Southwest Airlines Increases Loyalty-Program Membership by 20% Through Frequent-Flyer Program Transformation and Integrated Customer-Service Operations
 
 

Southwest Airlines Increases Loyalty-Program Membership by 20% Through Frequent-Flyer Program Transformation and Integrated Customer-Service Operations

Southwest Airlines Co.—the United States’ largest carrier in terms of originating passengers boarded—operates more than 3,500 flights each day and serves 96 destinations in 41 states, the District of Columbia, Puerto Rico, and five near-by international countries.

The airline, which serves more than 100 million customers each year, is well known for its exemplary customer service. But Southwest was not content to rest on its laurels. The company decided to overhaul its highly regarded Rapid Rewards loyalty program to deliver new differentiated value propositions to its customers and to adapt the loyalty program to the airline’s transformation over the last two decades.

To support the program, Southwest worked with Oracle to deploy Oracle’s Siebel Loyalty Manager, Siebel Contact Center, and Oracle Loyalty Analytics—putting a robust IT platform in place to help the airline manage the expected influx of program participants while providing the high level of flexibility and high performance required for ongoing success.

 
Evolving to Address Customer Needs

A word from Southwest Airlines Co.

  • “At Southwest, we’ve had an unwavering commitment to our customers for over forty years. Oracle’s Siebel technology enables us to better meet our customer service goals, while also achieving double digit growth in terms of new members, revenue, and reward-program flight activity” – Jonathan Clarkson, Director, Rapid Rewards Program, Southwest Airlines Co.

Southwest Airlines had evolved into a different carrier since first creating its Rapid Rewards program in the 1990s. At that time, the airline specialized in regional, short-haul flights, and it allocated its rewards accordingly. The program awarded a free ticket whenever a customer accrued 16 flight segments. But as Southwest expanded its route network, becoming a medium- to long-haul carrier and one of the largest airlines in the US, its managers realized that they needed to revise the airline’s credit-based program to give customers better options for rewards and recognition. In addition, the old program’s simplified credit model did not allow customers to use Southwest credits for hotels, car rentals, and other partner rewards.

As the company began to update its program, it needed to modernize the technology supporting it. Southwest’s old IT platform was homegrown and had been developed with a series of expansions and customizations over the course of two decades. There were also many complex interfaces connecting the rewards platform with Southwest’s other enterprise applications.

“We need to interface with a large number of systems, including financial accounting, customer service applications, reservations, kiosks, Southwest.com, the voice response system, and the mobile devices that customers use,” said Murugesan Paramasivam, senior manager of technology, Southwest Airlines.

Southwest selected and deployed Oracle’s Siebel Loyalty Manager, Siebel Contact Center, and Oracle Loyalty Analytics to provide a global customer repository for the airline’s current loyalty members and those not yet in the program.

 
Scaling to Meet Demand

 
Generating Customer and Revenue Growth

 
Moving Forward

 
 

 
 

Challenges

  • Replace home-grown, legacy, loyalty-management platform with a more modern system that has the functionality, flexibility, and scalability required to manage the All New Rapid Rewards frequent-flyer program
  • Provide customers with a loyalty program that offers a more flexible currency, such as “points” as opposed to “credits” which often expired before customers could use them
  • Redesign the loyalty program without negatively affecting the customer experience

Solutions

  • Replaced home-grown, customer-service applications with Oracle’s Siebel applications, providing a consistent customer view across all channels, streamlining written communications, and enhancing the overall passenger experience
  • Implemented Siebel Loyalty Manager and Oracle Loyalty Analytics, which enabled the airline to transition to its All New Rapid Rewards program with many unique loyalty-program features—including no blackout dates 
  • Converted approximately 645 million data rows from legacy systems, including various internal customer-experience applications and the flight reservation system to Siebel Loyalty Manager
  • Switched from the legacy platform to the new Siebel Loyalty Manager-based solution in just a few hours, ensuring a smooth transition to the All New Rapid Rewards frequent flyer program
  • Created a centralized customer data repository to further improve customer service and enable targeted marketing
  • Generated a 20% increase in new loyalty-program members and an additional US$300 million in revenue in the first year of operations for All New Rapid Rewards
  • Exceeded growth expectations for All New Rapid Rewards partners—including Chase Credit Cards—with total partner revenue increasing by 46%, thanks in part to the expanded reward program features
  • Supported members of AirTran’s loyalty programs, following the acquisition of the airline

Why Oracle

“We selected Oracle because the Siebel suite features best aligned with Southwest Airlines’ vision for its frequent-flyer program and customer service. The solution gave us the integration and analytics capabilities we required, while also enabling us to improve the loyalty program, enhance customer account management, create more targeted customer promotions, and improve the functionality of our contact center,” said Jonathan Clarkson, director, Rapid Rewards program, Southwest Airlines.

Implementation Process

Southwest Airlines completed the implementation in two major phases. It deployed Siebel Contact Center in the first phase to support customer e-mail and letter management and to establish a foundation for the phase two Siebel Loyalty Manager implementation.

The second project phase included the launch of Siebel Loyalty Manager, Oracle Loyalty Analytics, and All New Rapid Rewards frequent flyer program. This phase involved a complete loyalty-program redesign and impacted a large number of internal systems—including flight reservations, the enterprise data warehouse, loyalty-program partners, customer service applications, financial accounting systems, campaign management systems, and southwest.com. The company also trained more than 7,000 employees during this period to use the system’s new tools.