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The StoryBrand Podcast
#18: Southwest—The Genius of ‘Bags Fly Free’ and What Happened When It Changed
00:37:34
Southwest Airlines built one of the strongest brands in the world by doing one thing better than almost anyone: clear, clever messaging that made customers feel like family. “Bags fly free” was more than a tagline. It was a promise that set them...
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- [00:00]
Donald Miller
Foreign. You're listening to the why that Work podcast presented by StoryBrand AI. If you've ever wondered why certain brands, trends, or cultural phenomena find success while others don't, you're in the right place. Every week, we unpack why something worked, then give you actionable insights that you can use in your own life. Now let's dive in with your hosts, Donald Miller and Kyle Reed.
- [00:25]
Kyle Reed
Don, did you know that you cannot have your bags travel for free anymore on Southwest? I've heard about this announcement.
- [00:31]
Donald Miller
Yeah, I've heard a little bit about so back.
- [00:33]
Kyle Reed
I mean, this is like recent. Like back in March, they came out and the very thing they're known for, their tagline, Bags Fly Free.
- [00:39]
Donald Miller
One of their taglines, what a.
- [00:40]
Kyle Reed
What a great marketing message. They're going back on that now, and it is causing a quite a conversation on the Internet.
- [00:49]
Donald Miller
First of all, let's acknowledge something Southwest probably has in terms of airlines and maybe even large corporations, the best messaging history, the way that they position the differentiated themselves from everybody charging for bags. What don't you like about bags? Why don't they like bags? What's wrong with bags? Absolutely brilliant and memorable and playful and fun. Absolutely incredible company in terms of getting a message out there and distilling it into sound bites, repeating those sound bites. So this is an anomaly for them. And we'll get into why it didn't work. On the why that Worked podcast, we'll get into why it didn't work. Let me just open up by saying I think it's a good time to buy stock in Southwest Airlines. Potentially. But. Right. Yeah. When you build your brand on discount prices and not charging people for bags, it's a real challenge to kind of go back on that. And they. There's a way to handle it. And I do think they didn't handle it perfectly. And there's still plenty of time.
- [02:01]
Kyle Reed
Yeah. And I think that's a great. That's kind of the reason I wanted to talk about this, because I think, you know, you being one of the foremost messaging experts, how do you navigate this? I mean, we were doing some prep for the show, and there's estimates that they will lose $200 million.
- [02:17]
Donald Miller
That's what we're looking at. What Quarter 2, 20, 25.
- [02:19]
Kyle Reed
Just on this announcement alone. And. And again, I agree with you. I think they've been incredibly clever with their marketing. They've done a great job of making you feel like it's a. It's an Everyman's. Like, I like. I fly Southwest all The time I have the credit card, I do all the things. I think they've been counterculture in the way that they, you know, you can sit wherever you want. They've been really, really smart. And truth be told, like, I get it, like, it's expensive to run an airline and they had to make this decision. I'd be curious from you, how could a brand think about relaying bad news to the customers?
- [02:53]
Donald Miller
Well, let's also first understand that this is not a money grab from Southwest Airlines. One of the things that Southwest built its entire airline on was they, they bought an enormous amount of fuel at a fixed price really early. Very smart, Very smart. And allowed them to charge less when I think it was around Christmas or something. Well, first of all, that expires, so now you're paying more for fuel. So you've got to make that up. The other thing that's thing number one that is causing them to make this decision, in my opinion, the second would be allegiant airlines. Breeze is a new airline coming up, Spirit Airlines. All of a sudden, Southwest has some serious competition in a commoditized market. So there's a race to the bottom in terms of pricing. And they're just, you know, they can't go any lower than they're going. They're bigger than these guys really have bigger overhead and so they've got to raise their prices there. Secondly, airlines make a lot of money off of first class and they now they're going, okay, we can't compete with the real discount. Airlines are charging you for a bottle of water. Right. And that's just not our. So very, very difficult decisions would have to be made here. So this is not a money grab. So one of the. Now the other thing that you have to understand in this messaging situation is all you can do is mitigate damage. You're not coming out of this a winner. You have built your entire reputation on the airline for the people, for the common man. We're going to get you to grandma's house, you know, that sort of thing. And you're going to have to change strategies if you want to compete with Delta and United and all that sort of stuff. So there's several levels of this. The first thing you have to do if you're going to raise prices, let's just get this out there. In terms of messaging, you have to raise prices or change your system by expressing the value that you're about to get. So you never actually say we're raising our prices because of inflation. Brian Canlis Ran Canlis Restaurant for years and is now coming to Nashville. But I went to dinner with Brian once and the restaurant that we were eating at said, okay, we've got a table for you, but we need it back at 7:30. And Brian said, that's fine, but turned around and said, don never make your problem the customer's problem. And I said, well, how would you handle that? How do you guys handle that at Canlis? Well, we would never say that we need your table at 7:30. What we're going to do at 7:15 is we're going to give you a tour of the kitchen. And now we've got the table. Would you guys like a tour of the kitchen to end your night? Yeah. And you just. Nobody knows that you actually needed that table. You said you made the customer feel like. And then they take them up on the roof at Canlis Restaurant, give them an extra glass of wine and say, enjoy the sunset on us. And now they're in a better place. The other thing is that while choosing your own seat and lining up, I've never liked that system. I mean, I'll do it because it's getting me back to Nashville to see my family. But there's plenty, plenty, plenty of customers who would actually rather have an assigned seat. And so one of the things that you have to do is you have to say, enough of our customers have requested assigned seating that we're changing this policy and giving our customers what they want. Now, nobody's asking that you charge for the bag, right? So that's another one. But I think what, you know, so you always want to say, here's the value our customers have been asking for first class, blah, blah, blah. One of the things, and of course this is in hindsight, you want to actually release something like a white paper that lets the press know, that lets the sort of thought leader class, the podcast class, know that this is the business decision that we are having to make and here's our competition. And actually let people into the board, the C suite in terms of the decision making process. Now, there's not many people going to read that, but it's going to give the people who have a microphone the chance to push back and actually say, hey, this is why this is a smart decision for Southwest. And it's why, you know, you don't always do that. But in an instant like this, especially in hindsight, I have the benefit of hindsight. That was probably a. That would have been a very, very good first move. The second thing is that what has worked For Southwest for years has been humor and, you know, very funny, very witty. Their flight attendants there are just best in class in terms of their cheerful attitudes. They're absolutely amazing. Lots of funny jokes, things like that. One of the things that you have to remember about humor in messaging is that it is always good for a discount brand. It is never good for a luxury brand. So when you are being humorous about raising prices, humorous about it's going to bomb every single time. That's why Bud Light is humorous. But if you're promoting some sort of wine, you can't be funny about $1,000 bottle of wine. You can't be funny about Rolex, you can't be funny about BMW, you can't be funny about Mercedes, you can be funny about Ikea. You know, discount brands, you can use humor. You've got to actually use drama and sophistication when you're messaging something higher. Now, the other thing is they're actually changing their entire business strategy. So you do that with a white paper. You do that by saying, our customers have asked for this. And you do that by saying, this is now a necessity for the survival of this airline. To do this, people, there's going to be people who complain. You're not going to get around that. But people, many, many people, giant percentages of the population will show you an enormous amount of grace. The other thing that I want business leaders to understand about just the market dynamics is the less somebody pays for something, the more they complain. So the fact that you are a discount airline means you are you. When people pay less for something, they don't appreciate it. What they actually do is they justify in their mind the price that they paid. So if you're on a flight for $39, you're going to try to find some reason that was only worth $39. And that means you were just setting yourself up to be criticized all day long. We did this. I did a conference years ago, the Storyline conference, where a quarter of the seats were pay whatever you wanted. If you wanted a better seat and an extra breakfast and time to meet Don and some extra sessions, then we'd start like $250 tickets or something like that. It was always very cost. Pretty good. But listen, if you didn't have the money, my heart was like, I want you to be there anyway. Just give me five bucks. Let's go. I'll lose money on it. I want you in the room. And what we found was in customer service, 95% of the complaints were people who literally paid what they wanted. And they were justifying the fact that they didn't pay very much. Well, it actually wasn't worth very much. You didn't give me anything. I don't owe you anything. You didn't do me a favor. Any favors here. So all of that together, I think, kind of created this little perfect storm of negativity around Southwest Airlines. The fact that the market was saying they're going to have to do something, the fact that the customer base had been taught to think of you as a discount airline, it was like they feel justified.
- [10:39]
Kyle Reed
The customer base feels like you owe this to me.
- [10:41]
Donald Miller
That's right. And look, people online are just really, really mean. I guarantee you what's going to happen is Southwest is going to survive this, but they're going to have to change the sort of brand identity from a discount airline to somebody who competes with United. Look, they've got the gates. They've got. I mean, they basically own Love Field. You know, they own Chicago, Midway.
- [11:03]
Kyle Reed
Almost everybody has a whole terminal just devoted to Southwest Airlines.
- [11:06]
Donald Miller
Some airlines are just Southwest. I mean, some entire airports are pretty much only Southwest Airlines. You know, they're in a very, very powerful position. We'll see if they can make the identity switch. But I think the two things that I would say are, don't use humor. Be really, really honest. You know, deliver. Put out a white paper on why this is the business decision that the. The executive board chose to make. So that way the. The thought leader class would actually understand and study the decision they could push back. Look, you know, what do you want to do? Go bankrupt, right? And also don't do it. None of this is done for money. This is done so that you can pay your employees and you can continue to serve customers as well as you possibly can. And it's not about a money grab. Now, everybody kind of knows that. But because you didn't say it, it's not a talking point.
- [12:02]
Kyle Reed
They didn't get ahead of the narrative.
- [12:04]
Donald Miller
That's right.
- [12:05]
Kyle Reed
They let the narrative define it. What I hear you saying is it's kind of own the problem that, you know, hey, I'm going to get ahead of this. I'm going to share. Here's how we came to this decision. It almost seems like the customer base is kind of saying, show me your work. How did you come? Like, I'm going to make up a narrative in my head.
- [12:24]
Donald Miller
Well, they're not even saying that. They just see an opportunity to attack. And, you know, that's not very many people, but they're Very loud. And, you know, it's unfortunate, but every. That's. That's. That's business.
- [12:37]
Kyle Reed
Yeah, I, you know, I think it's. It's pretty evident there was a couple missteps. And again, you've mentioned it. In hindsight, it's easy for us to sit here and kind of play Monday morning quarterback on this. The move from the announcement to then trying to use humor to soften the blow just did not land whatsoever. I'm also really fascinated, and I really would love to hear your thoughts on this. Is when you make a core message of your business. Something.
- [13:00]
Donald Miller
Yeah. You say bad discount or whatever that.
- [13:03]
Kyle Reed
Is, and then you change it. How is a brain. Because I'm sure there are people listening to that. That for a long time that was. They had a message, they went on and they had to either make a hard decision or. Or they wanted to pivot to something else. How does a brand as big as Southwest down to the solopreneur where you're saying, hey, we've got to make this decision. This is really tough. How do you effectively navigate that and figure out, you know, you're so big on talking points.
- [13:31]
Donald Miller
Yeah.
- [13:31]
Kyle Reed
I mean, you've got.
- [13:32]
Donald Miller
You've got to put the word. You know, the talking points are being flown at you because there no talking points were actually given to anybody to actually say. So you've got to be. You've got to have a counter argument to what you know the criticism is going to be. And you've got to get it out there in sound bites so that people can repeat it for you. That's what you've got to do. Listen, we went through something really similar. You know, I wrote Building a story Brand. It's a framework on. Help you clarify your message. We certified six or seven hundred marketing agencies to make websites and write copy and all that sort of stuff. And all of a sudden, AI is doing their jobs. I mean, it's just doing it all. And so we said, okay, how do we actually get all of these people more business? What does this make possible? Because they're all panicking. So we had to really sit down and nail the talking points. And so we said, okay, well, if we do storybrand AI, we'll make it very cost effective. And what we can do is position our retrain and position these storybrand certified coaches as strategists. So we're gonna help you use AI, we're gonna employ AI and we're gonna come up with a strategy that you need. And also, just the fact that Our AI platform exists. There's so many marketing and messaging assets that people didn't even know they needed. And they get in there and they realize why I wish I had. I'm not a full time marketer, even with AI. I need somebody to help me. We have strategically designed this to grow your business. We, we have, we have very plug and play easy ways for you to actually use our AI platform. There's an affiliate commission for you. Those talking points were nailed down and repeated as we brought what we knew to the market would be, would feel like bad news. I never once thought of it as bad news. I knew this was going to actually grow. Anybody who was with us, I knew this was going to grow their business. And it has. We've seen it. But you have to understand that people aren't in the boardroom with you. We had very open conversations at our annual summit with all of our coaches in the room saying, here's what we're planning on doing. We took questions from audiences. It wasn't easy. And all the people, by the way, who can't pivot and can't change and can't vacillate with the market demands, they left and it was like, well, you weren't going to survive anyway. This is business. Things change. And we've got to be able to iterate and change too. So it actually ended up being a real positive. But I think I understood from the very beginning we got to be on top of this narrative and we got to get the narrative out. So I would be saying things if I were Southwest Airlines, like, because we're able to do this, we can get you to more cities, we can get planes to be on time. We can stay alive. We can, we can be a better service for your family so that you can sit together if you want. You know, there's, there's an upside and a downside. And I would actually, if I was the CEO, I would say because of these changes, here's the downside that you can expect. One is we've always said we're never going to. We don't charge for bags. You're going to be shocked because we're actually charging for bags. The reason is if we don't do that, we cannot compete in this industry anymore. We will literally go under. That means we won't be friends anymore. We won't get you where you need to go and somebody else is going to start charging. We're going to do that because we've made this decision. Here's the many ways we're able to serve you. We're opening up 47 new routes. We're letting your family pick weeks in advance where they're going to sit. So you know that feeling of stress when you're getting on a plane wondering if you're going to sit in the middle seat or if you're going to be in the back of the airline, that stress is going to be gone because you booked your ticket on time or early or whatever. You get the negative in there and then it's positive, positive, positive, positive, positive, positive. And then when people push back, you have some sound bites that just say, we had to innovate in order to serve people. For the next 50 years, we will continue to serve American families and get people everywhere we need to go. And all you did there was you mitigated an enormous amount of damage. That's all you did. It's not a positive. There's times when your messaging just has to mitigate damage. That's its job. And I think they're gonna, you know, they're very, very smart.
- [18:06]
Kyle Reed
Yeah.
- [18:07]
Donald Miller
And I mean it when I say probably not a bad time to buy stock. Now, you may know something I don't know. I heard you saying earlier we're not.
- [18:13]
Kyle Reed
A financial advisor podcast, but I like that thought. I. Well, I think too, it's like not to bring it always back to this, but it is the story brand framework. When you know the problem your customer's facing, that's how you get those talking points. I mean, I've learned a lot working with you, but that is such a. It's just tattooed into my brain.
- [18:32]
Donald Miller
Yeah.
- [18:33]
Kyle Reed
And so when you know that that's how you can communicate that if you.
- [18:38]
Donald Miller
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- [19:34]
You want to reverse Engineer this question. Why did we make these changes from the perspective of loving our customers and serving them better?
- [19:44]
Kyle Reed
Yeah, that's right.
- [19:45]
Donald Miller
That's it. And then you just, you get down, you get out a napkin, and you reverse engineer everything from that perspective and then you distill that message into three or four talking points and you repeat the hell out of those talking points.
- [19:56]
Kyle Reed
Yeah, yeah. And it's like, it would be so tempting. There's a couple of things I think too, is, is if I was in that leaders, is either bury your head in the sand and hope that it goes away, or sit there and go, well, here's all the reasons why I have to charge. And. And we're losing money. And like, the customer doesn't care. No, they don't care about.
- [20:13]
Donald Miller
Yeah, this is a. This is a hard thing for people to understand. Business leaders to understand. I think most of the people who listen to our podcast own a business or lead a business. Human beings are loyal to opportunity.
- [20:25]
Kyle Reed
Yeah.
- [20:25]
Donald Miller
And that's it.
- [20:26]
Kyle Reed
That's right. That's a great point.
- [20:28]
Donald Miller
It feels like you're loyal to a brand, or it feels like you're loyal to a company that you work for, or it feels like you're loyal to, with the exception of perhaps your family, you're really just loyal to opportunity. And that doesn't make you a bad person. It's actually a survival mechanism. We are loyal to survival assets, period. We're not loyal to brands. And you think you're loyal to a brand, but as soon as they stop being a survival asset, you're off that so fast. So I think what you have to remember what south, first of all, don't take this personally. Second is if you want to survive in business, be a survival asset. Third, if you are a survival asset and you haven't told people how you are a survival asset, they don't know that you are. And so you have to break it down into sound bites and don't look, when people say, we're not doing storybrain anymore, blah, blah, blah, I sit and go, okay, are we still a survival asset to them? And have we communicated that? And if we haven't communicated that, that's not their fault, it's my fault. And by the way, if I'm a good human being and I'm a good business leader and I run a good company, you know what? I am a survival asset. Why would I expect people. If I expect people to be loyal to me when I am not helping them survive and thrive, I'm a jerk.
- [21:49]
Kyle Reed
Yeah, I'm a jerk.
- [21:50]
Donald Miller
That's not a good relationship. I should always be committed to helping them survive and thrive.
- [21:54]
Kyle Reed
We've seen brands make that mistake right.
- [21:55]
Donald Miller
Where they think they're going to become entitled.
- [21:58]
Kyle Reed
Yeah, they think that you're loyal to me because of all I've done for you. It's almost like every day you're showing up and trying to earn that survival mechanism.
- [22:07]
Donald Miller
That's a message of after all I've done for these customers. They're attacking us like this. You know where you say that message into your pillow at night? That's where you say it into your.
- [22:18]
Kyle Reed
Journal, into your journal that you burn.
- [22:20]
Donald Miller
Because it's a self pity victim mindset. And we're looking for guides in the businesses that we trust. We're not looking for victims. Victims are weak. So they haven't done that, by the way. They haven't done anything like that. But I would come back and I would. But I'd say, here's what this allows us to give you. And then also just expect people to be pretty negative about it. And I would even say, hey, look, we aim to continue to be a great value for Americans and the American family. We intend to be an incredible value to you and we are always committed to that. These are why these decisions were necessary. I think you'd lead with that. But the taste in everybody's mouth is you're actually getting an upgrade. If you fly with Southwest. Everybody's getting an upgrade.
- [23:13]
Kyle Reed
Yeah. Because it could very quickly go to people's. You're taking advantage of me. And you almost have to get ahead of that in the way that you're sharing that message.
- [23:21]
Donald Miller
Yeah, look, the controlling idea. I even like that controlling idea. For Southwest Airlines. We're giving our customers an upgrade.
- [23:28]
Kyle Reed
Yeah.
- [23:28]
Donald Miller
Everybody knows what an upgrade is, right?
- [23:30]
Kyle Reed
That's right.
- [23:30]
Donald Miller
On an airline.
- [23:31]
Kyle Reed
Yeah.
- [23:31]
Donald Miller
It's good messaging.
- [23:32]
Kyle Reed
I wanted to run through this was.
- [23:33]
Donald Miller
Necessary in order for us to give our customers an upgrade.
- [23:35]
Kyle Reed
I wanted to run their messaging campaign by you, actually. So the thing that they posted when they announced this was they said, new policies, same heart. Like, evaluate that from just a messaging. Just like, let's remove this.
- [23:49]
Donald Miller
Look, it's elusive and it's vague and the controlling idea needs to be. Here's why you, the customer, are about to get a better deal.
- [24:03]
Kyle Reed
Upgrade's doing a lot of. If you go online, that doesn't work.
- [24:07]
Donald Miller
A lot of that. What is it? Same heart. What's the first part?
- [24:11]
Kyle Reed
New policies, same heart, same.
- [24:13]
Donald Miller
Yeah, I mean, first of all, what are the new policies. You're scaring me with that. And then the same heart. You know what this sounds like? This sounds like mommy and daddy are not going to be together anymore, but we still love you. Right? It's just like. No, there's no. That doesn't make the cough syrup taste any better. I think that's too elusive. Three things the customer's getting. They're getting to choose where they sit, they're getting more destinations to choose from, and they're getting an easier booking service. Just give us the three things. And here's the three ways we're upgrading your travel.
- [25:01]
Kyle Reed
Yeah, that line is so good, we're giving an upgrade. Because what it also does is back to the beginning of this conversation.
- [25:06]
Donald Miller
Upgrading your experience. Just say Southwest Airlines. Upgrading your experience. And look, people will, you know, if you put out the little white paper just like three pages on everything that changed in the market, then, you know, you know, Dyer of a CEO and Joe Rogan will. Will know those talking points and be able to say, well, here's what they're saying.
- [25:25]
Kyle Reed
Well, and this also goes back to, again, the brand script importance, right? Because if you. You land in that and you know who you're talking to. You know, that was one of my favorite shifts when I kind of realized that was, oh, you have a brand script for multiple different people. You're communicating with the brand script you use for the. The wholesaler is different than your customers. So imagine if they started there and they go, okay, what. What's the messaging campaign we want to work with? With like cnbc, who's going to announce this versus the social media to the. The mom who's responsible for booking the travel, who now is trying to figure out how many bad things.
- [26:01]
Donald Miller
Imagine the CEO of Southwest Airlines going on MSNBC and saying, we just came to the realization as a board of directors that we were going to have to upgrade the Southwest experience. And you frame it that way because you know what it is? It's an upgrade like getting a ticket and having a seat and knowing what that is, it's an upgrade. If they do add first class, it's an upgrade. And upgrades cost a little more. But then you need to really quickly say, we still intend to be the best value in the air. And now all you've done is you've mitigated damage. So let's set expectations. Everybody's not gonna go, ah, I love Southwest. I'm so willing to pay for that bag. You know, at least we're saying, yeah, you're gonna Pay more, but you're gonna get more. And that's how we're gonna stay in the game.
- [26:55]
Kyle Reed
So. And you know what's interesting?
- [26:56]
Donald Miller
It's also necessary.
- [26:57]
Kyle Reed
It is. And it hit me. I'm thinking about this. You know, I have YouTube TV.
- [27:02]
Donald Miller
I do, too. It's the best ever.
- [27:04]
Kyle Reed
It is. But so, okay, so what's interesting about that, when YouTube TV came out, the reason I switched, it was so much cheaper with basically the same value and great tech. But over the years, over three years, my bill has risen 10 to $15 every year. And the way they've rolled that out is they just send an email, hey, we're just upgrading. We're changing your bill. And it's fascinating how there was backlash to that because they didn't do the very things you're talking about. Netflix has kind of done the same thing. But Netflix, I think, has actually come in with a mindset of for us to continue to develop our own original content, to continue to give you this value that this is the thing you go to every night with, you know, when you and your wife get the kids to bed and you finally sit down. Because we have these great shows that you all love. Here's how we do that. And this is why we're raising the price versus just kind of this blanket, hey, policy change. We're changing. You know, it was, you know, 80 bucks. It's now $129. You know, good luck. It's such an interesting avoidable. You're still going to face backlash. Absolutely.
- [28:10]
Donald Miller
But it's so avoidable. Yeah, that's another tough one, because probably the negotiations in their contracts with ESPN and CBS and ABC and then Nature Channel and all that kind of stuff, those people are probably charging them more and they're just passing along the. Yep. You know, but I think you actually, you have to communicate that. I think you can actually just say, if you're YouTube TV, look, we run off a 24% profit margin. We just stick with that 24% profit margin. That's how we pay our bills. That's how we do everything that we.
- [28:47]
Kyle Reed
Do to give you great service. This is how we do.
- [28:49]
Donald Miller
To give you amazing service to be the best television experience that there is. Now, I don't know if that's true of them. Sounds good that, you know, it could be a money grab.
- [28:56]
Kyle Reed
Yeah, yeah, yeah.
- [28:56]
Donald Miller
But I really don't know. But, you know, I think you can be honest there. But if you actually come out, let's say you're YouTube TV and you come out and you say, you know, if you take my advice and that is, we're adding $25 to your monthly bill, but we've added like, National Geographic 3. Then everybody goes, I don't need National Geographic 3. I'd rather have my 25 bucks back. So in that particular instance, you actually can't communicate.
- [29:22]
Kyle Reed
Yeah.
- [29:23]
Donald Miller
The added value that you're giving because just doesn't feel like added value. I think you actually have to be honest and say, look, we need a 24% profit margin to make ends meet, and people are charging us more, therefore we're having to increase that cost. And I think there can be a little bit of honesty there. The other thing that they have probably calculated is that people don't pay attention to that. They're habituated into the system and they're probably just better off slipping it under the door and not communicated it, not bringing very much attention to it. That wouldn't surprise you. I'm not saying that's a good thing. That's probably the reality.
- [30:01]
Kyle Reed
You know, if YouTube TV came out and said, hey, you know you love that quad box where you get to watch all the games. You know you love that. You know how you love that. You can watch it anywhere you go. You know how you love that? It's really, you know, well done and made. That's how we keep doing this great service.
- [30:15]
Donald Miller
Yeah. And what I would do in that instance is I would put them separately. I would actually send out the message saying we're raising prices in order to keep our 24% profit margin. And then in a separate email, maybe a week later, I would say, we're adding these amazing features. That way people aren't saying. People aren't putting an economic. A monetary number on the actual upgrade. Yeah.
- [30:40]
Kyle Reed
Because then you could justify canceling that because, like, I don't really use that.
- [30:43]
Donald Miller
That's exactly it. Because you're saying that's not working when you say, well, they're just running a 24%. I don't mind paying a 24% profit margin to these guys. I mean, they certainly deserve to make money. They've invented something really incredible here. But then I would actually separate the value. So let's make a rule here for everybody listening to the podcast. If you're having to raise prices and you cannot communicate a value that you're actually adding, that feels like a great deal. You need to actually make that a very short business statement about we try to run an X profit margin and so we're having to raise prices. We're all dealing with inflation, that sort of thing, and then send out something else. But you've got to continue to communicate. Nobody notices value. They have to read it or hear about it.
- [31:37]
Kyle Reed
That's right.
- [31:38]
Donald Miller
It has to be told to them. Nobody notices it. So you've got to do that very separately. There's one of my favorite coffee shops is a place here in Nashville called Stay Golden. And Stay golden is run by a friend of mine named Jamie. The chef is Roger. Chris is the kind of manager there. And it's like my Cheers. I walk in and he had a coffee subscription program for $69 a month. I think I was paying unlimited lattes. And I'm an oat milk latte guy, so that's about seven bucks, about ten in. I'm making money. And he changed locations and in the new location, started to lose money off of the coffee subscription program because people were not buying anything else. They were just going in and taking up a seat. Yeah, taking up a seat and not buying anything else. And so he sent out an email. And the email basically said, we are canceling all coffee subscriptions. This is a very difficult decision. We know that you've really loved this. However, coffee prices have increased. The number of people actually purchasing anything other than coffee has gone, has plummeted, and then more people are taking advantage of the program every day. So we're actually losing money on this offer. And so because of that, in order to stay in business and pay our staff and continue to serve you the best we possibly can, we are canceling this program stuff. Really well done. I mean, good on you, Jamie. By the way, go buy Stay golden and pay full price for their coffee. They're on 51st across the street from our office.
- [33:15]
Kyle Reed
That's right.
- [33:16]
Donald Miller
Well done, man. That's not an easy email to send. It was. You know, when all else fails, maybe we should tell the truth.
- [33:25]
Kyle Reed
Right.
- [33:27]
Donald Miller
I'm saying that facetiously because it should always be the first thing that you do.
- [33:32]
Kyle Reed
Yeah, well. And if I get that email, I go, oh, yeah, makes sense. Like, that stinks. I like that. But I also love them, and that is loyalty. That is where the. He didn't assume that you could just send an email out saying, hey, we're canceling this. Sorry, we're losing money. He showed his work is what it reminds me of a little bit. Like, how did you come to the board?
- [33:50]
Donald Miller
Let you into the board.
- [33:51]
Kyle Reed
Yeah. And I think, you know, to bring this back to the conversation and just to Southwest, I think the reality is the Kind of final thought is, great brains have to evolve. You have to. You cannot.
- [34:02]
Donald Miller
Things change, you're going to die.
- [34:04]
Kyle Reed
Yeah. And that comes with a cost at times a hard. There are moments where we get to announce great things here, and then there are moments where we have to step up to the plate and go, hey, AI is not going anywhere. You know, we have to respond to this Southwest, hey, For us to continue to provide great healthcare and all those things for our companies and to give you the best service, these are the tough decisions we had to make. And here's how we came to that decision. That's the thing I'm walking away from this conversation is, is that kind of every brain, every person listening, there are moments in life you have to make those tough decisions, and it really matters.
- [34:42]
Donald Miller
Got to figure out how to communicate it. And, you know, what I do for a living is go into these boardrooms and say, here's how I think you should say it. And to Southwest Airlines, I think it's something about upgrading your Southwest experience. In order to upgrade your Southwest experience, we are, or by necessity, we are having to upgrade your Southwest experience. Many of you are not used to paying for bags. You might be surprised when we actually charge you for a bag. This is necessary for us to upgrade your Southwest experience. Upgrade your Southwest experience. Those four words is the controlling idea. And you're going to repeat them. You're going to beat them like a drum.
- [35:19]
Kyle Reed
Yep.
- [35:20]
Donald Miller
And you're going to put that in the mouth of every single employee, every pilot, every stewards, and then you're going to. You're going to be able to demonstrate, here's how we're doing it. That tension, that knot in your belly wondering where you're going to sit, we're taking that away. You know, the city that you weren't able to get to, that layover where, you know, you're two hours in Phoenix. That layover for many of you is going to go away because we're going to be able to get you a direct flight on and on and on. Here's how we're upgrading, and you explain the value that you're giving to people. And again, that mitigates damage.
- [35:52]
Kyle Reed
That's right. And that's my favorite thing about messaging campaigns, is when you find that word, the unlock, which in this instance is upgrade, then you get creative because you can spread that everywhere.
- [36:02]
Donald Miller
Yep.
- [36:03]
Kyle Reed
Well, it's been a great conversation, Donna. I'll be very interested to watch how this continues to play out for Southwest and for other brands as they navigate this. It's good luck to them. Yeah.
- [36:12]
Donald Miller
You know, I mean, good luck to them. It's not going to change my human being. I'm loyal to opportunity. If I get a first class ticket for less money somewhere, I'm going with the other airline. But at the same time, Southwest has made me happy many, many times. They're going to continue to do it.
- [36:26]
Kyle Reed
That's right. And listen, hey, we, we, we really strive to provide tools for business owners and their marketing and messaging campaigns. We do that at storybrand AI. There are several tools on there that we don't make money off of. They are free. And then there are other tools on there that you can pay for that are incredibly.
- [36:42]
Donald Miller
You can upgrade your experience at StoryBrand AI.
- [36:45]
Kyle Reed
And so we'd love for you to.
- [36:46]
Donald Miller
In fact, the messaging for free is really bad, but if you pay for it, we give you good messaging.
- [36:51]
Kyle Reed
We control that.
- [36:52]
Donald Miller
Yeah.
- [36:53]
Kyle Reed
Don't question us.
- [36:56]
Donald Miller
Thanks for listening to the why that Worked podcast presented by StoryBrand AI. If you like the show, follow wherever you get your podcasts. And if you're Enjoying this on YouTube, hit that subscribe button and leave a comment letting us know what you think and what you want the guys to talk about in a future episode. Curious about how StoryBrand AI can help you create clear, effective messaging? Well, you can try it out right now and create a free code, customized tagline for your business. Just go to storybrand AI. Thanks for listening and we'll see you next time.