Southwest Airlines business model and operations

Southwest Airlines

How does Southwest's customer service affect its bottom line?

Any airline is by nature a services business, which by the structure of its business model is centered on creating accurate expectations of customers and then exceeding them. By continually surpassing the expectations of customers, companies build exceptional brand equity and loyalty. This is what Southwest has done such an exceptional job of in one of the toughest services businesses to excel in. They have continually set expectations with customers and then deliberately designed a myriad of processes to ensure everyone has a good flight and at a competitive price.

The ability to continually exceed expectations and deliver excellent customer experience is a large part of why Southwest Airlines continues to be profitable and has the honor of being the only American-based airline to never file for bankruptcy. By delivering excellent customer experiences on a consistent basis, business and pleasure travelers alike reward them with more business. And all of these factors taken together contribute to a profitable, scalable business model that Southwest is perfecting with its unique approach to customer service.

Among 47 industries, airlines overall earn the lowest customer satisfaction score. What could they learn from Southwest?

Put the customer at the center of every process even if they aren't directly involved in it, as Southwest Airlines does with their airplane turn-around times, maintenance, repair and overhaul (MRO) procedures, and strong focus on keeping costs under control. All of these factors taken together are aimed at keeping the turn-around time for flights at a minimum while also keeping the costs of fares low. By honoring their customers' time and budgets, Southwest Airlines continues to win the customer satisfaction score battle.

Why do advertisers continue to post ads on Facebook, even though the click through response rate is so slow?

For many companies that rely on business-to-consumer (B2C) business models, social media isn't a nice to have anymore, it is a must-have. Its part of the broader integrated marketing communications (IMC) strategy that for many B2C businesses is moving in the direction of digital channels. So even while Facebook may be ineffective relative to Twitter or other social media platforms, it is part of a broader mix of social media and digital marketing platforms. This is why B2C companies will continue to buy advertising with the click response being so low.

A secondary factor that is driving advertisers from both B2C and business-to-business (B2B) companies to advertise on Facebook is the accumulative effects on search rank with Google, Yahoo and other search engines. This is why many B2B companies are investing in Facebook despite their customers' rarely turning to social media as part of their buying decision.