate with ours because they are about person-to-person connection. For years, we have discussed being the world’s best “person-to-person travel retailer.” We want to connect the customer with the right consultant, knowledge base, or product. These disruptors have actually made the industry bigger and better; we admire and learn from them rather than seeing them as a threat.
John: Who poses the greatest threat? Expedia, Google, or others?
Melanie: I don’t look at them as threats because that isn’t productive. They are competitors in some segments, but they make us think harder about digital capability and how we can provide our salespeople with “digital tools of mass selling.” Google is a huge partner of ours, and we are even discussing how our world and Airbnb’s might collide in a beneficial way. It isn’t productive to look at them as threats.
John: Where is Flight Centre going in the next five to twenty years?
Melanie: Our purpose and values won’t change, but our physical presence will. We will embrace multiple distribution channels, particularly online and mobile. We will also diversify into adjacent industries.
One big growth market for us is at-destination products. We send thousands of people to key destinations; it makes sense to own the products they buy on the ground. This provides a better customer experience and unique products while improving our margins. We are moving vertically. We are also looking at applying our business model to different segments, like home loans or lending. It’s similar to our entry into the bike industry—it works because the Flight Centre business model is successful there. Finally, we want to become a “travel incubator” for new technology and ideas.
John: What are the challenges in this “Age of the Customer,” where transparency is at an all-time high?
Melanie: The customer often knows more than the consultant in some parts of the cycle, but that isn’t necessarily a problem. The real challenge is the cost of reaching the customer. We now have to be in three places at once: digital, mobile, and traditional channels like TV. Investing your money in the right places to allow the customer to make choices, while still delivering low pricing and value, is a significant challenge. However, I see it as an opportunity to stimulate the market and get people to buy a holiday instead of, say, a new fridge.
John: What new services can customers expect in the future?
Melanie: Beyond “hard products” like flights and hotels, customers will see more monitoring and surety services. For example, we are looking at a service that automatically monitors the price of a ticket you’ve already bought. If a cheaper fare becomes available, we can re-book you on that fare. Customers will pay for that service because they want someone looking out for their interests and providing surety that they have the best price at the right time.
John: What keeps you awake at night?
Melanie: I generally sleep well, but I am often kept up by thoughts of possibility and exciting opportunities. However, the one thing that concerns me is the success of the frontline sales consultant. It is becoming increasingly difficult for them to be successful compared to when I started. If I can’t create success at the frontline, the organization suffers. I want the average consultant to do well because we have provided the right environment and tools.
John: How do you make that happen for them?
Melanie: We must simplify their world. Travel has become far more complex in the last 30 years. There is unbelievable choice and complex pricing. The person shopping on the customer’s behalf needs to know more and look in more places for potentially less return per sale. We have to make their world simple.
John: What are your top tips for managing a business in an age of digital disruption?
Melanie: First, don’t resist digital tools. See digital as a way to create capability rather than cannibalize your business. Second, never underestimate the human desire to deal with people. We are social beasts, and travel is about meeting people. Use digital tools to make your people more efficient. Computers should handle non-value tasks, allowing humans to do what they do best: converse with customers, make recommendations, and look after them.
John: Perfect. Thanks so much.
Melanie: Thanks, John.
John: Since we have the recorder rolling, could I ask what it’s been like working with Komosion over the last few years?
Melanie: Oh, those people! [Laughs]. No, it’s been fabulous. John, you might remember when you first came in, and I was stomping around the room saying things weren’t good enough. You helped me as a leader define exactly what wasn’t right. You gave certainty to my intuitive concerns and systemically nailed down those issues.
Because of the size of our business, it is hard to dive deep into specific problems. You helped us do that and forced us to move away from a “sausage factory” approach to marketing. You gave our concerns concrete form and helped us develop actions. You sped up a process that would have taken us ages to fix on our own. And you’re fun people to work with—we like a drink!
John: We have also tried to support the company tactically with travel trends and product evaluation. Have those been useful?
Melanie: It’s early days for the travel trends, but there is already significant interest. Because of our multi-year relationship, you understood our style and suggested things that would be of value to us. I believe these facts and data points will be hugely useful in the talks I give both internally and externally.