Thank you Herb!

Every business magazine and business student knows something about Southwest Airlines (SWA). My favorite business leader, Herb Kelleher, who was so significant in making SWA the admired company it is today has retired as Chairman of the Board. I have held off talking about this wonderful company because I was certain that I would only be redundant. I choose to add my two-cents today because airline customers are recently being charged extra by other airlines for things like, baggage of all things! Why are airlines like American resorting to these tactics? Just look at the price signs on the local gasoline stations. The same rising costs have created a crisis at airliner fuel stations. Most airlines have not prepared for these huge rises in jet fuel and are now making their customers pay the price for their inept management. Why hasn't SWA followed suit?

Under Mr. Kelleher's direction, SWA began storing fuel as far back as their beginning years to meet just such a fuel crunch as being experienced today. What began as a small Texas airline, Southwest has grown to become one of the largest airlines in the U.S. Today, Southwest Airlines flies over 104 million passengers a year to 64 cities all across the country, and they do it more than 3,400 times a day. What makes SWA unique?

More than 36 years ago, Rollin King and Herb Kelleher got together and decided to start a different kind of airline. They began with one simple notion: If you get your passengers to their destinations when they want to get there, on time, at the lowest possible fares, and make darn sure they have a good time doing it, people will fly your airline. And you know what? They were right.

For those of you who are not all that familiar with the SWA roots, here is a short synopsis:

Founded in 1971, Southwest Airlines began to establish a consistent pattern of deviating from convention. In 1978 the airline industry was deregulated and 120 plus airlines have gone bankrupt since. Why, in this difficult environment, has SWA continued to grow and thrive? Notably, SWA is the only airline to continuously show a profit every year since 1973. How has SWA managed to increase its traffic by as much as 139%? Here are some facts that might help to understand how SWA has achieved this incredible record:

* The company consistently leads the industry in low fares and dominates the short haul market with an average of 60% market share.
* The company serves over 2400 customers per employee annually - making SWA employees by far the most productive workforce in the airline industry.
* Employee turnover averages 6.4% - again one of the best records in the industry.
* SWA is consistently ranked in the top 100 of the best U.S. companies to work for.
* They have never been forced to lay off employees regardless of external market factors such as recession or high fuel prices.
*They have the best record for baggage handling in the industry.
* They have the best on-time performance record.
* Fewest customer complaints.
* Youngest fleet of airplanes, and the best safety record!

If the above does not convince you that SWA is doing something unique, consider they can turn around an airplane at the gate in 15 minutes. Thats a full 10 minutes faster than their nearest competitor. This allows them to operate with 35 fewer aircraft.

The SWA culture is as unique as its business strategy. The differences begin in the hiring process - they believe in "hiring for attitude and training for skills". You must have a sense of humor to work at SWA, and they insist on having "fun" at work. More importantly, all employees are told to be themselves and treat other employees as "best friends" (Great internal customer service!). Finally, employees are told to establish their own standard of professionalism. They are encouraged to think entrepreneurially and act quickly even if it means disregarding the company bureaucracy. Southwest empowers their employees and expects positive results by eliminating inflexible rules.

Although Herb Kelleher has retired, the high standards and positive attitude he instilled while Chairman and father-figure to all SWA employees carries on. Many airlines have tried to copy Southwest’s business model, and the culture of Southwest is admired and emulated by corporations and organizations in all walks of life. Always the innovator, Southwest pioneered Senior Fares, a same-day air freight delivery service, and Ticketless Travel. Southwest led the way with the first airline web page:southwest.com; DING! the first-ever direct link to customer’s computer desktops that delivers live updates on the hottest deals.

Let me leave you with this quote from the SWA Website:

As you can see, we've been busy these past 36+ years. And we promise that the future will be just as fun-filled and exciting as the last. We've accomplished quite a bit, and along the way we've earned a title no other airline in the industry can claim: the leading low-fare, high-frequency, point-to-point carrier in America. We are proud of our accomplishments, and it just goes to show that time really does fly when you're having fun!

Thanks Herb. I will remain a loyal Southwest Airlines customer because of the great customer service example you and your company pioneered.

DJC

Customer Service Moments of Truth

Products alone can no longer sustain a company as a market leader, nor can products alone be depended upon to build a small business. Companies across all industries must treat customer service as their primary product - one that can be constantly improved. Providing quality service does not simply provide a competitive edge; it is the Critical Element. Some experts like to call them Moments of Truth . A high quality service encounter raises expectations for all future encounters.

Jan Carlzon, former President of Sacandinavian Airline System (SAS) called "Moments of Truth" - opportunities. He says, "A Moment of Truth is an episode in which the customer comes into contact with any aspect of the company, however remote, and thereby has an opportunity to form an impression." Each customer contact is a unique, unrepeatable opportunity for a company to differentiate itself from the competition. Every decision should be made with the customer in mind and viewed as another opportunity to make a favorable impression. Unfortunately, failure to satisfy a customer on any Moment of Truth will quickly destroy the customer's memory of good service. On the other hand, getting it right can erase all the wrongs that the customer previously experienced.

The two crucial components of the critical element include: results and process. To focus and manage our customer's Moment of Truth, we can use a simple five-step process:

1. Identify and prioritize each customer episode or contact. This means thinking about every time you come in contact with an internal (I will talk more on this subject in my next posting) or external customer either in person, by phone or email, or through your company process or system. You should then determine which of these customer contacts would have the most impact on customer satisfaction.

2. Develop alternative customer responses. Think of some alternative ways you could improve your response in each of these customer contact opportunities.

3. Decide which responses will delight your customer. Choose the response that will most likely pleasantly surprise your customer and thereby not just meet, but exceeds their expectations. "Delight" Moments of Truth provide unexpected, thoughtful, delightful experiences for the customer. Knowing your customers likes and dislikes makes this easier.

4. Create a service standard to ensure basic customer satisfaction. When a response delights your customer, think about writing it down and using it for all of your customers. That's when it becomes a standard. Be careful, after a customer has become accustomed to this "delightful" Moment of Truth, they may begin to expect the experience and this becomes a "basic" Moment of Truth. Exceeding expectations requires a continual desire to improve. You will need to remain creative to continue to delight the customer.

5. Measure customer satisfaction on each Moment of Truth. Find a way to continually check to see if it's time to improve or change your standard response. Strive to provide breakthrough quality service on specific Moments of Truth by using the personal thoughts and creativity of everyone in your organization.

Reflect on what the competition does to set their customer service bar high. Ask your customers what they expect. Ask your teammates what works for them. If you work to merely satisfy your customers and fall short, you will have an angry or dissatisfied customer. Working to delight customers means going beyond meeting basic expectations.

Good luck.

DJC

A Different Tipping Point

I have often wondered what the correct amount is to tip someone providing service. I also wonder how the custom of tipping ever came about in the first place. After years of adding a tip to the bottom of a restaurant bill of 7%, one day, about 20 years ago, it became 10%. Ten years later it was 15%. Who comes up with these amounts? Is it still 15% or has it changed again without my knowledge? Am I going to be embarrassed next time I pay for dinner at my favorite eating establishment?

There is a Website dedicated to tipping called appropriately;The Original Tipping Page. They have a tipping chart that breaks down amounts to tip between 15 and 20 per cent(Damn! Just when I had the 15% tip down)! The site also offers a "Tipping Guide" that breaks down tips for different places such as the Barber, the Golf Club, Hotel, Supermaket (are we suppose to tip at the supermarket too!?) and at Restaurants.

The writer of The Original Tipping Page says this about restaurant tipping: "My opinion is: tip your waiter / waitress. But this is not to say that it should be ever considered 'required'. Recently, most wait staff have lost sight of the fact that a tip is a gratuity and NOT a must. It is also a fact that in a lot of places, wait staff are underpaid (usually less than minimum wage) and must share tips with busboys, aides, etc." Most of us know to be a fact that tips are expected regardless of the quality of the service provided. I often struggle with this. My wife, Duchess and I were at a new Mexican restaurant last week. The very friendly waiter (I think he may have also been the owner) took our order and brought our drinks and chips and salsa immediately. Duchess and I got lost in conversation and half and hour later realized that our food had not arrived despite the fact that we were only at one of four occupied tables in the restaurant.

The waiter came to us a few times and said, "Your order will be out shortly. May I refill your drink?" That satisfied us until about the one hour mark when we were about to give up, our plates arrived at the table with an apology - "We had a mix-up in the kitchen tonight. I am sorry for the delay." The food was very good, but the taste of the long delay lingered. When the bill arrived I immediately started to figure a 15% tip and suddenly stopped and asked myself, "Why am I tipping?"

Have you ever really stopped to think about this strange custom? Not just the how much part, but why we do all this in the first place. For example, the restaurant could just charge more for the food and pass it along in the staff's paychecks. Banks pay tellers that way - why not restaurants?

In an article from CNN Money entitled, "The Logic of Tipping" Annelena Lobb wrote,
"It may seem odd, but tipping some people and not others really does make sense. Some service employees offer a highly personalized service -- and tipping is an efficient way of rewarding them. In a restaurant, for example, what constitutes good service is really a matter of the customer's opinion. "

Since tipping began in sixteenth century England, the reasons for tipping have changed over the years, but conforming to social norms and avoiding embarrassment were generally the main reasons. Tipping seems to improve service quality; the extent of the improvement varies across occupations. Author David Templeton says, "The etiquette of modern tipping, if there is one, has become so vague and indistinct on this service-hungry cusp of the 21st century that consumers are routinely confused about what is expected, and why. There are even voices mumbling that the whole tipping system amounts to little more than the publicly subsidized stinginess of employers, and should be abolished. Consumers of yesteryear left no more than 10 percent on fountain counters. A decade ago, it was rare for tips to be brazenly solicited for counter service, but in today's coffeehouses and juice joints, with their 'tip jars,' it has become de rigueur."

An etiquette consultant, Michele Maussion Wilson, believes otherwise. She thinks, "Tipping is part of your pleasure. It makes you feel good," she says. "And you must never simply leave the money on the table and walk away. You don't wave the money about. You discreetly leave it beneath the bill. Then you gain their eye contact, and you say, 'Thank you for your kind attention this evening.' It's so easy to do and it means so much."

Recent studies reveal that the amount of a tip often reflects factors other than the tipper's generosity or the server's ability. According to a Cornell University report, servers who introduce themselves by name receive an average tip 53 percent greater than the tip for those who do not; servers who squat next to the table while talking with customers--thereby improving eye contact--up their tips from 15 percent to 18 percent; those who write "Thank you" on the back of the check receive about an 18 percent tip, the same amount female servers get by drawing a happy face, whereas males who do so decrease their tips by 3 percent; the use of tip trays bearing credit card logos increases tips by up to 25 percent, even when customers pay cash; tips soar by 140 percent for servers who simply smile; and those who casually touch customers (e.g., once on the shoulder, twice on the palm of the hand when giving change) add to their tips by 42 percent, women customers being a bit more generous than men.

Which brings me back to my original dilemma; do I leave a tip if the food was great but I waited an hour for it? "IF YOU TIP less than 15 percent, it's assumed that you felt the service was well below expectations," says David Bynum, assistant director of Food Services at Santa Rosa's Flamingo Hotel, who adds that he's seen a slight shift upward from 15 percent. The thing about tipping is, we may expect it, but it's not obligatory," he says. "It's a gift you make to someone who deserves it."

I left 15%. What can I say? I liked the guy. And so it goes.

DJC