We Fixed It, You're Welcome - Southwest's Loyalty vs. Profit Dilemma

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Starting point is 00:00:30 All right, here's how this works. In each episode, we pick a company we all know that has something going on right now. Then we put ourselves in charge and see if we can fix it. You'll be hearing from Melissa and Operations, Chino on people in culture, and me on marketing. My name's Aaron. As always, a quick disclaimer, we are going into this somewhat cold and nothing we say should be construed as legal advice, financial advice, or anything that would get us in trouble. These are our views and opinions. We're here to ask the kinds of questions everyone's thinking, have an engaging conversation and maybe come to some conclusions that we feel are worth exploring. By the end, if we fixed it, you're welcome.

Starting point is 00:01:21 All trademarks, IP, and brand elements discussed are property of their respective owners. Welcome back to We Fixed It, you're welcome. Today we're going to talk about a company we all know. Some of us may love, or LUV, love, if you follow their stock fluctuations, but we'll get to that in a moment. If you're a new listener, thank you for joining the growing numbers of fixaholics out there. We are your fearless fixers. you've got Melissa on operations and customer experience.

Starting point is 00:01:46 Chino on HR, People and Culture. We're joined by Sam on Finance. And me, my name's Aaron, and I come from a marketing perspective. I feel like I've just introduced us as a band. We could, but we're not here to play freestyle jazz for you, as fun as that would be. We're here on a mission to fix the world one company at a time. So please, Melissa, tell us which company we are fixing today. So today we're talking about Southwest Airlines, a company that's changed the way we fly,

Starting point is 00:02:12 by being a brand that we love. We're going to explore the story behind this brand and what's shaped them in the moments that make or break them. This also applies to other companies, so we can also include some of those conversations and companies as well. But today's focused, again, on Southwest Airlines. They've really revolutionized air travel.

Starting point is 00:02:33 They've been the rebel of the skies for decades, but a rebel with love and heart. But recently, that promise has been called into question and in a series of shocking announcements, Southwest revealed as making mass changes that go against the very grain of their brand and what they've always been known for. And they aren't the only ones making these brand missteps, as I mentioned. Founded in 1967, Southwest took off in 1971 with a bold mission to make flying affordable and accessible to everyone. And Southwest wasn't just about these cheap tickets. It was about personality. Percy flight attendants that sing songs.

Starting point is 00:03:12 Peanuts and punchlines made flying fun. And then there were policies that won our hearts. So no change fees, free checked bags, and a loyalty program that actually worked for customers. So speaking of loyalty, they launched their rapid rewards, one of the first airline loyalty programs in the industry. No blackout dates, no complicated tiers, just straightforward points you could use. It became kind of their cornerstone of Southwest's customer first ethos. But now their facing a crisis and identity. Their recent announcements introduced luggage fees, assigned seating, and cuts to rapid rewards value. For a brand built on being different, these changes felt like a real betrayal to their customers. So social media is a buzz with outrage. I share,

Starting point is 00:04:03 I would share some of those things, but I think all of you have seen those online. So is Southwest losing its soul? Let's unpack this. decide as an expert panel here, whether this is a necessary evolution for business or whether it's a brand destroying this step. Take it away, panel. Who wants to start? Well, losing its soul, that's a, that's strong. So do we, do you start there? Yeah. Aaron, tell us. What do you think? Mr. Brandon had made. I think it takes a lot for a company to lose its soul, you know, publicly in real time. Introducing a new wave of fees and reforms is not necessarily soul-crushing to the point where people would look at them and say they've, I can't follow them anymore. It's maybe the

Starting point is 00:04:52 equivalent we've talked about Netflix. Netflix does these price hikes, right? And it's just a fact of life. And if you're a subscriber, you know you're going to pay. You like Netflix. You want to stay with them. You're going to pay. So Southwest hasn't done it for a long time or maybe ever. Some of these, you know, changes they're putting into effect. So it's shocking. It's shocking to see it come from Southwest. But I'd say the loyalists that have, you know, flown Southwest for years, it's will continue. It's their brand. It's their company. It's probably going to be business as usual once they get over this initial, you know, shock factor. But do you think that? Because I really feel like that is their brand, like the no, the no luggage fees, the like open seating,

Starting point is 00:05:36 kind of the cattle hurting mentality, the no change fees. I mean, they made it so easy that to me, Erin, I would feel, I feel like it really is increasing this friction for the customer. Yeah. And really eroding trust. And I'd be interested also, Chino, because like they have been known to hire people that live into this like quirky, like, we do everything for the customer that we can. And then also from a business perspective, Sam, whether those baggage fees, like what I'm

Starting point is 00:06:14 looking at and what they're bleeding out in high fuel costs and operational inefficiencies, is that really going to help them? Because I'm not really sure that they would be able to recoup that. And the other thing, Aaron, that I saw online, which I agree with too. And I talked to somebody yesterday's CEO who has flown southwest before and he said same thing is that their planes are not the newest planes so they don't have like the TV's in seat they don't have the like you know the charging you know outlet underneath the seat so why would I pay more you know for them when I actually could get an assigned seat that has all of that with another airline. So anyway, Chino, Sam. Yeah, I think it's really interesting because obviously their brand ethos was being

Starting point is 00:07:09 kind of that quirky friend that you can rely on, that, you know, you got the no check bag fee, which is huge, where, you know, even if you have a carry-on in some airlines, you have to actually pay for a carry-on luggage, right? And it's interesting, actually. So Frontier Airlines has actually come up with a Camberian. campaign saying, we're actually not going to do this anymore. We're not going to charge on check bags, kind of as a dig to Southwest Airlines. So it's really interesting because, you know, unfortunately, there's obviously the financial aspect of, you know, airlines hemorrhaging cash. And Sam, I'm sure you'll get into that. But, you know, the reality is if this is your brand ethos, what are you doing for your team, for your people, for your loyal customers, to

Starting point is 00:08:01 still say, hey, we're, you know, we're still your friend. We just have to kind of raise prices so that we don't go out of business. And I think that really is the questions on how they can kind of overcome the financial reality while still being that fun brand that has been what they've been known for. Yeah, it's, it's an interesting point, Chino. Let me just start out by saying this much that in business, there are two ways to make money. You can innovate or you can nickel and dime your customers. Southwest just chose to do the latter. Short term gains, absolutely. Long-term brand erosion, almost guaranteed.

Starting point is 00:08:42 So let me start off also by playing a two truths and a lie. Two truths and a lie. Let's see who can guess the truth or the lie. So two truths. One, Sam was involved almost in a Southwest airline crash. Two, as a result of that crash, or almost crash, Sam got invited to join Southwest's customer advocacy panel. And third, Sam actually got to fly the plane that almost crashed.

Starting point is 00:09:19 So two truths in a lie. Which one is the lie? Flying. Yeah, it's the last one. I have flown with a naval aviator who flew with Southwest. But I was almost involved in a Southwest plane that almost crashed. The right engine sheared off. It was panic.

Starting point is 00:09:37 It was terror. But I'll never forget two things. One, the flight attendant who was in the chair facing backward to everyone, had the most angelic smile on her face. And she was wearing this shade of red lipstick that I've never seen to this day. And she didn't panic. There was never an ounce of fear. And I thought to myself,

Starting point is 00:09:59 Three thoughts. One, earlier that morning, for some reason, I had outreach to everyone that I love. And I had had this really great conversation with them. And so I thought, you know what? If this plane's going down, at least I say goodbye to everybody, right? Second, it's kind of my oh crap moment. I didn't have any chocolate with me. And I've traveled for a living.

Starting point is 00:10:21 I'm ex-Dloid. I traveled one year, 50 out of 52 weeks. I wore Southwest out. but I can tell you this much that day for some reason I didn't have me chocolate and so I thought to myself you know what they're going to bring my dental records or my teeth to my mother and they're going to be like you know what we think this is your son but it's got this really weird substance on it it's chocolate my mother would be like yeah that's my boy yeah but I didn't have any chocolate so I didn't know how they were going to identify me the third thing though and back to the flight in and of

Starting point is 00:10:55 itself. This flight attendant was only matched by the pilot who came on, who shared that, hey, look, obvious malfunction on the right-hand side of the plane, for those of you looking out at it, the gentleman who was sitting in that window seat turned around and looked at me and his eyes were as big as saucers. It was one of those terrifying looks. I looked at him, I said, it's pretty bad, right? And he was like, yeah, it's bad. But the pilot shared with us, look, we're doing what a plane does. We're flying. We're going to be able to fly safely on one engine. And we're going to land. We're going to do not an emergency landing. It'll be a controlled landing. And we're making arrangements right now on the ground for us to have another plane. We'll get off of this one.

Starting point is 00:11:44 Those of you that want to carry on, we'll keep on going. Those of you where it's more convenient, if you were catching connections, we'll see if we can't have you catch connections at the airport we're going to. Single-handedly, the greatest thing I've ever heard, set everybody at ease. And when we landed that pilot and that flight attendant stood right by the front door and shook everyone's hand on the way out. It was unbelievable. If you can imagine, people dispersed into two lines. They either made a B-line to the bar early too. It was pre-9 a.m.

Starting point is 00:12:16 Or they went to the restroom to, you know, clean stuff out. But I ran to the Hudson News to grab some chocolate. I'll never forget that. And I've sat on customer advisory councils for other organizations, but Southwest is special for a couple of different reasons because they really tap us to help architect the future of what customers like me and you want to see on the airline. Now, there's a couple of financial figures that I'm honed in on today. One is $1.5 billion with a B billion. This is the anticipated annual revenue that charging baggage fees will drop into Southwest's balance sheet or financial statements, the income statement. It's a huge figure because last year, in just one quarter, they lost over $200 million.

Starting point is 00:13:11 That's a big figure. Now, is that because of their economics? Southwest has always been great at buying fuel in advance at cheap prices. And so is some of that coming back? Has everybody else gotten smarter? I don't know. The other figure I'm looking at is 5%. 5%.

Starting point is 00:13:30 When Southwest just announced that they were going to do the baggage claim, when they were just announcing they're going to do some layoffs, the first ever, the stock went up 5%, which means that investor sentiment, they like that, right? I have more, but let me pull up there. Well, and I think some of the key difference between your stats, a great story about the flight and how it was handled. The difference between that and how the news has been communicated about the baggage fees and, you know, the other things that are impacting consumers is that it was very, very even keeled. It was businesses, you know, here's a transactional business situation.

Starting point is 00:14:11 Here's what you need to know. And there was no, you know, for a company known for Hart, it could have been delivered with Hart. right? And I think we would have seen a much better reception from it. And because it was delivered so in such a calculated manner, maybe it had to happen. I don't know. It certainly is better for them financially. But since it was presented in, you know, such a, the way that other companies communicate, not the way Southwest communicates, that's, I think that's why we're seeing so much of a pushback right now. I agree. And I think, too, like having a cheeky campaign saying, hey, if you want to keep flying, we need to stay in business, right?

Starting point is 00:14:52 Like, you know, make it fun, make it the friendly voice that we're used to is imperative. And I think going to your story, Sam, about kind of that flight attendant sitting there, even killed in such a horrific, you know, time where, you know, I just came to Chicago. I was sitting right by the wing. And I was just looking at that engine the whole time. I'm like, okay, do your job. just in light of all of the different things that have been going on in different airlines. But I think I know their talent and kind of their hiring has been exceptional.

Starting point is 00:15:29 They find people that live true to kind of their brand promise of delivering excellent customer service. And I think, you know, I wonder if there's an opportunity for them to kind of lean on their team. Again, whether that being a better brand campaign positioning, sharing, hey, we have. had to do this. We're so sorry. Here's how we're going to make this better because I think if you have the option of choosing between an expensive flight, who doesn't care, or an expensive flight where there's great customer service, you're going to pick the great customer service in lieu of maybe not the newest airplanes, right? And I think there's something to be said for that. Like customer service can make it break a brand. And I think if they can lean into that as well, it can help rebuild

Starting point is 00:16:17 some of this brand perception that they've lost. Yeah, I totally agree with all of you. I think what you have outlined, Sam, is really important that it's a business. But at the end of the day, Southwest Airlines is a business. We all understand that there are rising costs, there's operational challenges, there's all of those kinds of things. I think what Erin and Chino, you've reached to is that knowing your differentiators, knowing how the best way is to communicate something, and it can be.

Starting point is 00:16:47 cheeky and it can be, you know, it can be fun. I think they tried to do that in their Twitter response that when the backlash started happening and they tweeted out, we didn't trade Luca, which, you know, is a basketball reference to Dallas trading Luca Donchitz. You know, it didn't, it kind of fell really flat because it's like, no, you kind of did trade it because you traded our loyalty to your brand for dollars. And we might be willing to the point that Sam just shared, our loyalty might be more to your people and your team and the experience. And we might be willing to pay for the luggage.

Starting point is 00:17:31 We might be willing to pay for an assigned seat. But maybe there was a different way in which to communicate that. And, you know, empathy is essential knowing, like I said, again, what makes Southwest special is what they do. there and really kind of leaning into that and playing into that. And so it's interesting to me that, to Aaron's point, it kind of came out in a very business-like, you know, all the Southwest, you know, I'm a loyalty, rapid rewards member, get the email and it just says that and it has the date on it. And you're like, what? Like that just didn't really feel like them. I was like

Starting point is 00:18:11 wondering like, is this really them? Right? Because it doesn't feel like that. And, you know, there are opportunities, you know, especially in today's world. Like we talked about all of these brands, Starbucks took to all the the cancel culture. Like you got to be really careful about what you're doing these days because it's a fragile state of affairs, you know, when people are doing it in such a manner. I mean, I was already seeing people complaining about Southwest because they were always like the low fare cheap fare right and i laughed because this happened to me i was like looking for flights and it was like oh forty nine dollars to the place to wherever i was trying to fly to but like three hundred ninety nine dollars to get home right so doesn't make it more doesn't make

Starting point is 00:19:00 it cheaper right you know but like it used to be where you could get forty nine dollar leg you could get a twenty nine dollar leg and yeah it was way cheaper and you know and in those circumstances yeah, maybe I would have been willing to pay for back, right? Because I'm already saving so much money. Yeah. And going back to even past podcasts where we talked about dualingo and how brilliant their marketing was, right? You know, I do understand that, you know, it's a business.

Starting point is 00:19:26 We all do. And I think leaning into that and just sharing, hey, you know, we have to make money somewhere and, you know, we're going to maybe undercut some of the other people to save. because if you weren't doing it, you know, $1 is better than $0 to begin with. But finding a way to do that or if you're even having a loyalty program for the people that are flying quite often, it's like, okay, well, on your fifth flight, you get a free, you know, check bag or whatever it may be to kind of help with those customers who've been loyal to you is a really great idea to, again, be honest with what's going on. I think, you know, everything in life is going up. And so we're all expecting it, right?

Starting point is 00:20:08 Netflix's raise their subscription, you know, etc, et cetera. But I think being able to communicate that to the people who go back to your brand is incredibly important. And without doing that, you lose customers. Then what loyalty do I have to Southwest Airlines? I'm just going to take the next cheapest. Or if it's all the same price, I'm just going to go on a better plane. Yeah. We have seen this time and again with domestic air, with domestic travel companies.

Starting point is 00:20:38 It is a proverbial race to the bottom. Warren Buffett says that this is the least performing sector. He no longer invest with any airline. And if you think about these communication faux pas or miscues, they're littered in the domestic U.S. airline industry, whether it's Delta and their faux paw screw up of how it is that they change around their loyalty program. if it's jet blue leaving a plane on the tarmac because of winter conditions for three hours and not letting anyone off the plane, the domestic airline industry is littered with these types of mistakes.

Starting point is 00:21:19 And the thing we've got to keep in mind is this race to the bottom, where is it taking us? When you look at international airlines and three of the top airlines, or three of the top airlines from a customer experience perspective, are all international. We have Singapore, we have Qatar Airlines at the top, we've got Singapore Airlines second, and we have Emirates coming in third. And I flew Emirates last year, and no, I did not sit next to Penelope Cruz,

Starting point is 00:21:48 but a second best, it was my wife. Here's what we recognized. This is a superior airline, not only from a performance with the efficiency that everyone boards the plane and exits the plane, but just from the level of service and just an all-out comfort. Now, I'm not expecting a domestic travel, a flight that's 40 minutes from me here in New York to Cleveland, for example, for there to have the ultimate luxury.

Starting point is 00:22:19 If I wanted to do that, we'd fly private. But I do expect to be able to hop on a Southwest airline jet, and because I want to get away, maybe back to Melissa's point, the airfare may be $49. But guess what? We've seen an erosion in pricing that benefits the customer over the last five to 10 years with Southwest. They've almost done away with those

Starting point is 00:22:44 want to get away fares. And it is if not as much more expensive. And so why would you fly that? That doesn't make any sense. I can tell you what's to blame though. Because I'm not here to cast blame on Southwest

Starting point is 00:23:00 senior leadership. I'm certainly not trying to cast blame on their competitors who've helped race to the bottom, I would blame there's a very activist investor who has had tremendous influence at Southwest. And it's the Elliott Investment Management Group. I know these folks. They're not bad folks. But for some reason, they're putting the proverbial arm wrestle chokehold on Southwest to do some things different. I don't know what the big game plan is, though, here. It doesn't make any sense to me. It's a wonderful brand. It's got wonderful ecosystem and associates and employees throughout the country and now the world. But why are they doing these things? It's kind of a mystery. And this is coming from somebody who sits

Starting point is 00:23:49 on the customer advisory council. Yeah, agreed. And it's, you know, companies are for profit. There's nothing wrong with that. And there's nothing wrong with, you know, if you hit a point where you say we can't operate the way we've been operating. So sorry. We have, we're a for-profit venture. We have, we have to see this through. There's still a way to do that. And, you know, you and I talked about Warner Brothers and DVDs last week or last episode. You know, there's still a way to bring at least your loyalists along. You don't want to lose your base. And there's a way to communicate it. And with Southwest, it, you know, it should be fun and playful. Like, you know, you came up with some great ideas about how to, how to have some fun with the fact that we're going to

Starting point is 00:24:28 you can get your loyalist to say, ha ha, I know. Great. Thank you. You're still going to do the things that I like about you and you're going to do them more. But I think there's, you know, in order to keep your base, you've got to have a tradeoff too. You got to say, we're going to charge you more. We all know it. We all recognize it. There's a right way to communicate it. Obviously, that hasn't happened yet. I stand by my initial thought that there will be a recovery. People will get over it. But what is that tradeoff? And it can't be. We're going to charge you more and we're still going to be, you know, the discount airline and, you know, no frills, right? And we're seeing a little bit of that, like you can start to use your points

Starting point is 00:25:11 toward hotels and I think you couldn't do that before and things like that. But I do think we're going to see more customer rewards come out of it. And I don't know what exactly what that'll be, but they've got to do something to say to their, at least to their base, we've got your back. And I want to see what's going to happen from here. Yeah, yeah, I think the recovery is going to be super important because to your point, Aaron, like, it's already out there. There's already all this noise. There's a lot of disgruntled customers. I mean, the fact of the matter is from a business perspective, 60% of Southwest Flyers are loyal customers, right?

Starting point is 00:25:50 They're part of the Rapid Rewards program. If that loyalty program just dropped 10%, that's a reduction of one. $7.2 billion. So again, like, what are, what are, you know, it's, it's like the short-term gain for long-term, you know, deficit, you know, all these kinds of things. But I agree. I think that one of the ways to recover would be just to own it, just to say, we didn't mean to, like, break your hearts, right?

Starting point is 00:26:17 You know, and then do something about like, I mean, they can make it fun. Like, they don't have like a United Club or Centurion Lounge or any of this stuff, right? They could say, hey, we have a baggage club. want to join, like make it fun and say for, you know, you pay an extra $200 a year, you get to take your bags for every flight that you want, right? Like something like that, I think would make the customers feel better. And then like explaining like, hey, you know, like for every person that brings a bag on, this is how much it's costing us.

Starting point is 00:26:53 And, you know, we'd like to be able to offer you peanuts, but now we're not even going to be able to offer you peanuts. You know, just those kinds of things. I think that there is a way to transfer that into, like, recognizing their loyalists. And then also saying, hey, help us out here, right? To Sam's point from a financial, you know, help us out. We're going to have to start charging for assigned seats. We're going to have to start charging you for bags. You know, but what could we do differently?

Starting point is 00:27:25 You know, and I'd be surprised, too, Sam, because one of the things that I think is nice about not having the assigned seats for them is that they don't have to have that software in a program to do that. They're going to have to invest. You know, we all saw what happened when their software went down for, you know, they're going to have to upgrade all of their, that's an investment. That's millions and millions of dollars of tech investment. So it'll be interesting to say.

Starting point is 00:27:51 Yeah. I'm sorry, Chien, I think I cut you up. No, no, no. I was just going to say, too, like we're talking about, you know, the need for business, which is one thing, and kind of how they can rectify it in that time of kind of transition. But I think what's important to talk about, too, is the blowback to their team if they don't do something. Because if they're known for customer service and, you know, Sam, again, going back to that incredible flight attendant where if you're getting yelled at,

Starting point is 00:28:20 if you're, you know, people are disgruntled, you're not going to always have the brightest smile. It's going to wear your teams down. I think there's a blowback on that perspective too because the easiest thing you can do without an award or bringing a new tech, right, is that recognition and it's the customer service, having people kind of overcompensate on the friendly factor there to make sure that your experience flying is big

Starting point is 00:28:48 without really putting any like dollars towards that. That's the first thing you can do. But if every single person that is working there is getting yelled at because, you know, they paid for a seat and somebody moved and now you have to check your bags and it was $29 when I told me there's this hidden fee. That's going to be a problem. So how are you preparing your teams in the interim while you're in this transition, right, so that they can keep that smile on their face, continue to have excellent customer service while dealing with the blowback while you're figuring it out, I think is really important and it will

Starting point is 00:29:21 be key for them to implement in this transition. Yeah, we always in the customer experience world, we call those moments of truth, right? So this is really, you know, and to the individual. So whether it's the gate agent, whether it's the flight attendant, whether it's the person on the phone, because you're calling in, a travel agent, whatever it might be, there is that place and time where they can make a huge difference. And to your point, you know, it's not just expecting our team members to be able to answer those questions or or respond in kind or respond in a way that is professional and fun and stays true and loyal to their company. They need to be trained. They need to have a talk track. They need to know what they can do. I mean, one of the things that I think was always fun about Southwest is you felt like the gate agents had a thing. authority to do fun things, right?

Starting point is 00:30:24 Like when there were delays, right? Like they used to do like karaoke contests, you know? And, you know, the karaoke winner wins like a whole water and peanuts. And it was just fun, right? You know, those kinds of things. And like the funniest things that they would do, they would like, we're going to upgrade. I was, you know, in L.A. once and they did this. They were like, we'll upgrade the first person who shows us that they have a hole in their sock.

Starting point is 00:30:49 Right. And so, like, you know, people are throwing their shoes and, like, running up because they wanted to get in the A group, right? You know, that kind of thing. So I feel like, you know, giving that power to their team is truly going to be really one of the things that needs to happen. Because this seems like, to Sam's point, the decision came not from the team, but from somewhere higher up. So how about other companies? Yeah, Melissa, I was going to ask you, you want to give us a little roundup of some other companies that have. gone back on whether it's spoken or just kind of known on a fundamental brand, you know, truth that everyone has known and loved them for and what happens in the aftermath of that.

Starting point is 00:31:30 There definitely have been recently a few companies that have had brand, what we would call brand missteps. So a perfect example is 7 up, you know, which has always been known as caffeinated soda, introduced 7Up retro, which was supposed to be caffeinated. And, people were very confused and that they were disappointed they because they specifically choose seven up or its caffeine free status. So they felt like the brand, you know, was diluting its identity, alienating its core audience and sparks debates about whether seven up is trying to compete with all other drinks or just, you know, or within the non-caffeinated field. Another one that was a little sneakier that I think that, you know, some of us might have seen, you might see the blowback

Starting point is 00:32:19 on LinkedIn was Google who removed Don't Be Evil from its Code of Conduct. And they had been known for this informational motto, don't be evil. And they quietly removed that phrase from their code of contact in recent years, though. And it just says it has a more generic statement, which is do the right thing. It's very similar. But I think that like people were like, wait, you know, don't be evil. It was pretty strong. And so do the right thing. Similar, but a little

Starting point is 00:32:55 toned down. And so the change sparked a lot of criticism. Many seeing it as a sign that Google was moving away from its founding principles and that it's also because of the way it's handled user data controversies around, you know, there's a lot of controversy around AI and ethics, and maybe that's the time for another spotlight for all of us. And antitrust. issues. So kind of contradicting that spirit of don't be evil, kind of removing that phrase was interpreted as like a symbolic shift. Thoughts? Yeah, when you know and love a brand, whether it's Southwest or one of the ones you mentioned or any number of brands that have made a big misstep. And again, I'm not saying this is. This is a business situation. It's the way it's been handled.

Starting point is 00:33:39 But when you know and love a brand, especially one that's been around as long as Southwest or some of the others. And they do something that's very contrary to what you believe about them, it feels it can't feel like a betrayal, right? It feels like I thought we, I thought we were friends. I thought I knew you. This is something that someone who cares about me wouldn't do. And I think that the only way the Southwest goes down is if they don't get ahead of it. They've got time. And by the time this comes out, they may take some actions and they may even reverse their bag policy. Who knows? But I think they've got a limited time window where they're, they're allowed to not necessarily walk it back, but recontextualize and share more and be more

Starting point is 00:34:21 transparent and implement better loyalty programs and three times rewards or a merch store or something, you know, give back in some way. And I want to see what kind of actions are if they're prepared to take. Well, and I also think that one of the things that you mentioned earlier was Netflix. And, you know, there's so many of us that are very loyal Netflix, you know, subscribers. And their crackdown, for example, on password sharing was like for my family devastating. We were like, oh, no, you know, and my kids and whatever, whatever. But you know what? We got over it. So Aaron, to your point originally was like, will the customers get over it and just continue because they are loyal and they've had amazing experiences like Sam had?

Starting point is 00:35:11 be okay with it to a certain extent. I think that might be definitely in their thought process of why they communicated it this way, like rip the band-aid off and let's just go. But I do think that there's some really nice things that they could do to rectify the feeling of broken trust that their loyalists have. Also, I like to say, too, on the Netflix crackdown, that hurt. I am not over it. I will not get over that. Especially when you have, you know, you're paying for a premium for the family sharing plan

Starting point is 00:35:48 and it's like, you know, sucks there. But with Southwest, it's different because there are ways that they can rectify, whether that just be, you know, creating campaigns to clearly communicate kind of the business needs, you know, overcompensating on the customer service aspect as well, you know, doing those fun karaoke. Or maybe, you know, take a pull and maybe everyone wants a quiet flight. You know, I don't know, whatever it can be. And finding ways to upgrade and kind of give back to those loyal customers.

Starting point is 00:36:21 Because as you shared, well, even a 10% loss from those people is a significant cut in revenue. And so, you know, you need to also be thinking long-term gain as a brand that was known for kind of being the friend that we could rely on when we needed to quick. cheap flight, if you're not that person, you just become like everybody else and what becomes your point of different. And that's what they need to focus on. It's an interesting point. I think the study behind the study is that when they looked at the loyalty program and the loyalty participants in their travel patterns, you know, whether they got to did away with baggage fees, whether they did implemented assigned seating, whether they did whatever, I think there was going to be very little atrophy there. So it's not quite the big number. And back to your Netflix example, Chino, I would hazard

Starting point is 00:37:17 to guess that you didn't switch. You didn't turn it off. You didn't say, Hulu's a better opportunity for me. I'm putting my money where Hulu's mouth is. I would argue that we probably stuck with Netflix because it's the best. Here's the problem Southwest faces. though. It is not the best. In a race to the bottom from an industry perspective, where it is basic transportation, point A to B. It's a long distance sometimes, but how can I get there the cheapest? I don't know how it is that a Southwest wins that argument. Yeah. All right. So better and more transparent communication, rewarding your loyalists and not leaving them behind, not profiteering to the point where you're gouging your customers,

Starting point is 00:38:03 but making good financial decisions that keep you afloat as a company, as the fiscal responsibility. Sam, did we fix it or at least give Southwest an opportunity to fix it? I think I want to say layoffs, baggage fees and assign seating, oh my, to the Lions, Tigers, and Bears, Wizard of Oz analogy. I argue Southwest just traded its soul for a spreadsheet. The market can cheer today, but customers who remember those love days and who, like me, I'm a product of Southwest. I've had their back and they had my back. I wouldn't be here sitting here today physically if it wasn't for that pilot that day where we almost crashed. I would argue Southwest should try and play the long game or they're going to get played. Or as consumers,

Starting point is 00:38:55 we need to play a shorter game and not get played. So did we fix it? I don't think so. All right. Chino, how about you? I would say, yeah, for this one, unless they kind of bring on some of the ideas we had, they have a short window to fix it. And without doing any of that,

Starting point is 00:39:14 they become just like everybody else. And unfortunately, they're going to get lost in the background. So they can fix it if they listen. So hopefully someone from South West is listening. All right. So maybe a fix with an apostrophe? Yes. Or an asterisk?

Starting point is 00:39:29 coming. Melissa, how about you? I definitely think that to Chino's point and perspective, it's true, crisis management matters. And so hopefully they will be able to communicate with empathy and with transparency, what the needs are and what was behind this and can get a balance of what they need to be profitable. But I do feel like they have that opportunity. The door is still open to that. and it doesn't mean that they have to roll it all back. I think that they can still move forward with the changes they want to, but I think that there needs to be some adjustments to those so that the loyalists feel like they're still being taken care of.

Starting point is 00:40:12 And, you know, I really appreciate Sam your story about Southwest because I think that also shows the importance of safety, of trust, that, you know, you were just so impressed by the, the people that helped you get back to where you needed to safely is something that they should really, you know, they should not ignore that. They should use your story to help people understand that like there's more to it than, you know, no, you know, free backs. There's a lot more to it. And so I think that there's an opportunity for them to craft a new story that will help them get to where they need to get. Yeah, just before we end, because I will not just

Starting point is 00:40:56 Add one more piece to that. I think Sam's story highlights one exceptional nugget for them. It's the people. Your people can make it a plane can almost crash. And that is a horrible situation that you experience. We can't make light of that. But the fact that the people were able to guide you through that with the utmost professionalism, care, and building that trust with you is what made the difference.

Starting point is 00:41:22 Like you're on the customer advisory ward, having been on the same plane from that company at crash. Would it be me? I don't know. But again, it was the people that made the difference. So I think there's one nugget you take away from this self-plus airline. It's not. It's you really need to double down on your people. Yeah, I hope they hold on to that moving forward and put their people front and center. That does it for us. We've wrapped up another episode of We Fixed It. You're welcome. We've got more episodes underway, including one where you, the listeners, send us the things you wish companies would do and how you would fix them. We'll discuss your ideas and pressure test them and tell you what we think.

Starting point is 00:42:00 We'll call that one, you fixed it. We're welcome. But as always, send us your ideas at we fixed it pod.com. Tell your friends, neighbors, and colleagues about our show. Listen and subscribe on Apple Podcast, Spotify, or wherever you get your favorite podcasts, and we will see you next time. This podcast is produced by Straightforward Media Group, All Rights Reserved. If you'd like to learn more about how a podcast can help your company establish authority

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We Fixed It, You're Welcome - Southwest's Loyalty vs. Profit Dilemma

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