✢ 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.