Earlier this month, in the span of just a couple weeks, the business world lost two great customer experience strategists.
Jack Bogle was the founder of Vanguard Investments, which is now the second-largest asset manager in the world. He popularized the concept of index investing, advocating for low-cost portfolios that seek to mirror the performance of the broader market, rather than outperform it via higher-cost “actively managed” portfolios.
Herb Kelleher was the co-founder of Southwest Airlines, which began as a small airline serving just three Texas cities but eventually grew into the largest domestic air carrier in the United States. With a formula of affordable fares and a distinctive service experience, Kelleher’s airline effectively “democratized” the skies, bringing air travel to the masses in a way that had never been done before.
Both Vanguard and Southwest perennially land at the top of customer experience rankings for their respective industries. Beyond that, they’ve earned a place among an elite group of companies whose customer-centric business practices have fundamentally altered the markets in which they operate.
These firms’ founders were instrumental in setting their companies on a path for success, both through the strategies they crafted and the leadership behaviors they embraced.
What can you learn from these two customer experience legends? Here are four philosophies that Bogle and Kelleher put at the center of everything they did:
1. Infuse your business with a sense of purpose.
Early on, Bogle and Kelleher defined an overarching purpose for their companies that transcended mere profit generation. They recognized that a compelling brand purpose can be very energizing for employees (who get to be part of something that’s bigger than themselves), and very appealing to customers (who are drawn to companies that stand for something they believe in).
When Kelleher established Southwest in the 1960s, air travel was an elite and expensive form of transportation, used primarily by those who were financially well-off. Kelleher sought to bring air travel to the masses, giving people “the freedom to fly.” That was Southwest’s purpose – its reason for being – and it helped motivate the organization to achieve great things.
As Kelleher put it in an interview with Investor’s Business Daily: “That’s the most difficult thing for a competitor to imitate. They can buy all the physical things. The things you can’t buy are dedication, devotion, loyalty – the feeling you are participating in a crusade.”
Whereas Kelleher democratized the skies, Bogle democratized financial markets. He was an ardent advocate for the average investor, championing low-cost investment vehicles that helped people keep more of what they earned in the stock market. He promoted low account minimums, to help make equity investing accessible to the masses. And he railed against sales commissions and hidden fees that drained money out of consumers’ pockets.
All of these guiding principles helped shaped Vanguard’s stated brand purpose: “To take a stand for all investors, to treat them fairly, and to give them the best chance for investment success.”
Isn’t that a bit more inspiring than the typical corporate mission statement about “maximizing shareholder value”?
2. Be good to your employees, and they’ll be good to your customers.
Herb Kelleher was remarkably outspoken on this topic, even describing his priorities to stock analysts as “Employees first, customers second, shareholders third” (which is a pretty courageous statement in front of a shareholder-oriented Wall Street audience).
Here’s how Kelleher explained those priorities in an interview with CNBC:
“If you treated the employees well, if you cared for them, if you value them as people, if you gave them psychic satisfaction in their jobs, they would really do a great job for the customers and the customers would come back, which would be good for the shareholders. Most companies didn’t operate that way. So we turned the pyramid upside down, in effect, and said the employees come first and they always have. Not just in our minds but in our hearts as well.”
Bogle was also keenly aware of the importance of making staff feel valued and cared for. Here’s how one of his earliest employees, Paul Haaga, described Bogle’s approach in an interview with Fortune magazine:
“[Jack] didn’t just fill a room, people would say he owns the room. His presence was big but it was ‘positive big.’ While some leaders kick down and kiss up, Jack did just the opposite. He expressed deep interest and concern about his people. He was always joking. He had a bunch of kids, and when he came downtown to work, we were his kids.”
Both of these leaders recognized that happy employees help create happy customers. Without the former, there’s no hope for the latter.
3. Be genuine in advocating for your customers’ interests.
Rare is the company that demonstrably puts customers’ interests front and center. Advocacy of that sort, because it is so rare, really serves to distinguish a brand in people’s minds.
Bogle and Kelleher infused this philosophy into the DNA of their firms. Bogle, in particular, actually chose an organizational structure for Vanguard that, by design, put customer interests first.
Vanguard is set up as a mutual company that is owned by its fund investors (in contrast to a public company, which is owned by stockholders). What this means is that Vanguard’s profits aren’t used to enrich corporate shareholders. Rather, those profits are plowed back into the company and used to help reduce fund expenses for Vanguard’s clients (thereby enabling them to earn higher returns on their investments).
This organizational structured created an alignment of interests that was unique in the investment world. Vanguard never has to weigh what’s best for its clients versus what’s best for its owners, because they are one and the same.
Southwest, unlike Vanguard, is a public company. Yet the airline – under Kelleher’s direction and that of his successors – has repeatedly taken stances that demonstrate clear advocacy for their customers (even at the behest of their shareholders).
A great example of this is Southwest’s longstanding commitment to what it calls “Transfarency.” That’s the term the airline uses to describe its focus on treating customers honestly and fairly, without all the small print, hidden fees and “gotchas” that are common at other air carriers.
Whereas other airlines raise revenue by nickel-and-diming their passengers for things like checked bags, tickets changes, seat assignments and even carry-on items – Southwest does none of that. They play the long game, earning loyalty from the flying public by operating in a way that exudes customer advocacy.
And that long game does pay off. Southwest has consistently outperformed its industry peers, delivering 46 consecutive years of profitability in an industry that, over the past half-century, has struggled to make a cumulative dollar of profit.
4. Be humble and embrace a “mop bucket attitude.”
Bogle and Kelleher were larger-than-life figures in their companies, yet they always remained incredibly grounded. Both took great care in setting an example for others. While they didn’t coin the phrase “mop bucket attitude” (that was the brainchild of Wendy’s Founder Dave Thomas), Bogle and Kelleher created an air of accessibility, in part due to their willingness to chip in and help out alongside the front-line staff.
On the Wednesday before Thanksgiving (the busiest travel day of the year), Kelleher would go to Dallas’ Love Field (the nearest airport to Southwest’s headquarters) and help the ground crew load and unload baggage from the planes. He enjoyed spending time with his employees, and not for public relations purposes. He genuinely cared about his people. As he put it in that CNBC interview: “We want them to know that we value them as individuals, not as part of a workplace.”
Bogle, like Kelleher, never let success get to his head. Even after Vanguard had made him a wealthy man, Bogle remained the embodiment of frugality (which, of course, was a cornerstone of the company he created). He drove a Volvo station wagon, flew economy class, and avoided any ostentation.
To help Vanguard maintain 800-line service levels during periods of market volatility, he oversaw the creation of the company’s “Swiss Army.” They were a corps of Vanguard executives and managers who were trained to answer investor inquiries and would personally take calls during periods of high volume, thereby helping front-line reps to maintain service levels.
These personal leadership characteristics that Bogle and Kelleher demonstrated helped endear them to their employees. The workforce viewed these two individuals not as detached corner office CEOs, but as approachable leaders who were genuinely vested in the success and wellbeing of their staff.
Two Iconic Leaders; Two Legendary Companies
Jack Bogle and Herb Kelleher appreciated the influence that a single leader can have on an organization. Their personal behaviors set an inspiring example for others to follow. Their business strategies created competitive advantage via a strong and unambiguous customer orientation.
Vanguard and Southwest were fortunate to have these two legendary leaders at the helm. The rest of us are fortunate for the opportunity to learn from them.