BY SCOTT WHITE ON MARCH 8, 2010
A lot of businesses like to promote the fact that they are driven by mission, vision, value or some higher purpose. When times get tough, however, you find out who really walks the talk.
At the Texas Public Relations Association Leadership Day in Austin over the weekend, John McGrath of the Austin ad agency GSD&M offered a great example that business owners can relate to about how making a decision based on your company’s values can pay off even when the experts say it’s the wrong thing to do.
McGrath’s agency handles advertising for Southwest Airlines and if any industry has faced severe challenges during the recent economic downturn, it is the airline industry. During his opening keynote speech to the TPRA, McGrath told of how Wall Street questioned Southwest executives about why they had not jumped on the bandwagon and started charging additional fees for bags like the other airlines. Southwest was leaving millions on the table, according to the financial experts. They were told that customers would understand because when times are tough companies have to look at ways to generate more income. And anyway, everyone else was doing it.
The problem that Southwest management faced, however, was that charging for bags flew in the face of the company’s purpose — giving people the “Freedom” to fly. At Southwest, “freedom” means that their customers enjoy the freedom to roam; the freedom to get away and enjoy themselves or do their business. If families had to spend another $100 to take their bags on vacation, that would be $100 less they would have to spend on their vacation. That’s $100 less the businesses in the markets that Southwest Airlines serves would receive from visitors.
Since charging for bags did not fit the Southwest Airlines “purpose,” Southwest executives decided they would ignore Wall Street and the rest of the industry. They would not charge for bags. In addition, they launched the now iconic “bags fly free” marketing campaign.
And it paid off.
According to McGrath, the increased business that can attributed to Southwest’s decision to let bags fly free was triple what Wall Street had told them they were leaving on the table.
Is Southwest Airlines the perfect company? Of course not. They have their issues, just like any business. But this is a good example of how sticking to your company’s higher purpose when others are abandoning theirs can pay big dividends.
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Scott White is president of Dallas PR and marketing communications agency BizCom Associates and past president of the Texas Public Relations Association.
