✢ Customer Service: It Starts at Home
by Herb Kelleher
ustomer service has been a But they took the cost factor, pushed another dealer.” She replied, “Yes, passion for me and for it to the wall, and wound up with an but I choose to pay $2,000 more CSouthwest Airlines for a operation that was absolutely unlike because when anything is wrong very, very long time. Southwest Southwest Airlines in terms of the with the car, the owner comes out may be known throughout the U.S. efficiency of its reservation center, the personally to make sure that it’s and, indeed, throughout the world on-time performance of its airplanes, straightened out.” for having low fares. But very few the adequacy of its baggage handling, The same thing is true with any people talk about the quality of our and the approach to customer com- business. By way of example, cus- customer service—which is superb. plaints. tomer service determines our source As a matter fact, Southwest was Southwest Airlines is in the of steel. When we’re building some- featured in a recent Harvard process of reporting its twenty-fifth thing at Southwest Airlines, there are Customer Service video series and consecutive year of profit-ability in probably five or six different compa- selected by Money Magazine as the the airline industry and its sixth nies that offer steel of equal quality. best airline in America. Universities consecutive year of record profits. But quality is not the only issue. The that research businesses also cele- This is particularly impressive for question is, Who will get it there on brate Southwest, not only because an industry that is fairly dicey: fuel- time? Who will have it cut to the of low fares and the best safety intensive, labor-intensive, capital- right lengths and who will rectify any record in the history of aviation, but intensive, and intensively cyclical. mistakes they make in the shortest also because it has excellent cus- Airlines go up and down with the period of time when all those tomer service. cycles in the economy because one machines and all those people are sit- Southwest Airlines has been of the first things that people cut ting around waiting for the right steel focused on customer service from the during difficult times is flying. to arrive? So we’re all in the cus- beginning. We’ve always tried to pro- Customer service is a large compo- tomer service business, whether we vide more service for less money nent of Southwest’s winning formu- want to be or not and whether we’re rather than less service for less la. validly a customer service business money. In contrast to this approach, A long time ago, the mother of or we’re a business that produces consider People’s Express. People’s a friend taught me something about products. Express was formed by folks who the value of customer service. She One of the first steps in effecting had been with Texas International in always bought her cars from the a customer service business is to Texas and who planned to create, in same dealer. Her son said to her, ensure that the management of the effect, the Southwest Airlines of the “Mama, you can buy that company focuses on customer ser- Northeast. That was their objective. Oldsmobile for $2,000 less at vice. Part of that focus began some
© 1998 by RMA. Kelleher is president, chairman, and CEO, Southwest Airlines. This article is based on Kelleher’s pre- sentation at RMA’s 83rd Annual Conference, held November 1997 in San Antonio, Texas.
74 The Journal of Lending & Credit Risk Management February 1998 Customer Service
years ago for Southwest Airlines, dur- things. That’s when the officers real- ing a debate on how to handle a cer- ized the need to change the system. LIKE A LIGHTNING BOLT, IT STRUCK tain situation. The maintenance So we came up with a new propri- department said they’d like to handle ME THAT THE MOST IMPORTANT PER- etary sales system that greatly expe- it in a way that was more convenient dited the process for our people and SON AT OUTHWEST IRLINES WAS for them. The ground operations S A enabled them to have more interac- department said they’d like to handle NOT REPRESENTED AT THAT tion with the customer instead of it differently because that was more going through paperwork. We really convenient for them. Like a lightning TABLE—OUR CUSTOMER. OUR do believe, as Sam Walton said, that bolt, it struck me that the most impor- CUSTOMERS WERE HAVING NO SAY the best leaders have to be the best tant person at Southwest Airlines was servants and we try to make our com- not represented at that table—our cus- AS TO WHAT WE DID INTERNALLY. pany that way. tomer. Our customers were having no Since European aviation has say as to what we did internally. I your ticket counter in Las Vegas. been liberalized, or deregulated, as immediately appointed an executive How come we suddenly had eight we call it in the U.S., they are no vice president for customer relations complaints in the past month?” We longer state owned or government to participate in every decision that always answer customer letters, not protected. Representatives from these we make, for example, new equip- with generic responses, but with airlines now come to Southwest ment, airplane configurations, gate specifics. “You said you flew on Airlines asking advice on how to design, and automated ticketing sys- Wednesday on flight 789; you actu- compete vigorously. They’re expect- tem decisions. Ultimately, you need ally flew on Tuesday on flight 672.” ing some complex formula, but the to step back from the process to see “You said you were an hour late in advice is simply to find out what how your customers are affected. departing; you actually were 32 your customers want. During the pre- minutes late in departing.” We use a vious 40 years as state-owned airlines What Does the Customer Want? pinpointed factual response to the without competition, they told cus- I then moved the customer rela- situation raised. tomers what to take. With competi- tions function into my office for an At Southwest Airlines, we think tion as a factor, they have to find out obvious reason. I found that when that our management ought to spend what customers really want and customer relations was in the ground time with customers in the field, sam- think. The following story illustrates operations department, there were pling what our employees and cus- this point. no customer complaints about tomers experience every day. So we A dog food company was doing ground operations. I want customer have a requirement that each of our okay but wanted to do better and relations in my office because I want officers each quarter goes out into the that’s admirable. They prepared a new to see what customers actually say field to act as a reservations agent, to dog food formula that was awarded a about all facets of our company. load baggage, to dispatch airplanes, or certificate from the agricultural Customers will tell you the truth at whatever is required, and report back department as the purest dog food great length about what you’re to me on what they did, what they ever made in America. They had a doing wrong and, in many cases, found out, and what they did to can designed that received an award about what you’re doing right. improve the job. As an example of as the best package design for that Being this close to the customer lets how this works, we took several offi- year. They next launched an advertis- me, for example, call our people and cers over to an airport on a rainy ing campaign that won an award for say, “Hey, wait a second. Six letters night with lots of weather-related the best advertising in that category have shown up in the last two irregularities, such as passenger for that particular year. However, months about inadequate baggage back-ups. All of a sudden they saw about six or eight months later, the service in Albuquerque. What’s employees hand processing forms— head of the company called together wrong? What’s changed?” Or, “We stapling, sifting through piles of all the employees and said, “I hate to never used to get a complaint on paper, and other time-consuming tell you this, but we’re filing Chapter
75 Customer Service
mary fallacy. You are telling the cus- that’s easy,” but my response was A N OLD MAN IN THE tomers what they should want. They heresy at that time. I said employees have told us they don’t like this. come first and if employees are treat- BACK OF THE ROOM We’re stopping it today.” That’s the ed right, they treat the outside world RAISED HIS HAND AND kind of thing that you’ve got to do right, the outside world uses the com- and that’s what customer service is. pany’s product again, and that makes HE SAID, “CHIEF, I It’s determined by the customers and the shareholders happy. That really is THINK I CAN TELL not by management deduction as to the way that it works and it’s not a what the customers should like if conundrum at all. YOU WHAT THE PROB- they had your background, dressed Your employees should be your the way that you did, went to the first customers and it’s very impor- LEM IS. THE DOGS same schools that you did, and so tant to communicate that to everyone. DON’ T LIKE IT.” forth. Even demeanor can be communica- tion. We had a department running 11 tomorrow.” And he went through But Who’s the Number-One beautifully as far as I knew, when this recitation about having created Customer? someone came to me and said, the purest dog food ever made, the Once you do determine what “Herb, we must be doing a really best package ever designed, the best customers want, however, how you lousy job.” I asked, “Well, why do advertising campaign for this type of deliver it makes the difference. That you say that?” And he said, “Well, product. An old man in the back of difference depends on your employ- our vice president used to arrive in the room raised his hand and he said, ees. We’ve always felt that we not the morning and say hello to us and “Chief, I think I can tell you what the only deliver a good product, the best chat with us a little bit. Now he just problem is. The dogs don’t like it.” on-time performance, the baggage walks through with his head down You see, the dog was their ultimate always arrives with the customer, and and his shoulders slumped, so I guess customer. They forgot who the cus- that sort of thing, we also deliver the we’ve done something wrong and tomer was. They were doing all these product at a very reasonable price, we’re not sure what it is.” So I talked things for their edification without which is value. However, we wanted to the fellow involved and he was in keeping the customer in mind. still more than that, something that the middle of a divorce that he didn’t Similarly, Southwest Airlines you might call a spiritual element—a want. But you see, the way the peo- had a process that we thought was warmth, good humor, entertainment ple interpreted it was that he was one of the best things we’d ever quality, hospitality, altruism. There are down on them. We think it’s just as developed. It was a computerized a lot of words that you can apply but important how the CFO and his peo- way of handling passengers. It saved they amount to those things that will ple within the finance department passengers one stop as they went produce a sense of dedication and treat their people as how the flight through the terminal and we thought togetherness that leads each employee attendant treats passengers on an air- we were geniuses. We patted each to believe that he or she is doing plane. It is a cycle and it all starts other on the back, saying, “Boy, something worthwhile as an organiza- inside. You can’t abuse or maltreat an you’re smart.” “You’re smarter than I tion and for society. And we don’t employee and then say, “Now I want am.” “Well, I couldn’t have done it believe a company can have that kind you to put on a big smile and go out- without you.” And we implemented of atmosphere and that kind of cus- side and entertain and charm the pas- that process and found our most fre- tomer service unless it first realizes sengers.” The employee’s heart has to quent fliers hated it. There were that the employees are its number-one be in it to make it sincere and real. protests when I told our employees customers. Years ago, business gurus One of our vice presidents we were going to change it back used to apply the business school came to me and said, “Herb, it’s immediately. They said, “Well, Herb, conundrum to me: “Who comes first? easier for a mechanic or a flight you know, they don’t understand.” I Your shareholders, your employees, attendant or a provisioner to get in said, “No, you’re committing the pri- or your customers?” I said, “Well to to see you than it is for me.” And
76 The Journal of Lending & Credit Risk Management February 1998 Customer Service
I said, “Bill, I want you to under- We also give prospective We tell them to stop administering stand why that is. They’re more employees strange tests because we because we want them to be leaders. important than you are.” want to see what kind of attitudes And that’s what we’re looking for, they have, what kind of sense of because leaders are so scarce. The Hiring the Number-One humor. Sense of humor is a sense of focus is entirely upon how to get dif- Customer proportion to a great extent. You don’t ferent people with different back- We spend a lot of time trying to make mountains out of molehills. grounds to work together harmo- hire employees who have a customer When one pilot class that came in, we niously for a goal. What makes com- service focus and are altruistic. We’re said, “Take off your pants. We don’t panies ultimately perform well is very zealous about hiring. One time I interview people in suit pants, just in when everybody is leading and was told, “Herb, we want to tell you, shorts. Southwest Airline shorts.” there’s a little less management and we have interviewed 34 people for a This may sound strange, but what we administration—bureaucracy, in other ramp agent position in Amarillo, look at are the reactions. The pilots words. Texas. It’s getting a little embarrass- that got a kick out it and saw the ing, and there’s a lot of time and cost humor in it were the ones that we Celebrating Extraordinary involved.” And I said, “If it takes 134 hired. The pilots that did not were the Service interviews to get the right ramp agent ones that we did not hire. And that We celebrate and we exalt cus- in Amarillo, Texas, do it because kind of thing goes on all the time in tomer service inside and outside the that’s where it starts. When you start our hiring. We’ll say, “Tell us how company. It doesn’t have to be hiring people just to fill slots for one you used humor to extricate yourself something that was done for a reason or another, that is when the from an embarrassing situation” in Southwest Airlines passenger or a apple gets poisoned and the barrel front of 30 people during a group Southwest Airlines employee. It can starts to go bad. interview. be something that was done for At Southwest Airlines, we value somebody on the street. It’s just education and experience, but we Probation and Training unbelievable what our people do would rather have some-body with It’s very important to be attentive and they deserve to be celebrated. less education and experience but during the employees’ probationary For instance, a woman called the with a great attitude. If it comes period. That’s when you discover the Phoenix reservation center, crying. down to a choice between the two, incompatibles. That’s when you see She is from the Midwest and was we’ll take the attitude over the educa- the types of mistakes made and that’s coming to Phoenix for treatment of tion and experience and provide when you reduce the number. South- a rare type of cancer. She knew no those ourselves. We have line west Airlines also has a different one in Phoenix and was very upset employees that help us hire. Our approach to training. Of course, we that she would be in this unfamiliar model employees are part of the have technical training, but that’s not environment while undergoing diag- employment process. Pilots hire all we emphasize. We also emphasize nosis and treatments. So our reser- pilots, ramp agents hire ramp agents, customer care training with all vation agent said, “Well you know and flight attendants are involved in employees. If you’re in the refunds hiring flight attendants. We also have department, you get customer care YOU CAN’T ABUSE OR MAL- customers come in to help us hire the training, because everyone in the TREAT AN EMPLOYEE AND right employees. We bring our fre- refunds department has customers quent fliers in and ask their advice, inside as well as outside to deal with. THEN SAY, “NOW I WANT YOU after we interview prospective appli- We have leadership classes for cants, on who they think we should management-level employees that TO PUT ON A BIG SMILE AND hire. It is a good guide to hear your repeats about once every two years. GO OUTSIDE AND ENTERTAIN customers tell you what they think We tell these employees to stop man- about a given person and how they aging; when they manage them- AND CHARM THE think that person would work out. selves, they are ready to start leading. PASSENGERS.”
77 Customer Service
somebody now. I’ll meet you when people that we deal with every day, dering, “Hmmm, I was looking for you get off the airplane. You can our passengers, and they’re the ones E = MC2 and I’m getting the stay at my house while you’re in that supply the wherewithal for our Macarena.” But a fellow from Phoenix being treated at the hospi- employees’ livelihood. Swiss Air was interviewed when he tal.” left, and he said, “What’s the most Extraordinary examples like that Maintaining a Culture important message you’re taking are produced by extraordinary peo- Maintaining excellent customer back to Swiss Air?” And he said, ple that really are focused on cus- service involves a process of getting “For everybody to learn to do the tomer service. As another example, a people to understand the importance Macarena.” Everybody’s looking fellow called from St. Louis. TWA of it to them in their daily lives as for a single big answer, an easy had canceled his family’s flight from well as others’. We were a little answer, such as, “We’ll communi- Dallas-Fort Worth to St. Louis. concerned as we got bigger that cate for six months, then get on Southwest Airlines can’t fly there maybe some of our early culture with something that’s more impor- nonstop because of an amendment might be lost, so we set up a culture tant.” I keep telling them that the that restricts service into and out of committee, whose only purpose is intangibles are far more important that field. He was going to have to to keep the Southwest Airlines cul- than the tangibles in the competitive put his 85-year-old mother on our ture alive. Before people knew how world because, obviously, you can airplane, where she’d have to trans- to make fire, there was a fire watch- replicate the tangibles. You can get fer airplanes in Tulsa because of this er. Cave dwellers may have found a the same airplane. You can get the federal requirement and he was very tree hit by lightning and brought same ticket counters. You can get worried about her capability of han- fire back to the cave. Somebody had the same computers. But the hardest dling that on her own. So our reser- to make sure it kept going because thing for a competitor to match is vation agent said, “Well, I’ll tell you if it went out, there was no telling your culture and the spirit of your what. I’m getting off in 10 minutes, when another tree would be hit by people and their focus on customer I’ll just fly up to Tulsa with her and lightning. And so, the fire watcher service because that isn’t something make sure gets on the right connect- was the most important person in you can do overnight and it isn’t ing airplane. A couple of hours— the tribe. I said to our culture com- something that you can do without a what’s the difference?” mittee, “You are our fire watchers, great deal of attention every day in Our people do these extraordi- who make sure the fire does not go a thousand different ways. This is nary things because they understand out. I think you’re our most impor- why I can say our employees are that we exalt and we honor and we tant committee at Southwest our competitive protection. celebrate people that provide great Airlines.” I really do believe that to ❐ customer service. And Southwest be the case. We have people come Airlines’ checks say, “From Our in from all around the world who Customers,” because we want are interested in our culture because everybody to know the check does- they see it in the customer service n’t come from Herb Kelleher. The aspect of it. check doesn’t come from a piece of Southwest Airlines had 162 corporate paper called Southwest companies at our last corporate day, Airlines that’s on file with the which we have twice a year. We Secretary of State’s office in the started them off that day with the state of Texas. It comes from the Macarena and they were all won-
78 The Journal of Lending & Credit Risk Management February 1998