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Sunday, January 30, 2011

Will the Rewards be 'Rapid' for customers or Southwest?

In a past post, I complimented Southwest for the simplicity of the Rapid Rewards purchase frequency program. As far as programs that create fiscal bonds with customers go, theirs is one of the most tangible, credible ones I've seen, and one of the few that delights with unexpected surprises. In the airline industry in particular, it stands out as differentiated and unique in value.

So when Southwest announced program changes, including a move from the simple 8 round trips = 1 free flight formula to one that grants points for flights based on the price of the fare, I wasn't initially enthused. I tend towards clarity & simplicity. One of my long standing criticisms of other airlines' programs (several of which I am a member) was that 15,000 miles was as vague to me as 25,000. I never have a sense of how close or far I am from attaining the next reward. With Southwest, however, I always knew whether I was 2 flights or 4 flights away. While I would look for a reason to get that last Southwest round trip, I've never looked for an opportunity to travel an extra 1,500 miles to gain another carrier's reward. A flight is more easily characterized as an experience (transaction, if you must) than an aggregated distance.

Gary Kelly's comments in announcing the changes were one of the few instances I've seen corporatespeak supersede customerspeak for Southwest. He discussed how much time & money Southwest spent on developing the new program ($100M over 5 years) and how the new program should expand revenue and put it on par with American and Delta programs. It was also the first time I've ever noted Southwest outwardly aspiring to a status of the legacy carriers. It draws a stark contrast to ads where Southwest portrays the protector of travelers' pocketbooks, while the legacy carriers are the personification of greed.

The idea that the new rewards program will open rewards purchases up to Hawaiian, Alaskan and international travel are intriguing. One of Southwest's operational and marketing strengths has been how they have maintained resolute focus on the domestic US traveler. To serve them, Southwest created a terrific rewards program that kept customers flying the airline. If Southwest customers aren't interested in international travel, it could be a an additiona benefit without much value.

Still, Southwest has a history of delighting me. When they've made changes, they've often been ones that put more burden on the customer in terms of helping their operation, but that also bring additional customer value, even beyond planes that take off and land on time.

Because of a terrific track record, I'll stay open to these changes as they become more evident. But if the program deteriorates value for customers, Southwest will find itself judged, maybe not in competitor ads, but in the very real court of customer opinion.

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