Your Signature Experience Is Not a Perk. It’s the Product

And that is exactly what makes this the most important customer experience case study of 2026 for C-suite leaders.

Because the question every CEO needs to be asking is not whether Southwest made money. The question is: what did they have to give up to make it — and could your company survive giving up the same thing?

 

What Southwest Actually Was

Southwest Airlines was founded in 1967 by Herb Kelleher and Rollin King on a radical idea: democratize air travel. No first class, assigned seats, or bag fees. Everyone boards the same way. Everyone gets the same treatment regardless of what they paid. As Kelleher put it, “We are in the customer service business. We just happen to fly airplanes.”

For over five decades, that philosophy became a signature experience — not a tagline, not a marketing campaign, but an actual operational system that made Southwest instantly identifiable and impossible to confuse with any other airline. You either loved it or you didn’t. But you always knew what you were getting.

Free checked bags. Open seating. No change fees. Employees who were hired, trained, and celebrated for a sense of humor and genuine hospitality. These weren’t perks layered on top of the product. They were the product.

And they built extraordinary loyalty. Southwest’s Rapid Rewards program counted tens of millions of members. The Companion Pass — a benefit that allowed loyal customers to bring a companion on every flight for free for an entire calendar year — was widely regarded as one of the most valuable loyalty benefits in the airline industry. Customers didn’t just prefer Southwest. They evangelized it.

“We are more than the logo on our planes. Our DNA isn’t open seating, or even bags fly free. It’s a dedication to service.” — Southwest CEO Bob Jordan, March 2025

That quote — made just months before the changes — is the most instructive sentence in this entire story. And I say that not to criticize Bob Jordan, but because that reasoning is one I have heard from leaders in every industry just before they dismantle what made them great.

The CEO was right that Southwest’s DNA is a dedication to service. But he was wrong that open seating and free bags were separable from it. They were not decorative. They were the physical, operational expression of that dedication to service. When you remove them, you don’t just change a policy. You change what the company communicates to every single customer about who it is.

 

What Actually Happened — The Facts

In 2024, activist investor Elliott Investment Management acquired more than 10 percent of Southwest’s shares and pushed for significant changes to improve profitability. Elliott’s position was clear: Southwest was leaving money on the table by refusing to adopt industry-standard practices — baggage fees, premium seating, and assigned seats — that its competitors had long since normalized.

The settlement between Southwest and Elliott in October 2024 resulted in five Elliott-backed directors joining the board. Under that new oversight, the changes came in rapid succession:

• May 28, 2025: Southwest ended its two-free-checked-bags policy for the first time in its 53-year history, implementing fees in line with industry standards.
• 2025: Southwest launched basic economy fares, introduced red-eye flights, limited flight credit validity to one year, and listed flights on third-party platforms like Expedia and Google Flights for the first time.
• January 27, 2026: Southwest ended its open seating policy after 53 years. Passengers now board with assigned seats across three tiers — standard, preferred, and extra legroom — with eight boarding groups based on fare and loyalty status.
• Early 2026: Elliott Management began significantly reducing its stake in Southwest, having secured the changes it came for.

The loyalty data tells a quieter story. Southwest’s own SEC filing for fiscal year 2025 showed that customer redemption of flight awards accounted for approximately 13.7 percent of revenue passenger miles — down from 14.7 percent in 2024 and 16.3 percent in 2023. The airline carries approximately $4.3 billion in total Rapid Rewards loyalty liabilities.

Meanwhile, one loyal Southwest passenger said on the day open seating ended: “Now they’re like everybody else, and nothing is setting them apart.” That comment appeared in CNBC’s coverage. It is not a data point. But it is the data point. It is exactly what a customer says when a signature experience disappears.

 

The Shareholder vs. Customer Experience Tension Every CEO Faces

I am not here to argue that Southwest made the wrong business decision. That is genuinely complex, and smart people disagree. The airline was losing money while competitors posted record earnings. The pressure was real. And so far, the financial results have validated the move — at least in the short term.

What I want to help C-suite leaders understand is the trade that was made. Because this trade is not unique to airlines. A version of this decision is being made right now in boardrooms across healthcare, financial services, hospitality, retail, and professional services. And most of the leaders making it do not fully understand what they are exchanging.

Southwest exchanged a signature experience for revenue optimization. Those are not equivalent. Revenue optimization is something every competitor can replicate tomorrow. A signature experience, built over 53 years, cannot be bought back.

Delta’s president said it plainly when the bag fee reversal was announced: “There are some customers who chose Southwest because of that, and now those customers are up for grabs.”

Those customers were not choosing Southwest because of a transaction. They were choosing it because of an identity, a feeling of belonging. That is the emotional currency of a signature experience — and it is the hardest thing to rebuild once it is spent.

Revenue optimization is something every competitor can replicate tomorrow. A signature experience, built over 53 years, cannot be bought back.

 

What the 10 Commandments Teach Us About What Southwest Lost

For nearly 30 years, I have worked with some of the world’s most admired customer experience organizations — Chick-fil-A, Starbucks, Ritz-Carlton, Nestle, and hundreds of others — studying and codifying what separates them from competitors. That work became the 10 Commandments of Customer Experience: a framework for building, scaling, and sustaining world-class service cultures.

The Southwest story is a direct illustration of what happens when Commandment 4 — Signature Experience Design — is dismantled, and why it matters more than most C-suite leaders realize until it is gone.

Commandment 4: Signature Experience Design

Every industry suffers from sameness. Banks all offer the same accounts. Airlines all fly from the same airports. Hospitals all treat the same conditions. The signature experience is the answer to sameness — it is the deliberate, systematic design of the moments that make your organization instantly recognizable and emotionally irreplaceable.

A signature experience is not a perk. It is not a marketing feature. It is the operational expression of who you are at your best, codified so that every employee, in every location, on every day, delivers it consistently.

Open seating was not just a boarding policy. It was Southwest’s signature. It communicated: We trust you. We treat everyone equally. We’ve made flying simple. It required no upgrade. It required no status. You showed up, you checked in online, you got on the plane, and you sat anywhere. That simplicity — that deliberate rejection of airline complexity — was the product.

When you build a signature experience and then remove it, you do not go back to neutral. You go negative. Because your customers had come to count on it. Their expectation was set. Their loyalty was based on it. And now that expectation has been violated.

Commandment 3: Never & Always — The Customer Bill of Rights

In the 10 Commandments framework, we build something called a Never & Always list — a Customer Bill of Rights that establishes the non-negotiable standards that define how your organization behaves, regardless of who is working or what the pressure of the moment is.

One of the most critical rules for building a Never & Always: once you commit to a standard publicly, it becomes load-bearing. Customers build their loyalty on it. When you reverse it, you are not simply changing a policy — you are breaking a promise that your best customers trusted enough to organize their behavior around.

Southwest CEO Bob Jordan said in September 2024: “Bags will absolutely fly free.” Eight months later, bags were no longer free. That reversal — regardless of the business rationale behind it — was experienced by loyal Southwest customers as exactly what it was: a broken promise.

I am not saying the decision was wrong. I am saying it had a cost that did not appear on the quarterly earnings call. And that cost is: trust.

Commandment 5: Zero Risk Organization

A zero-risk organization is not one that never makes mistakes. It is one that, when things go wrong, recovers so brilliantly that customers become more loyal than before the problem occurred.

The loyalty point redemption data is a quiet but significant signal. Customers are redeeming fewer Rapid Rewards points as a percentage of total flying — a three-year consecutive decline. When loyal customers disengage from a loyalty program, it is rarely a conscious protest. It is the quiet calculus of someone who has decided the relationship is worth less than it was.

That is not a crisis yet. But it is the early data of what I call silent churn — customers who do not complain, do not cancel, and do not write angry letters. They simply redirect their loyalty, gradually, toward a competitor who makes them feel something. And by the time the data is undeniable, the relationship is already over.

 

The Real Question for Every CEO Reading This

Here is what I want you to sit with: Could your company’s signature experience survive a board-level pressure test?

If activist investors, cost-cutting pressure, or a difficult quarter put your organization’s most distinctive customer-facing commitments on the table — the things that make your company recognizable, irreplaceable, and chosen — would your leadership team be able to defend them? Would they even be able to identify them?

Most companies cannot answer that question, because most companies have never formally identified their signature experience. A brand guide exists. They have core values and a customer service philosophy. But they have not done the work of mapping every touchpoint from the customer’s perspective, identifying what is genuinely non-negotiable about the experience they deliver, and codifying it as a standard that survives leadership transitions, budget cycles, and investor pressure.

That is not a nice-to-have. That is the most important CX investment a company can make — and it is the one that most organizations skip in favor of technology, loyalty programs, and training initiatives that address the symptoms without ever treating the root cause.

The companies that protect their signature experience are not the ones who love their customers more. They are the ones who know exactly what their signature experience is — and why it is worth more than the short-term revenue of dismantling it.

 

What World-Class CX Companies Do Differently

The best customer experience organizations in the world — the ones I have had the privilege of working with and studying — share a specific practice that explains their resilience. They have formalized their signature experience so completely that it becomes extraordinarily difficult for any single leader, board, or financial pressure to dismantle it.

Chick-fil-A closes on Sundays. Every Sunday. Permanently. That is not a scheduling policy. That is a signature commitment that communicates: we stand for something that cannot be purchased away. The competitive pressure to open on Sundays — the highest-traffic day in the quick-service restaurant industry — is enormous. But Chick-fil-A has never wavered, because that commitment is not a perk. It is part of the product.

The Ritz-Carlton empowers every single employee to spend up to $2,000 per guest, per incident, to resolve a problem without manager approval. That is not a budget line. That is a non-negotiable, codified standard that communicates something to every employee and every guest: we will do whatever it takes.

These organizations protect their signature experiences because they have been identified, documented, named, and embedded in the culture. They are not subject to quarterly review or dependent on any individual leader’s commitment. Signature experiences exist as organizational standards.

That is what the Signature Experience Design process in the 10 Commandments framework is designed to create. Not a feel-good vision document, but a working, operational standard that every employee understands, every leader can defend, and every customer can count on.

 

A Note on Fairness to Southwest

I want to be direct about something: I am not predicting Southwest’s failure. The financial data through early 2026 suggests the transformation is, at least initially, succeeding on revenue metrics. The airline is projected to significantly outperform prior years.

Southwest was facing real financial pressure. The changes they made are things 80 percent of their surveyed customers said they preferred — specifically, knowing their seat in advance. Not every element of a signature experience is worth protecting at all costs. Some of what Southwest changed may prove to be evolution rather than surrender.

What I am saying is more precise than “Southwest made a mistake.” What I am saying is that Southwest changed its signature experience under external pressure without a framework for evaluating what was worth keeping and what could be changed. And every C-suite leader who has ever felt that kind of pressure — from a board, from an investor, from a bad quarter — should study this case closely.

Because the pressure will come for your signature experience too. And when it does, the leaders who have codified what makes them great will be able to defend it. The leaders who haven’t will give it away without fully knowing what they’ve lost — and realize it only when the loyalty data starts to quietly tell the story.

 

The Bottom Line

Southwest Airlines in 2026 is a profitable airline. It may prove to be a very successful one. What it is no longer is distinctive.

“Now they’re like everybody else, and nothing is setting them apart” — that is not a tweet. That is the sound of a signature experience ending. And in customer experience, when you become like everybody else, you compete the way everybody else competes: on price, on routes, on features. You lose the one thing that made price irrelevant.

Technology doesn’t differentiate you. Neither do bag fees or seating policies. What differentiates you is a signature experience — deliberately designed, rigorously maintained, and protected fiercely enough that no board meeting can quietly retire it.

The question for your organization is not what Southwest should have done. The question is: Do you know what your signature experience is? Has it been codified? Can every employee describe it? Can every leader defend it under pressure?

If the answer is no, start there. Because the boardroom pressure that just reshaped Southwest Airlines is not unique to the airline industry. It is coming for every industry. And the only companies that will survive it with their loyalty intact are the ones who knew exactly what they had — before they were asked to give it up.

 

Take the Next Step

If you are a CEO or executive leader ready to identify and codify your organization’s signature experience — and build the framework that protects it — the Customer Experience Executive Academy (CXEA) is the most comprehensive 12-month program available for doing exactly that work. Your internal CX champion will work directly alongside our team through the complete 10 Commandments framework, including the Signature Experience Design process.

Schedule a conversation at tdg.click/Claudia to find out whether CXEA or direct consulting is the right fit for your organization.