Marketing Done Well

Ok, another airline example, but this is a good marketing example. It has to do with Southwest Airlines. If you do not fly them often or at all you probably think they still have the “cattle call” boarding process that rewards people who arrive at the airport hours early with the best seats on the plane. Actually it hasn’t been that way since they began to allow Internet boarding passes. Today, you can get your boarding pass 24 hours in advance, and first come first served in terms of boarding. With two exceptions and an additional benefit. (I’ll get to the cool marketing idea soon, stay with me.)

Boarding on Southwest is by boarding number, the lower the number, the earlier you board. And, now they have you line up by exact number so there is no need to stand in line at all until boarding starts. They actually now have the easiest boarding process in the industry. And it’s still fast. (But I digress.)

So, how else can you get a low number: Two ways. One is to fly them a lot. If you do, they reward you with a low number (usually below A-30) no matter when you get your boarding pass. The second way is to pay a Business Select fare. Usually about $10 more than full-fare and potentially a lot more than the lowest fare. The reward is boarding number usually between A1-A15. Again, no matter when you get your boarding pass.

So what’s the cool marketing idea. Well it is actually the whole way in which you board and get your low number, but they have added a really good promotional idea recently. Now, when they announce boarding they call the “Business Select customers A1-Ax.” That way everyone knows that if you buy a Business Select fare you can be an early boarder. Free promotion every time they board a flight. I like it a lot.

Mitch

Which comes first the chicken or the egg?

Back to two of our favorite subjects: customer service and airlines.

The AP reported on May 20th that once again the U.S. Airline industry had received “dismal” grades from their customers. But then who is surprised? I doubt even the airlines are surprised. Once again Southwest came out on top (and they make money), while U.S. Scareways(excuse me US Airways) came in last. Their supposed target merger partner, United Airlines, came in next to last, so that merger is unlikely to improve anything. Likewise with Delta and Northwest which were the next two on the bottom of the list.

Southwest’s score improved to 79 from 76 and the next airlines on the list were American and Continental at 62. Quite a gap from #1 to #2.

The director of the research center at the University of Michigan that conducts this study, Claes Fornell, suggested that consumers were not necessarily blameless in this cycle as they continue to buy the lowest airfare possible. He believes this has created a cycle of cost cutting and a business model that “leaves no one happy.”

I suggest another hypothesis: People buy on price becuase the “product” being provided is undifferentiated, so why not. In other words, the consumer’s price focus is a result of the universally dismal level of “product” provided, so the only thing left to consider is price. If all providers “suck” why pay more?

So which came first, the price focus or the universally dismal service? I’m sure the airline execs would suggest that the price focus came first, it justifies their actions. Even if that is true, why is it that Southwest can make a profit and provide a better than average “product?” Because they have “cost advantages” goes the traditional thinking. What cost advantages can they have that have not been available to the other airlines? Southwest is not a start-up airline. I submit their cost advantages come from knowing where to cut costs that don’t add value for the traveler. The other airlines appear to have no clue what is of value to the customer.

Several years ago I wrote an article about TED (The United Airlines low-cost competitor) predicting it would fail because United had no idea what aspects of Southwest to emulate. It failed for the reasons I predicted.

So what can the airlines do? I suggest they read Moments of Truth. This decades old book about how Jan Carlzon turned around SAS by focusing on what was valuable to the customer is dead on and industry related, so it won’t be a stretch to apply what he talks about.

There is no question in my mind that if an airline understood what was valuable to its target market, it could provide it profitably. Southwest figured out how to do it for their niche. They can’t be the only smart people in the airline business … or maybe they are.

Mitch

What do penguins have to do with it?

This is a guest post from one of our co-workers, Jeff Krawitz. He is referring in this post to the Who/What/How marketing/sales framework used by us in our work with clients. Who refers to Who is buying, What refers to What are they buying, and How refers to How do they want to buy it. Levels 1, 2 and 3 of the framework drills you down into more specifics for each to “force” the user to find answers that help the company achieve its goals and create more loyal, profitable customers. If you want to know more you can download a free white paper.

I have always found How #3, the Value Delivery System (VDS), to be the most difficult to get across in our workshops. I explain it and try hard to define it, but often with more limited success than I would like. An example I sometimes use is to suggest that when they communicate with a customer in a routine way (an invoice for example), do something to allow the recipient to derive some positive value from it.

I recently did a half-day Customer-Centric Marketing workshop at a top financial services company in Iowa. I went through each of the nine boxes of the Who/What/How matrix giving examples and definitions. For What #2, I suggested that instead of sending clients monthly reports filled with numbers, find out what each client is saving for and show them a picture of that item filled in enough to indicate how close they are to achieving their goal. In other words, show them their progress in their terms, not strict financial numbers. I told them that one of my goals was to visit Antarctica and touch a penguin, and that the first financial management company that could help me get to that in my terms would win my account. (I also suggested that they should send me a map of Antarctica filled in proportionately to my financial chances of getting there).

When I got the How #3, the VDS, I just didn’t feel I was getting the concept across as well as I would have liked, and I felt that all my examples were falling flat. At least I thought so.

When I got home the following Monday, I received a simple “thank you” note from Michele, the person who had sponsored by workshop with the company. However, along with the note was a book. A large “coffee table book called, Planet Earth. In it were a few sticky bookmarks with Post-Its from her. One note was attached to a picture of penguins in Antarctica saying “I hope I get to meet you when you retire!”

I guess she did get it and then added something to a routine event that makes it valuable and special. That’s a Value Delivery System.

Jeff