Customer Service Product Analysis of Southwest Airlines - Case Study Example

­­­­Customer Service Product Analysis Of Southwest Airlines Executive Summary In the words of Miguel de Cervantes in his classic novel Don Quixote, “To be prepared is half the victory”. As Southwest Airline built its business in the 1970s, the company looked forward to accomplishment and geared up for the future. In other words, the company readied itself for the next trendy thing, the newest in terms of technology and the increasingly shifting expectations of consumers. There were unforeseen events such as the recent worldwide recession and sometimes the greater imagery of the dream of the future often obscured the smaller imagery. However, Southwest Airlines built itself into a brand name. Not just through an emblem or a label, a stockpile frontage, a colour palette, a catalogue or a representative but through an emotional perception that made a mark on anyone outside of the company who came into contact with it. Southwest Airline has been able to post profits for over three decades running by focussing on minimalism and maintaining low flight costs. These two have been the benchmark of its success enabling it to be ranked as the fifth biggest airline in the US. Apart from maintaining simplicity and keeping its flight prices low, the airline has been focussing on its services to customers and has been positioning itself all through by constantly refining its “value proposition”. The airline has so far been able to enhance its facilities, and the latest addition to its services is the “satellite based WiFi internet access” addition to its flight experiences. Other modifications include; a more extensive wine and coffee service and fresh intercontinental pacts with foreign airlines. This is an analysis of customer service at Southwest Airlines. Table of Contents TITLE: ­­­­Customer Service Product Analysis Of Southwest Airlines 1 Executive Summary 1 Table of Contents 2 1.0.Introduction 3 2.0.Discussion 3 2.1.Short History of Southwest Airline 3 2.2.A culture of simplicity as a business model 5 2.3.Marketing 5 2.4.Digitalization 6 2.5. Service 9 2.6. Operation Procedures 10 2.7. Decisions related to Service 12 3.0. Conclusion and Recommendations 13 4.0. List of References 14 5.0. Appendices 15 1.0. Introduction Southwest has always been known for two main things namely; it has a humorous corporate culture and it has consistency in profitability for more than three decades. The customer service delivery strategy of the airline is unique on its own, but it is particularly critical to understand what the role of the airline’s managers has been in shaping this strategy in order to be able to do a comprehensive analysis of its customer service strategy. Besides all these, there is the role of employees in every success story since the enrolment, hiring, selection, promotion and training of personnel is extremely valuable because it is what determines whether employees will be able to fit into the corporate strategy of the company. This paper looks at all the above aspects in evaluating customers’ service provision at Southwest Airline. 2.0. Discussion 2.1. Short History of Southwest Airline Southwest began its operations in the year 1971, but its entry was painful and slow, due to a court case brought before a Texas based court to stop its incorporation by now non-operational “Braniff and Texas International Airlines”, to the effect that there was not enough demand to sustain 3 interstate airlines in the market at that time. The court cases did slow Southwest Airlines, but they did not stop it from taking off; in fact, they only strengthened the airline and made it resolve to survive (Chambers et al 1998). Later on, a price war competition saw Southwest fight a bruising battle against the two in the same market in which they sought to stop it from establishing itself forcing it to come up with an operation model strategy to enable it to survive. The airline did survive; from a culture marred by “rock bottom” fares to one characterized by humorous marketing put together around a “luv” premise as the airline developed a reputation for amusement and quality for itself. The image of humour is deep-rooted in the culture of the airline, to the extent that it can be observed in everything “Southwestern”. Humour can especially be witnessed in the convenient gags that the airline’s employees throw at each other to occupy themselves. Creator and long serving CEO of the airline Herb Kelleher saw to it that this culture became strengthened overtime with his love for organizing company parties one after another. Southwest employees were aware of the fact that their CEO loved them and the company too. When Gary Kelly, an accountant, succeeded Keheller, he had voluminous shoes to fit into; but he took it in stride. It is said that on the day Kelly took over from Keheller, he showed up dressed in a Halloween party attire as a make-up from the “musical hairspray, complete with an oversized dress and colossal hair”,; an image that made employees at the airline certain that he was one of them (Larcorte 2009). An issue like safety which is mostly handled with grave seriousness in other airlines is in most cases seen as another opportunity for humor at Southwest airlines, and this way the airline has built a history of zero tolerance to customer fatalities and South airlines has been able to show that humour and low prices do not mean being unsafe. By 2009, the airline was ranking fifth in terms of consumer volumes in the US and the first in terms of market exploitation (Gittell 2003). 2.2. A culture of simplicity as a business model Southwest airline has always sought to distinguish itself with minimalism at all levels of its business strategy (Company Profile 2004). The early years were regarded with austere simplicity, a factor that saw passengers go without snacks, seat allotment, first class service or any dexterity between the airline and any other airline. The airline flew from shore to shore, but its flight schedules were limited to destinations closer home and were mainly “short-haul”, low-priced and high-rated. Beyond the provision of these three, the airline’s customers came to love the airline’s culture of fun a lot as casually dressed flight attendants entertained them as they came onboard southwest flights, with comedy and songs, and also during the review of safety directions as well as they when they were being served snacks. 2.3. Marketing When it comes positioning itself in the market, Southwest airline positions itself in a humorous way, as a low cost airline that is always convenient to use and one which permits frequent travelling to its customers (Cook & Macaulay 2007). The airline’s advertising has always been one filled with humour, and is often characterized by frequently thrusts of fun at competitors. However, it is always focussed on the company’s maintenance of low prices and expediency (see appendix 1). For over thirty years, year after year, the airline has gradually developed its set of connections. The company is known for penetrating into one new market after another in what has come to be referred by experts as the “Southwest effect”. This has often been characterized by conventional contact with customers and competitors as the company has continued to conquer new markets, which previously appeared unfair and costly (Cook & Macaulay 2007). The airline, however, kept its business in the middle range cities during its initial development years in order to keep its cost of expansion as low as possible and also to keep away from insensitive competition from already established long haul carriers in the bigger cities. The company also avoided the main hubs and restricted its destinations to secondary airports when it comes to capital cities. The airline gradually infiltrated the principal cities by introducing its low cost campaign into any new market that it sought to enter through advertising, initiating a war of prices with the main airlines already in existence and eventually inspiring the demand in the entire market. The prices that the airlines usually introduced would often be below those of the main carriers by half or 50% and would be more competitive as they always included bus fares and the cost of driving (Larcorte 2009). The infiltration of a particular airport would increase demand in that particular airport, a demand which the airline would in turn fill by further extension. Characteristic of the airline has been its expansion style or strategy as it would enter a new city by about 10 flights and almost immediately, the airline would double that. This way, the airline expanded its services to entrenched hubs such as those operated by its competitors USAir in Philadelphia and United in Denver. Later, the airline impinged into New York LaGuardia airport by means of Chicago and Baltimore Washington airport and many more after that through its well thought out method (Larcorte 2009). 2.4. Digitalization One of the many ways through which the airline has been able to attract and keep customers as well as offer quality services to its customers is through digitalization. Southwest is one airline that became digitalized in terms of internet readiness long before the age of internet. The airline began by selling its tickets directly, keeping its costs of operation as low as was possible and avoiding sales commissions that travel agents often charge. Southwest was the first airline to launch an internet site long before others had done so in 1995 when the website age was still in its formative years and a few months after launching its site, the airline started proffering its customers chances to procure quick flights that did not require them to purchase tickets. The airline has since then continued to come up with new innovative ways on the web. First the airline created its customer appliance “DING” whose purpose was to give notice to its customers of exceptional low fares and “SWABIZ”, a tool for booking flights online for free whose main aim is to enable customers to map, buy and keep track of business travel. The year 2008 saw a whopping 78% of the airline’s tickets sold through the website (southwest.com) which was the airline’s main outlet through which it sold its tickets. In the year 2009, the airline’s site was positioned number four in terms of size and number one in terms of distinctive guests. The site also acts as a place for checking-in for flights besides being a place where customers can plan their flights, buy tickets, book hotels and hire cars. The site also gives customers an opportunity to follow up on the standing of their flights. In the year 2009, 77% of customers are said to have checked in for their flights online. The airline had a very simplified fare structure during its formative years, which did not comprise the multifaceted models that many airlines employ such as those that make use of revenue optimization. Southwest offered a “point-to-point” fare pricing that did not engage “round trips or Saturday night stays” to be able to acquire low priced fares. This model has stayed with the airline to date and as much as the airline’s destinations grew by large numbers, the airline’s low fare structure remained. By 2009, the airline still proffered all time fully refundable low–cost fares to its customers as well as “business-select” fares which gave customers an opportunity to board their flights early and secure a good quality seat for themselves (Freiberg & Freiberg 1996). The airline also exercised a straightforward adaptation of the returns optimization when it comes to “advanced-purchased fare classes” that went for lower prices (see appendix 2 for details on rules governing fares). As a plane became full, the lowest priced fare classes (specifically those that were not refundable and had strict scheduling measures), would all be bought and would leave behind those that were highly priced to be bought by last minute bookers. The airline also offers internet fare exclusives at promotional prices that are quire low and which often sell out quickly. The airline has a very transparent web pricing which lets customers get to see the different prices obtainable for every one of its flights regardless of whether they are already sold out or not (see appendix 2). Other than having it website as a channel of efficiency when it comes to offering services to its customers, Southwest has adopted other digital based expediencies such as cashless buying of drinks on the plane which helps the airline save a lot of time that would have otherwise been spend handling cash. The airline also offers portable gadgets that give customers onboard any of their planes the opportunity to trail their flight on their mobile phones and do some work on their computer systems while waiting for the flight they are scheduled for. 2.5. Service During the first 3 decades of Southwest travels, the service of the airline was quite distinguishable from that of the rest of the airlines with no seat allotments, no food or drinks and with only a solitary travel class. In short, Southwest’s service was “no frills” which is the word that has come to be commonly used when referring to airline service without the luxuries that come with flights in already established airlines. Southwest was therefore more of a air travel bus rather than a regular airline and many jokes were made by the public about this state of affairs especially with reference to the fact that the airline only offered peanuts, trouble-free bites and drinks as opposed to other airlines which offered full meals and sumptuous delicacies both in their business and first class areas. Southwest has however developed its service tremendously and today there is very little observable difference between the airline’s service and that of other US airlines except for allotment of seats. The airline has always focussed on giving its customers an experience filled with humour rather than focussing on meals and other distinguished services. The airline presents a likeness of a cheerful family and often includes onboard games in its approach of fun and humour. For instance games such as “guess the flight attendant’s weight are common” as well as jokes aimed as breaking the seriousness that comes with some activities such as giving travellers instructions regarding emergency evacuation. For instance, it is not uncommon to hear a flight attendant say “blow into the tube as if you were blowing a breathalyzer”, when giving travellers instructions on how to fill a life vest with air (Fitz-enz & Davison 2002). The airline utilizes its fun strategy to the maximum especially during holidays such as Easter and/Halloween and during times like these, it is not hard to sight a flight attendant fully clad as a bunny or to see gate attendants fully clad as witches. Being able to maintain a culture of playfulness has cost the airline a lot of attention in terms of selecting employees and Southwest is known to be extremely selective when hiring its employees (Mathis & Jackson 2000). According to CEO Gary Kelly, it has taken Southwest many years of building a corporate culture that believes in people as the single most important component when it comes to the success of the airline and that is why during the recent financial crisis, the airline refused to let go of any of its employees when many companies were downsizing (Gomez-Mejia et al 2007). 2.6. Operation Procedures The procedure that Southwest follows when it comes to its operations is quite different from that of other US based airlines. For instance, while other airlines operate using a number of different plane types, Southwest uses Boeing 737 jets only. The Boeing 737 plane is the smallest sized plane which seats about 130 passengers at a time though the seating depends on the construction of a specific plane. The airlines ensures that it keeps its fleet very young with its fleet of over 500 planes averaging about ten years old. The airline does its best to save on time and for instance, with a trip from Baltimore to Chicago, a journey of 635 miles needing an average of 1 hour and 55 minutes, which takes into account taxi time as well, a single Southwest plane would fly about 6.2 flights for 12 hours and 9 minutes every day. Southwest has always maintained a uniform fleet of planes and this allows the airline to save on a lot of things that would otherwise inconvenience service to its customers, For instance, it is possible for southwest to offer “point-to-point” flights as opposed to a “hub-and-spoke system” that usually requires passengers go straight to their destination without having to go through a secondary destination (Larcorte 2009). The airline has also been able to create other small hubs in order make connections more frequent for longer travels such as the ones involving the east/west or north /south. The airline has however always focussed on “point-to-point” services. Apart from the point-to-point service, Southwest has always focussed on the use of airports in intermediate cities or secondary airports in major cities which ensures that the airline is able to obtain a lease of several gates at a time which enables it to support its massive flight schedule. In major airports which tend to be congested, the airline is always likely to experience delays which lead to customer dissatisfaction. Secondary airports save the airline flight time and customer dissatisfaction not to mention saving the airline a lot of costs related to fuel, employees and other factors. South west also distinguishes itself when it comes to customer service in terms of the time that it spends in turning a plane or rather the time that a plane spends at the gate while customers get on board from the time when it packs at the gate until the time it is “pushed back with a new set of passengers and it also include cleaning the plane and restocking it with snacks and drinks” (Larcorte 2009). The airline is said to have rehearsed turns, always seeking new ways of improving. Turning a plane faster saves Southwest time and enables the airline to constrict more flights into its schedule. The average turn time of Southwest is 25 minutes which is way below that of the industry’s average turn time. The airline always maintains its labour efficiency to ensure that planes turn faster and during cleaning and maintenance of a plane, every employee regardless of their job description, including pilots, are expected to help in maximizing the turn time by speeding the processes (Odell 2007). Southwest airline is also well known by its passengers for its unique ways of boarding its passengers. Before September 2011, the airline made use of plastic cards which were reusable with numbers 1-130 and every passenger would be given a card according to the time he/she arrived. The passengers would therefore begin to board the plane progressively from those with the cards with the lowest digits.It is these cutomers, who end up having a choice of the best seats. Security regulations at airports later demanded that passengers should be given paper documents carrying their names and Southwest adapted to this procedure fast letting its passengers check in through its website but at the same time using numbers. Late decision makers however still have the opportunity to get a boarding card to enable one to board a plane at the airport. 2.7. Decisions related to Service Southwest regularly makes an assessment of its model to look for areas where is can be improved further and as much as customers like seat allotment services, Southwest through its regular evaluation has time and again come to the conclusion that seat allotment would slow service delivery to its customers which would in turn cause customer dissatisfaction. Other factors that have to do with service such as the provision of high-quality wines and beverages onboard and how it would relate with the airline’s business model which is basically low cost have had to be evaluated by the airlines service decision making body at length. Whether having WiFi onboard was in line with the airline’s fun strategy is also another factor that has been under scrutiny. The factor of partnering with other airlines in the international arena in the area of customer service provision and how it would affect the airline’s service provision efficiency is also another factor that has been under scrutiny. 3.0. Conclusion and Recommendations This paper has looked at customer service at Southwest Airlines and has established that the airline is very much dedicated to the provision of the highest quality customer service possible. The paper has also established that innovation and fun have been part of the airline’s corporate culture since its initiation. In consideration of the fact that the airline’s model is one based on provision of the lowest cost probable when it comes to flight fares, a strategy through which it has been able to compete against established giants in the industry and emerge a winner, this paper recommends that: - Southwest Airlines should seek to exploit its external competitive situation further, which comprises of the short haul market. Southwest should continue to expand in its slow manner into regional as well as local airports that it hasn’t penetrated yet and which are very suitable for its business strategy. - Southwest should seek to create a variety in terms of services due to the increasing consumer expectations which call for improvements in the features that service companies provide. For instance, the modern consumer expects a variety which gives them the freedom of choice and the single class flight system that Southwest has advocated all the years of its existence is no longer viable for “some” customers. Customers also expect services that are rapid which Southwest has thus far been able to provide though making it more rapid would not hurt. 4.0. List of References Chambers, E, Foulton, M, Handfield-Jones, H, & et al, 1998, The war for talent McKinsey Quarterly Vol. 3. Company Profile, 2004, Southwest Airlines. New York: Datamonitor. Cook, S, & Macaulay, S, 2007). How an integrated approach to performance appraisal and the reward and recognition of employees can improve your service levels, Retrieved September 15, 2012, from ecustomerserviceworld.com: http://www.ecustomerserviceworld.com/earticlestore_articles.asp?type=article&id=110. Fitz-enz, J, & Davison, B, 2002, How to Measure Human Resources Management third edition, New York: McGraw-Hill. Freiberg, K, & Freiberg, J, 1996, Nuts! Southwest Airlines’ Crazy Recipe for Business and personal succes, Austin: Bard Press. Gittell, J, 2003, The Southwest Airlines Way: Using the Power of Relationships to Achieve High Performance, Brandeis: MIT Global Airline Industry Program. Gomez-Mejia, L, Balkin, D, & Cardy, R, 2007, Managing Human Resources fifth edition, Upper Saddle River, NJ: Pearson. Larcorte, V, 2009, Enhancing Service at Southwest Airlines, Dartmouth: Tuck School of Business at Dartmouth—Glassmeyer/McNamee Center for Digital Strategies. Mathis, R., & Jackson, J, 2000, Human Resource Management ninth edition, Cincinnati, OH: South-Western College Publishing. Odell, B, 2007, Leadership at Southwest Airlines. New York: Southwest Airlines. 5.0. Appendices Appendix 1- Part A: Early Southwest’s Advertisements Appendix 1 – Part B: Playful Southwest advertisements Appendix 2: Rules related to Southwest Airline fares Read More