The Pioneer interview with... David Magliano

From the 2012 Olympics to The Guardian newspaper, throughout his career, David has listened to customers and taken bold decisions that reflect what matters to them, choices that have often been inconvenient or unconventional, but that have led to success.

Starting at Oglivy, David has moved from advertising to commercial to corporate strategy, working with some of the UK’s best-known brands along the way. Highlights include creating an early discount airline that provided a genuinely good customer experience, developing the audience-led idea that won London the 2012 Olympics, and helping The Guardian achieve profitability by adopting a customer-led approach to membership.

In our language, David is a serial customer pioneer.

Q. What challenges can people face in remaining customer-led as their career progresses?

Within advertising, it is clear who the target is and therefore it's much easier to have them front of mind. A lot of effort goes into understanding their needs, where those needs aren't being met today, what they think of the competition, where shortcomings are in the sector, and so on.

As you move up in your career – for me through commercial strategy to corporate strategy - you get further away from this core purpose. You become detached from understanding exactly what customers are thinking about. You become more preoccupied with other stakeholders – what are shareholders thinking? What are analysts thinking? What is determining movements in share price? What's going to affect six monthly or quarterly reporting cycles and so on. I think I have been lucky in that I've had a career that started in advertising, I think that's kept me little more rooted in what customers think.

Personally, I think there is no substitute for talking to your customers, but I have to say increasingly as you move up, you end up relying on aggregated data surveys and that's that never quite gives you the richness.

Q. You helped launch GO, British Airways’ answer to Ryanair and easyJet. Low-cost airlines aren’t known for having customers at the forefront, so how did you manage it?

Airlines were deregulated in 1997, with prices were no longer set by governments and this opened the door to low-cost airlines. Before this, airlines competed on the differential of service because the price was fixed.

Ryanair and easyJet entered the market and to distinguish themselves from the existing pack, they went right down the other end of the spectrum. They were able to charge low fares, but their challenge was helping people understand why the fares were so much lower. Removing free meals was a useful touchpoint. This isn’t the secret sauce of low-cost airlines, but it helped customers understand why the fares might be cheaper.

Customers weren’t just making a choice around price, we knew through our research that customer service was still an important differentiator. Ryanair and easyJet had done away with allocated seating. But the majority of passengers travelling in Europe are travelling as a family or as a couple. If you're travelling as more than one, then sitting together is a big deal. So we decided to adopt seat allocation.

I also spent quite a lot of time at Stansted and Luton watching what was happening with easyJet and Ryanair – watching the check-in lines, talking to the people who were checking in.

We knew our customers were spending money at the destination on nice hotels and the like, they just slightly resented spending their budget on getting there. But they didn’t want a horrible experience. We addressed that particular need.

We still flew from Stanstead and were able to adopt many of the low-cost signals, communicating it was a low-cost airline. But we adapted our offer to meet the needs of our customers.

Q. The London Olympic bid similarly took a different approach to convention, which was to focus on the location, and instead you chose to put the people the Olympics is really for at its heart. What made you take this path? 

Well, there was some faulty thinking here which we need to confess to! Up until 2012 the story for choosing a host city was very much based on the place. Would you have a good time there? Barcelona had made a very good case about how they'd use the Olympics to transform an area of the city that had been very rundown, which is what they did to great effect. And for quite a while, we were running a similar narrative about using the Olympics to transform the East End of London.

During the process you get lots of opportunities to talk either to the people that are going to vote or to the people around them. We realised weren't getting a lot of traction with that particular narrative and Paris was doing much better on that kind of joi de vivre and the fact that Paris would be a great city – which it would be!

So, I put some work into developing some alternative ways of framing the story. My thinking was that one of its main sources of revenue is TV rights. And as the audience for the Olympics was getting older and older and older, the value of those TV rights was diminishing. Younger people were watching football, basketball, American football, baseball and the big Olympic sports like swimming, track and field, the modern pentathlon were minority niches.

So I put together an argument which was to save the Olympics. To bequeath the Olympic movement a legacy, London would deliver a TV audience of young people.

I remember sitting down with Seb Coe on a Friday afternoon and talking him through this. He listened carefully and basically said, yeah, very good, David. But you've got it completely wrong!

The challenge facing the Olympic movement isn't that they don't have enough young people watching the Olympic sports. They don't have enough young people doing Olympic sports.

That was the ‘aha’ moment. We turned the pitch for London into not being about London, not even about the legacy that it will leave London in the rejuvenation of the East End. London's vision was about attracting young people into sport, and Olympic sport in particular. Our legacy was a legacy for the Olympic movement.

And to a large degree, the London Games did deliver on this idea of inspiring young people into being more active and into sport.

Q. With The Guardian the challenge was how to continue with a free-to-access model while finding ways to earn money from customers that they were happy to pay, to a degree that led back to profitability. How did that happen? 

The Guardian is owned by a Trust. At the time I joined it had been losing money for two decades. A few new approaches had been tried – moving to the slightly unusual Berliner format, then down to a standard tabloid format. And we looked at a membership scheme as a way of financing the paper.

I experienced another kind of ‘faulty thinking’ there.

There had been a philosophical decision not to charge people for reading The Guardian online. This was particularly novel at a time when newspapers were introducing paywalls. So we came up with this notion of membership with live events.

The faulty thinking was that we knew there were a group of readers who had an attachment to The Guardian that went beyond it simply being their source of news. We had a bunch of people who'd said to us they would be prepared to give us more and we believed if they were prepared to give us more, we needed to give them more. So we devised this programme of live events and talks as a way of providing a value exchange.

The thing that was going to underpin this was a physical member space. We actually took a lease on a building in Granary Square, Kings Cross in London to develop into a members club. We were going to have an auditorium, event spaces, restaurant and bar. While we prepared to get the building ready we launched the events programme to start building up momentum.

We learned lots of things, but the biggest was that most people actually didn't want to come to the events. They were physically inconvenient for many, many people.

When people did come to the events we would always ask ‘do you support The Guardian?’ Do you support their values?’ And so on. And everyone did. Everyone said they really supported the Guardian. But what they wanted to support was The Guardian's mission – independent journalism that isn't beholden to some kind of proprietor, journalism that has at its heart liberal progressive values

The value exchange was the fact that they feel like they're contributing to a social good.

So instead of focusing on the event programme, we turned to something much more like Wikipedia, a sort of philanthropic approach. We started including little asks at the end of articles. I remember the very first one which was about 4 words long – Please support The Guardian.

Then we did A/B testing – testing different messages, highlighting different words or sections, using different colours.

Over something like 13 or 14 months, as we changed the message, the average value we were getting from people who donated went up 100 times.

It has proved to be very successful. Now it has reached a point where reader revenue is greater than advertising revenue and The Guardian is showing a small profit for the first time in 20 years.

Q. What are the different challenges that you've encountered in trying to be customer led or encouraging others to be customer led?

Some organisations just don't get it. Where I am now, in the tech industry, I get exposed to quite a lot of product management, which is very close to being customer-led. I feel that this school of thought, that came out of software development, is actually helpful if you are trying to advocate for customer-led thinking. You can lean on and borrow from product management to talk to people in an organisation who get product management because it has a kind of legitimacy. And then you can use that to build an argument for being more customer-led.

Q. Which other companies do you think are pioneering really well for customers, or do you particularly admire for being customer led.

The category that has to be the most customer-led is comedy and comedians. It's well understood what the KPI is – it's laughter. You can measure it instantly and you can't fake it - you've either made the audience laugh or you haven't.

I'm not quite sure what the lessons are, but there is something so purely customer-led about it. You are there to serve that audience, to make them laugh. And it's really clear if you are doing it and if you're a good comedian or not. You get immediate feedback and can decide to act on it. If you don’t, people may not come back or recommend you. If you do, you can get the right output. I think that's a very pure form of being customer-led.