Rapid Rewards at Southwest Airlines Case Study
Southwest Airlines prided themselves on their commitment to customer service and equality by offering a streamlined business model with an emphasis on simplicity and efficiency that has remained the same for the most part since the airlines’ inception in 1967. At the time of the case study, Southwest had been profitable for the past 28 years, an achievement many airlines are incapable of boasting due to the volatility of the airline industry. One of the unique policies that Southwest employs is their ‘single-class service,’ where seats are not assigned, and those who check in first board the plane first and have their pick of available seating. In order to improve and maintain customer retention, Southwest built up brand loyalty by consistently offering the lowest flight rates and building relationships between repeat customers and staff. This worked for the most part, however in recent years the airline industry had become more competitive, with more airlines taking low-cost strategies in an attempt to attract a wider array of customers, particularly those of the price-conscious variety. With this change, Southwest suddenly had an increase of competitors who were charging similar prices but offering tiered seating options and amenities that Southwest’s egalitarian strategy lacked. While casual customers had no problem with continuing to use Southwest’s simple and cheap services, frequent fliers began to feel as though their consistent patronage was underappreciated when compared to other airlines’ frequent flier privileges. Southwest’s main dilemma was in determining the steps that should be taken in order to maintain their egalitarian strategy that had been a staple of the brand and its core values since its beginnings, while also keeping their frequent fliers satisfied and ensuring their continued patronage (customer retention). Southwest’s rewards program was unique in that the company...
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