And This Is Why Customer Affection For Southwest Airlines Doesn’t Expire

Southwest Airlines just showed a little more love towards 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 use travel credits within one year of the original ticket purchase date. Since the onset of the pandemic, major U.S. airlines (Southwest included) have temporarily waived that policy. But rather than extending that waiver for another few months (as most airlines have been doing), Southwest made the policy change permanent.

It’s a welcome enhancement for passengers, who have long craved greater flexibility in air travel (a desire that became even more pronounced in the pandemic). And it represents yet another customer experience differentiator for Southwest, a tangible brand proof point that sets them apart from the crowd.

Time and time again, Southwest’s approach to pushing the customer experience envelope has followed a familiar pattern – and it’s a playbook that can benefit most any business:

Remove industry-standard irritants.

There are some customer pain points that are so closely associated with particular industries that their removal becomes a cause for consumer celebration (and a driver of competitive advantage).

Consider how T-Mobile reinvigorated its business with its “Un-carrier” strategy, liberating cellular service consumers from those despised long-term contracts and expensive data overage charges. Or how Amazon rescued eCommerce consumers from redundant data entry with its patented “1-Click” purchase button.

That’s precisely what Southwest has done over and over again – when it refused to charge baggage fees, when it committed to “Transfarency” in ticket pricing, and now, when it took the frustration of travel credit expirations off the table.

Think about the industry-standard irritants that plague your marketplace, and go on a crusade to eliminate them. It’ll make your business a hero in the eyes of customers and prospects alike.

Reexamine what’s relevant.

What do your customers really care about? News flash: It’s most likely not the product or service you sell.

Your business’s offerings are but components contributing to some larger goal that your customer is trying to achieve. Understanding that goal is key to fostering customer experience innovation, because it enables you to think broadly about what’s truly relevant to your customer. And once you pinpoint that, then you can work backwards to engineer products and services that perfectly address your customers’ rational and emotional needs.

Once the pandemic hit, Southwest (and other major airlines) did reexamine what was relevant to their customers – and it was the resulting insights that drove, among other things, the suspension of travel credit expirations.

But what Southwest has realized, perhaps sooner than its competitors, is that in a Covid-19 world, flexibility is king. As Southwest CEO Bob Jordan put it on an earnings call: “Our customers are telling us that peace of mind around the ability to change is really, really important.”

In today’s environment, the flexibility to adjust one’s travel plans, and have complete latitude in rescheduling, is a product feature that has enormous relevance to travelers, and it’s something they’ll surely take into consideration when choosing an airline.

Look for the cost connection.

When business leaders think about the ROI of customer experience differentiation, they often fixate on the revenue line. After all, an improved customer experience means better customer retention, greater wallet share, and more referrals – all drivers of additional revenue.

That revenue impact is far from theoretical. For example, a few years after baggage fees became commonplace, Southwest’s research indicated that the airline had actually gained $1 billion in revenue by allowing bags to continue to fly free (due to increased market share, fueled by the customer-friendly policy).

Southwest is no doubt expecting a revenue bump from its latest customer experience coup, as passengers gravitate to a carrier offering industry-leading ticketing flexibility. But what’s interesting is that they’re also expecting significant cost savings.

That’s because travel credit questions are the “number one call driver” to Southwest’s customer-relations department, according to Andrew Watterson, the airline’s Chief Commercial Officer. By eliminating the need for customers to check on credit expiration dates, or to negotiate extensions, the airline anticipates that call volumes will decline, generating significant savings in 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 also simultaneously removing a significant cost driver (travel credit-related calls).

The lesson: Choosing what customer irritants to tackle is a decision that should be guided by revenue and expense considerations – because the most lucrative customer experience enhancements will have an impact on both of those financial levers.

For the past decade, Southwest has been ranked either #1 or #2 in J.D. Power’s airline customer satisfaction ratings. During the same period, the airline’s stock (with the highly appropriate ticker “LUV”) has outperformed the Dow Jones U.S. Airlines Index by an over 2-to-1 margin.

Southwest is clearly reaping the benefits of its unrelenting focus on the customer experience. The carrier has consistently disrupted the industry status quo by embracing a customer-first approach that strongly resonates with its target clientele.

And now, with this latest change to their ticketing policies, Southwest provides yet another example of why customers’ affection for the airline will never expire – much like those travel credits.

Jon Picoult is the author of FROM IMPRESSED TO OBSESSED: 12 Principles for Turning Customers and Employees into Lifelong Fans. Sign up for his monthly Customer Experience & Leadership eNewsletter here.