Generosity is the killer app of marketing. And no one personified generosity marketing better than the late Herb Kelleher, the man who used the strategy to build Southwest Airlines into one of the most profitable and admired airlines.
Kelleher died on January 4, 2019 at the age of 87. He was known as the fun-loving, chain-smoking, hard-drinking CEO of Southwest, a company he helped found in 1971. Today Southwest has 58,000 employees and carries more than 120 million passengers a year, making it America’s most popular domestic airlines.
While Kelleher is lauded for combining low fares with a spirit of fun customer service culture, what many miss is how Kelleher used generosity as a marketing strategy.
His pricing was generous. Back in the 1990s I had to pay $600 to fly from San Diego to Salt Lake City on business. Kelleher took a more generous approach. As I recall, when Southwest began flying that route the price dropped to about $100. Bless you Herb.
I appreciate the American, Delta, United et al pricing was just trying to maximize profits for shareholders. When Southwest dropped the price of air travel, I could afford to fly more often on business. By bringing low fares to a market, Southwest stimulated air travel. Generosity marketing made the pie bigger. He brought air travel to the masses.
Generosity marketing is not an orthodox marketing approach. Typical conventional economic theories suggest that maximizing prices, fierce competition, and other rational cutthroat business behavior will quickly extinguish anything but narrow self-interest by companies. The unconventional Kelleher flew in the face of that.
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For full disclosure I do not own stock in Southwest and have never worked for the company. But I do refer to Southwest as “my company plane,” based on an old advertising campaign slogan. That’s because Southwest is generous with me. Here are some generosity marketing reasons why I fly Southwest:
Bags fly free. While most airlines are trying to hide the true costs of flying with surcharges like $25 and $35 baggage fees, Southwest lets you bring two 50-pound suitcases at no charge. That sure helps when you are going to a trade show or you want to bring your golf clubs.
No change fee. This is the most generous aspect of all. If you need to change or cancel a reservation, no worries. Southwest will credit the purchase to another flight for one year after purchase. Sure does beat the $150 and $200 change fees other airlines charge.
Festival seating. This is what many hate about Southwest, but it is what is keeping costs down. Boarding groups are fair. I am okay with no first-class and business-class seating.
Early bird seat fees. Okay, so you don’t want to be in the C boarding group and get a middle seat in the back. You can avoid that if you plan in advance and purchase an early bird seat for $15-$25. If you wait until the day of, you will pay around $50 to be at the front of the line. But you have the option. Makes sense to me sometimes when a change in plans is going to put me in a middle seat for a Baltimore to San Diego fight.
Frequent flyer program. I always found it generous you can use your points for any seat on any flight. There are no blackout periods or seat limits. The passenger gets to make an economic decision on which points to use for what flights.
Not everyone loves Southwest. I suspect those who hate the airline the most are on expense accounts. If you are an entrepreneur like me, you have reason to love Southwest (another slogan, dating back to their Dallas home base of Love Field).
Methinks Kelleher knew his real competition was not the other airlines. His real competition was people driving or staying at home. He stimulated airline travel, and Southwest still does, with its generous approach.