Southwest Airlines' customer retention strategies and competitive advantages

Customer Retention Strategies

Creating Exceptional Customer Service at Southwest Airlines

Southwest Airlines continues to lead the airline industry in customer satisfaction because their business model puts customer satisfaction and maximizing customer experiences at its center. Their leadership of the industry on customer satisfaction measures has also been seen in the result of Consumer Reports studies as well (Consumer Reports, 2007). What sets this airline apart from others is the belief that customer loyalty will lead to more profitable growth when combined with an extensive commitment to process, system and service standardization (Hardage, 2006).

Recommendations

Southwest Airlines has done an exceptional job of building a loyal customer base, which combined with their unique approach to fuel hedging costs, has given them the ability to stay profitable while their many competitors have not (D'Aurizio, 2008). The use of social media has also been an emerging strength of the company as well (Bernoff, Li, 2008). The company however has not been successful in creating strong word-of-mouth across small businesses to match the potential it has based on the strong customer-centric culture it has. The following are recommendations for how the company can further increase its share of the small business market.

First, using more video testimonials of start-ups that had the ability to reach out and visit customers because of Southwest's airfares and services would be an excellent strategy. There are many, many cash-strapped start-ups throughout the Austin, Texas and Northern California markets where Southwest has a dominant market share. Having more first-person testimonials from the CEOs and founders of these companies would be powerful in positioning the airline as a trusted advisor. Second, the company needs to consider how best to create more efficient approaches to managing the first-time travelers. There was a mini-series done on Southwest Airlines a few years ago which showed the level of custom care first-time travelers required and it was hilarious to view but must have been grueling as a Southwest employee to endure. Stories of how first-time flyers from Louisiana trying to take a pack of baby alligators on a plane from New Orleans to San Francisco were hilarious. Southwest is so good at marketing they are attracting people who had been terrified of flying before, or could not afford it in the past. Southwest has a great opportunity to create a strong role of trusted advisor to the consumers who have never considered air travel before.

Third, with social media, Southwest can also create an exceptionally effective program for showing more transparency and earning more trust by offering to share the good and bad of their service on Facebook, Twitter and LinkedIn (Bernoff, Li, 2008). The next generation of travelers will rely purely on electronic channels for learning about travel pricing and programs. Social networks are the future of travel as it is a service-centric business. Southwest needs to take the lead on this platform to solidify their leadership position as a customer-centric business.

Conclusion

Southwest Airlines continues to define customer-centricity in an industry that has embraced cost reductions over customer focus. This airline has emerged as a leader due to their unique approach to bringing customer loyalty and standardized processes into a unified strategy that successfully puts the customer at the center of their business. The recommendations of pursuing social media as the next generation of their customers trust these platforms over traditional advertising channels is critical to their future profitable growth. The focus on how to create more value in the Southwest Airlines customer experience must pervade all future strategies to stay competitive in a very challenging industry.