"They Love Cash. We Love Customers!"

There are a lot of TV and radio ads out there that we all laugh at and remember.  Like the Superbowl FedEx commercial where the pterodactyl attempting to deliver the stick gets eaten by the T-Rex... should have used FedEx.  Or the Geico "woodchucks chucking wood", or Maxwell the little piggy going "Wee Wee Wee" all the way home in the back of Mrs. A's car.

Laughing at an ad, however, is different from an ad being truly effective.  Southwest Airlines has some of the best ads going, in my opinion, not just because they are funny, but because at the end of the ad you know something about their company.  You feel like you have learned something about them that may be beneficial to you at some point.

One recent ad on the radio caught my attention for a couple of reasons.  The ad is condemning the practice by other airlines of charging "change fees" of $100-$150 in addition to fare difference.  At the end of the ad, an incredulous lady asks, "How do they get away with that?", and the man answers in a somewhat triumphant voice, "They love cash. We love customers!".

Southwest doesn't charge a change fee, and those that frequently fly Southwest know this already (and it is a key reason for their loyalty).  For anybody that is a student of successful businesses, this ad tells us two key things.  First, there is a reason they don't have to charge fees for things that other airlines are charging fees for.  No fees for extra bags, and no fees for changing a ticket -- the question you should be asking is how and why?  While other airlines are struggling to make a profit, Southwest has weathered the bad economy because they have an extremely efficient business.  They don't charge extra because it doesn't cost them extra.  To put it simply, they run a better business.

Even so, just because they don't have to charge extra they still could.  That would be gravy, right?  That leads to the second key point: they have made a strategic decision based on the belief that they will benefit more by not following the crowd.  Let's be real; they aren't purely benevolent.  If they believed they were giving away cash, they wouldn't be doing it.  What they are doing is bringing in more cash by gobbling up market share.  Their belief is that customers will flock to them because their efficient business allows them to provide better value.  More customers means more profit dollars, even though they make less gravy off of each customer.  All signs point to their strategy as working.

So what?  The point is that every company has to make a choice between two seemingly opposite ends of the spectrum.  On one end is cash; on the other end is more customers.  Charge more because you have a valid reason and because your costs are higher, knowing that you will lose some customers... or because you anticipate many more customers, keep the charges low.  Those that run an efficient business realize that cash and customers aren't opposite after all.