SouthWest | Consumer Value Creation

Southwest Airlines is one of the most customer centric companies of 2016 per customerguru.in. If we look at their mission statement you could tell: “Dedication to highest quality of customer service delivered with a sense of warmth, friendliness, individual pride and company spirit.” Southwest Airlines goal is to make every journey an unforgettable one and with this they have achieved a very loyal customer base. I will go through Southwest’s customer centric business model by emphasizing on the efficiency criteria joint profitability discussed in class. So, I will look through Southwest Airlines business model by finding out if the system design is maximizing the joint pay offs of the partners involved (CCDC, 2017).

Southwest Airlines understands that happy employees will guarantee happy customers. “Our people are our single greatest strength and most enduring long-term competitive advantage’’ (southwest.com). So, it is not surprising that the employees stay with the airline even though they are paid less compared to other airlines. Before you can be customer centric you must be employee centric is what turns out here. Competitive prices, free checked luggage, and friendly employees are what they are also known for but Southwest reputation is at its best when things don’t go well. That’s when their good system is in place. An experience many Southwest Airlines passengers could recall is when the gate-agent of already book tickets for the next flight to their destination when the they were supposed to fly was grounded due to bad weather conditions. Even before you requested it. What was supposed to be an inconvenience turned out to be a moment of pleasant surprise for the customer. This is all the joint profitability is about: with emphasizing on customer happiness they create a loyal customer base which, in the end, will result in more revenue.

So, Southwest Airlines sees the importance of moving from a tactical to a more strategic approach of customer participation and this is critical for all their forms of social marketing. Southwest Airlines could embrace social business as a natural evolution of their business model, because they have always been customer-centric. Southwest Airlines, at least relative to their peers, have always viewed themselves as “agents of the customer,” focusing first on creating superior customer value, while understanding that profit is one outcome of successfully creating customer value. Companies that pursue any social business initiative as another tactic to improve shot-term profitability, are increasingly at risk, given the exponential increase in customers’ access to information. Southwest Airlines has done a great job with enhancing information and participation with their customers and, thus, creating a top of the bill customer centric business model.

http://www.customerguru.in/worlds-3-most-customer-centric-companies-how-do-they-do-it/#

http://customerthink.com/southwest-airlines-gives-us-another-lesson-in-customer-loyalty/

It’s well known that the airline industry is a big business. From free soda, to airline services to baggage; the airline industry is an intensely competitive market. I assume that many of you have their own experiences with airlines and I totally agree if you have some bad experiences. Once I traveled to China and had a delay of more than 12 hours and guess what? No compensation. A lot of airlines are focused on euro’s and cents but fortunately some airlines do want to solve dissatisfaction by turning an ear to the voice of its customers. Southwest Airlines is an example of one of these airlines which has implemented customer experience programs to continually listen to its customers and show that they care.

Southwest Airlines is a big player in the US airline industry. This could be a result of its mission statement which is as follows: “Dedication to highest quality of customer service delivered with a sense of warmth, friendliness, individual pride and company spirit” (southwestairlinesinvestorrelations,2016). From napkins with ‘I’d happy to hold your drink’ to stocks which are named as “LUV”, everything is about the brand. But what’s in it for the customer?

Southwest airlines CEO Herb Kelleher has and still uses a couple of secrets which create an unforgettable experience for its customers. These key secrets lead to joint profitability as happy customers benefit the company. One of the key secrets and their long-term competitive advantage works as follows; an organization should be employee centric before it can be customer centric.

In this example, institutional arrangements are considered such as employees supporting each other internally so that they can take care of customers outside the company. Happy employees will try to make the right decision and are proud to work for your company. If you take care of your employees, they will take care of your customers and in turn, the customers will come back.

Another key secret is that Southwest airlines anticipates on customer needs. Let’s go back to the introduction of this blog and imagine that you have booked your ticket to China. Your flight departs early in the morning and the weather is stormy. You have checked the flight information a million times and as soon as you arrive at the airport the flight has been cancelled. In my experience, I had to wait for hours before the airline informed me about my options. Although legislation tries to protect flyers, the institutional environment had not been considered in my case… except for one free drink. Fortunately, the experience of many Southwest airline customers is much better. In the case of a cancelled flight due to stormy weather, a gate agent already booked tickets for the next flights before customers asked for it. In this case, a consideration of the legislation was not even necessary! Southwest airlines always try to anticipate on customers’ needs and be proactive in helping its customers.

The last key secret is to apologize sincerely. We are all just humans and we should accept that humans make mistakes and that we can’t control every situation. Sometimes, a sincere apology has more value than a monetary solution. This all started by Southwest airlines’ institutional arrangements as every employee knows that they should turn an ear to the voice of its customers. Southwest airlines then apologies. At this point, the institutional environment has been considered, as the company takes it responsibility so that both in the end the firm and customers are better off.

This all is almost too good to be true. I totally understand if you still don’t believe the things I’ve discussed above. Just relax, take a breath, and watch these little movies on Youtube to see and experience it yourself 😉

Used sources:
Hyken, S. (2014), Before you can be customer centric you must be employee centric [online] Available from:
https://hyken.com/internal-customers/before-you-can-be-customer-centric-you-must-be-employee-centric/ [Accessed 10 Feb. 2017]

Southwest Airlines Co. (2017) Company Overview [online] Available from:
http://www.southwestairlinesinvestorrelations.com/our-company/company-overview
[Accessed at 10 Feb. 2017]

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