Richard Branson and Herb Kelleher, two of the world’s most legendary entrepreneurs, share a similar philosophy: take care of your people first and profits will follow.
I was thinking about Kelleher, Branson, people and profits after reading a 3,200-word New York Times article on Virgin America. Although the airline posted a profit of $8.8 million in its second quarter, it has yet to turn a profit for an entire year. However, as the article points out, it’s already winning the hearts and wallets of many travelers. Virgin America landed the top spot on Consumer Reports most recent airline rankings, earning the highest customer satisfaction score of any domestic U.S airline in many years. “Virgin America is a cut above in the eyes of our readers,” said Amanda Walker, senior editor of Consumer Reports.
Some experts interviewed for the New York Times article predicted that Virgin America’s renowned service might suffer as it takes steps to become profitable. “Joining the real world means doing things that can frustrate travelers,” according to the article. There’s nothing inaccurate about that statement, but if any company—including an airline—gets the people part right, the frustration can be mitigated and long-term success more likely. The article raises the question, “can an airline make money and still be beloved?” As the article correctly points out, Southwest Airlines LUV +1.02% has managed to do both (it ranks second to Virgin America in the Consumer Reports ranking). Take a deeper look and you’ll find that both Virgin Group founder Richard Branson and Southwest Airlines co-founder Herb Kelleher have been following a nearly identical philosophy to build a winning brand: People first; profits second.
Create a culture of service. Southwest started with three planes in 1971 and experts wrote it off. Richard Branson’s Virgin Atlantic began operating with one plane in 1984 and many experts predicted it would fail (For perspective, you might want to see this list of more than 150 now defunct airlines that once operated in the UK). In both cases the experts failed to realize that for profits to materialize, a company must hire and empower the right people who are committed to elevating the customer experience. Herb Kelleher once said, “We tell our people, ‘Don’t worry about profit. Think about customer service.’ Profit is a by-product of customer service. It’s not an end in and of itself.”
Branson publicly cites two reasons for Virgin’s success: 1) challenging the status quo and 2) putting people first. Branson said it’s possible for a company to make people, profits, and ‘planet’ an equal priority. “This [Virgin Atlantic] isn’t a company that just talks about putting employees first or glibly claims that our people are our greatest asset,” Branson once said. “This is a company that simply wouldn’t exist without the energy, the determination, the wit and the wisdom of our people.”
When I interviewed Branson earlier this year he made it very clear that the principle reason Virgin Atlantic succeeded is because it made service a top priority. “They [competitors] had might, but they didn’t have customer service. Customer service is everything in the end,” Branson told me. He believes the same approach will prove to be successful for Virgin America. You can see the excerpt here.
Hire for attitude. Southwest and Virgin America have a nearly identical hiring method that can be captured in the Southwest motto: “Hire for attitude; train for skill.” Some people believe this motto doesn’t extend to pilots. It certainly does, according to Southwest pilots I’ve spoken to. You see, if a pilot gets to the interview stage, he or she knows how to operate a 737. Interview questions are aimed at eliciting stories that give recruiters insight into personality. A recruiter who spent 33 years at Southwest and helped to develop many of its hiring practices was once quoted as saying, “The first thing we look for is the ‘warrior spirit.’ So much of our history was born out of battles — fighting for the right to be an airline, fighting off the big guys who wanted to squash us, now fighting off the low-cost airlines trying to emulate us. We are battle-born, battle-tried people. Anyone we add has to have some of that warrior spirit.”
That ‘warrior spirit’ results in a group of people who enjoy working together and who look out for one another. This attitude directly ties to profitability. Southwest made a name for itself and became profitable largely by getting planes in and out of the gate faster than its competitors (it pioneered the famous 10-minute turnaround at a time when many planes took an hour to get out of the gate). Kelleher directly attributed this industry-leading metric to hiring people with the right attitude: “Attitude is very important and has to be weighed with experience and skills. Someone with a high IQ who is a backbiter is a disaster for your organization. Someone who is outgoing and altruistic and can work convivially will be a huge asset,” he said.
Although security regulations and more carry-on bags have lengthened turn times, Southwest still leads the industry because, like a polished pit crew in auto racing, each member of the team feels responsible for the success of their colleagues. “We genuinely like each other,” one Southwest pilot told me. “And when you like each other, you have each others’ backs. We take one for the team.”
Virgin America also places a premium on hiring for attitude. The airline is very selective, hiring only about 1 out of 100 people who apply. Virgin America CEO, David Cush, told me that the airline seeks out people who are 1) positive 2) friendly and 3) who see life as “glass half-full.” Finding the right people is 90 percent of the battle, he says. People first; profits second.
Empower employees to do the right thing. “Empowerment” is the key word across all great customer service brands I’ve studied, including Southwest and Virgin America. Empowerment simply means that employees are trusted and empowered to do what’s in the best interest of the customer. For example, it’s not uncommon to hear stories of Southwest pilots who order pizzas for their passengers and pay for the pies on their credit cards to keep passengers happy when the plane had to be diverted to a smaller, regional airport due to weather conditions. Richard Branson has been known to personally call individuals or entire crews at Virgin Atlantic and Virgin America who took the initiative to make a good customer experience and make it even better.
In this excerpt from my interview with Virgin America CEO David Cush, he said “empowerment” is the key to a great customer experience.
Neither Kelleher nor Branson run day-to-day operations at the respective airlines they founded, yet both men remain visible and their philosophy is constantly on the minds of those who work for them. Gary Kelly, the CEO of Southwest Airlines, could be channeling Kelleher when he says, “The difference at Southwest is this: Everything begins and ends with our people. If we keep our employees happy and engaged, they will keep our customers happy, who will reward us with their loyalty. That repeat business helps our bottom line and creates value for our shareholders.”
Southwest and Virgin America win because its leaders know the difference between what they do and what business they’re in. What they do is fly people from point A to point B. Who they are is a company of people whose purpose is to deliver the highest level of service.
About the Author
Carmine Gallo is the communications coach for the world’s most admired brands. He is a popular keynote speaker and author of several books, including The Apple AAPL -0.19% Experience, the first book to reveal the secrets behind the stunning success of the Apple Retail Store. Follow Carmine on Facebook or Twitter.