How Southwest Measures the Success of "Bags Fly Free"

I spent last week at Southwest Airlines (LUV) Media Day and one of the most commonly asked questions was addressed head-on in the first session. With Southwest deciding to forgo so much money in bag fees, how was it measuring success when the numbers aren't readily available? Kevin Krone, VP of marketing, sales, and distribution took us through it.

The proposition is that customers hate bag fees and Southwest does what's right by the customer. It would rather win a new customer or win more business from an existing customer than push them away by charging hated fees. But it's hard for Southwest to measure exactly how much business it gets directly because of bag fees, so it has to rely on surveying for a lot of its analysis.

Kevin walked us through some survey results that were directly tied to the kickoff of the Southwest Bags Fly Free campaign. Remember, two free bags have always been allowed, but it was only in the last couple years or so that the marketing really ramped up to take full advantage of the differentiation as other airlines added fees.

After the first TV ad went up, Southwest did some testing. The surveys were concentrated in cities where Southwest flew, but responses were from a mix of Southwest customers and non-customers. The results would make any marketer drool.

90 percent liked the ad
84 percent agreed that "It tells me the brand is not like other brands"
73 percent agreed that "It motivates me to choose this brand over other ones"
84 percent had a higher perception of Southwest based on seeing the ad

Not too shabby, but how important was it in the decision-making process? Southwest surveyed people on what matters most when buying a ticket, and the top results weren't surprising. Everyone put safety first, but then business travelers put the usual schedule and price next. But below that was "does not charge unreasonable fees." For leisure travelers, price came second but then it was the fee thing again, ahead of schedule. I'm guessing the results here are skewed since saying "unreasonable" already biases results, but clearly fees are top of mind these days, so Southwest went to capitalize even further. The results continued to improve.

In one survey, Southwest was shown to be the airline people consider flying first by 28 percent of respondents in 3Q 2009. By 2Q 2010, that had risen steadily up to 35 percent.

Another interesting comparison is to look at a survey that's been given over several years. Looking at this from 2006 to 2008 and then 2010, the increases are remarkable.

"It's my favorite airline and I'd go out of my way to fly with them/one of the first I'd consider flying" went from 42 percent to 58 percent with all of the gain coming from the coveted business traveler.
"It's the best airline out there/one of the better ones" went from 56 percent to 70 percent.
"Really like and have a lot/something in common with" went from 54 percent to 64 percent.

The increase in brand identification was phenomenal and it does show from a qualitative standpoint, that Southwest is doing things right.

But what about from a quantitative standpoint? That's harder to do. Southwest sees a shift in its favor, but it can't be pinned directly to a single ad. There are too many other variables out there. But with the airline significantly improving its standing and making good money, it's hard to argue that Southwest has taken the wrong path. So what's next on the marketing side for Southwest? I'll talk about that tomorrow.

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Photo via Flickr user randomduck/CC 2.0

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