Southwest Airlines just showed a little more love to its customers.
The airline recently announced that the travel vouchers it issues when customers cancel a non-refundable flight will no longer expire.
Previously, Southwest adhered to the standard industry practice of requiring passengers to redeem travel credits within one year of the original ticket purchase date. Since the start of the pandemic, major US airlines (Southwest included) have temporarily waived this policy. But rather than extend that waiver for a few more months (as most airlines have done), Southwest changed the policy. permanent.
It’s a welcome improvement for passengers, who have long sought greater flexibility in air travel (a desire that has become even more pronounced during the pandemic). And that represents yet another customer experience differentiator for Southwest, a tangible branding point that sets them apart from the crowd.
Time and time again, Southwest’s approach to pushing the boundaries of customer experience has followed a familiar pattern – and it’s a playbook that can benefit most businesses:
Eliminates industry standard irritants.
Some customer pain points are so closely associated with particular industries that removing them becomes cause for celebration for consumers (and a driver of competitive advantage).
Consider how T-Mobile reinvigorated its business with its “Non-carrierfreeing cellular consumers from those despised long-term contracts and costly data overage charges. Or how Amazon saved e-commerce consumers from redundant data entry with its patent”1-Click” buy button.
This is precisely what Southwest has done time and time again – when it refused to charge baggage fees, when it pledged to “Transparencyin ticket pricing, and now when the frustration of expiring travel credits has been eliminated.
Think about the industry standard irritants that plague your market, and go on a crusade to eliminate them. This will make your business a hero in the eyes of customers and prospects.
Revisit what is relevant.
What do your customers really worry? Flash news: it is very likely not the product or service you are selling.
Your company’s offerings are just components contributing to a larger goal that your customer is trying to achieve. Understanding this purpose is key to driving customer experience innovation because it allows you to think broadly about what is truly relevant to your customer. And once you’ve identified that, you can work backwards to design products and services that perfectly meet the rational and emotional needs of your customers.
Once the pandemic hit, Southwest (and other major airlines) did re-examine what was relevant to their customers – and it was the resulting information that led to, among other things, the suspension of travel credit expirations.
But what Southwest realized, perhaps earlier than its competitors, is that in a Covid-19 world, flexibility is king. As Southwest CEO Bob Jordan said on an earnings call, “Our customers tell us that peace of mind about the ability to change is really, really important.”
In today’s environment, the flexibility to adjust travel plans and have full latitude to reschedule is a product feature that has huge relevance for travelers, and it’s something that they will surely take into consideration when choosing an airline.
Find the cost connection.
When business leaders think about customer experience ROI differentiation, they often settle on the income line. After all, an improved customer experience means better customer retention, higher share of wallet, and more referrals – all additional revenue drivers.
This impact on income is far from theoretical. For example, a few years after baggage fees became commonplace, Southwest’s to research indicated that the airline had in fact won $1 billion in revenue by allowing baggage to continue flying for free (due to increased market share, fueled by the convenience policy).
Southwest is undoubtedly expecting a revenue boost from its latest customer experience coup as passengers shift to a carrier with industry-leading ticketing flexibility. But what is interesting is that they also expect cost savings.
That’s because questions about travel credits are the “number one call engine” in Southwest’s customer relations department, according to Andrew Watterson, the airline’s chief commercial officer. By eliminating the need for customers to check credit expiration dates or negotiate extensions, the airline expects call volumes to decline, generating significant savings on operating expenses.
Southwest clearly saw a dual opportunity in eliminating travel credit expiration dates – a chance to both give customers what they really want (flexibility), while simultaneously removing a significant cost driver ( calls related to travel credits).
The lesson: Choosing which customer pain points to tackle is a revenue-driven decision and expense considerations – because the most lucrative customer experience improvements will impact both of these financial levers.
For the past decade, Southwest has been ranked #1 or #2 in JD Power’s airline customer satisfaction ratings. During the same period, the airline’s stock (with the very appropriate ticker “LUV”) outperformed the Dow Jones US Airlines Index by a margin of more than 2 to 1.
Southwest is clearly reaping the rewards of its relentless focus on customer experience. The carrier has consistently upended the industry status quo by adopting a customer-focused approach that resonates strongly with its target customer base.
And now, with this latest change to their ticketing policies, Southwest is providing another example of why customers’ affection for the airline will never expire – just like these travel credits.
Jon Picoult is the author of FROM IMPRESSED TO OBSESSED: 12 Principles to Turn Customers and Employees into Lifelong Fans. Sign up for his monthly customer experience and leadership email newsletter here.