If someone told you they could add $1 million revenue to your business overnight, what would you say?
Now imagine if it was $350 million, but you would have to compromise the core values of your business in order to see it, would you re-think your response?
In this week’s episode of Real Estate Pros, we share the story of a popular brand who said ‘no’ to an idea that would have added $350 million revenue to their business – literally overnight.
We discuss why their decision turned out to be much more profitable just 12 months later and the valuable lesson for all of us in business.
Something that gets a lot of lip service in real estate businesses today, is this idea of living by your company values. We would likely all agree that being a values driven company is something we all want to be. But sometimes, maybe more in some companies than others, core values are set aside for a moment in exchange for revenue.
I don’t know who said this, but there’s a great quote that goes:
“Core values cost you something.”
In other words, if you make decisions based on core values, it’s likely going to impact on revenue, at least in the short term. But the pay off, if you’re truly making decisions based on your core values, it will have an even bigger impact on revenue and business value in the long term.
For years, Southewest Airline’s mission has been ‘freedom’, and their signature tag line is “Your bags fly for free.”
With many, if not all other airlines charging customers for baggage, Southwest, still to this day, do not charge for baggage up to a very generous amount.
Southwest Airlines are consistently rated as America’s favourite airline.
Some years ago, the CFO (Chief Financial Officer) at Southwest Airlines approached Herb Keller, the CEO (at the time) of Southwest Airlines, and told him that he had found a way to add $350 million to the bottom line. The CFO of the company proceeded to tall Herb Keller that all the company needed to do was to start charging for baggage. Everyone else was doing it, and if Southwest started charging for baggage, they would add $350 million dollars to the bottom line.
They talked about it in the meeting, thought about it, but said ‘no’.
They said, ‘we’re in the freedom business and if people have to start paying for their baggage, they’ll need to stop paying for other things – like a ticket to Disneyland for their kids for example’. They decided that Southwest Airlines was never going to force their customers to make that decision.
So just like that, Southwest Airlines decided to walk away from an idea that would have generated $350 million revenue literally overnight.
That’s a lot of money, right?
Well 12 months later, they ran their “Bags Fly For Free” campaign and the CFO came back and said ‘we were wrong’ and because they chose to stick to their core company values, Southwest Airlines had instead generated $1 billion in new revenue as a result.
Just let that story sink in for a moment…
Would you say no to revenue if it was going to compromising your core values?
I like to think we all would. But the reality is, some of us probably wouldn’t. I like to focus on stories like this that prove, by sticking to your values, it always pays off in the long run.
We walk into businesses all the time where the core values are printed on the wall and when I ask the business owners what their core values are, I’m baffled at how many can’t even recite what’s written on the walls of their office.
‘Your core values will cost you something’, but the payoff in the long run, is very sweet indeed.
Is it time to get reacquainted with your core values?
It’s certainly something I’m thinking more about in 2017. I hope Southwest have inspired you to do the same.
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