Southwest Airlines enjoyed record-setting fourth-quarter financial result—and its highly successful Rapid Rewards customer loyalty program played a huge role.
During the company’s Jan. 22 company conference call, CEO Gary Kelly said Southwest’s fourth-quarter earnings, excluding items, set a record, dramatically surpassing last year’s previous record by 79%.
“Our revenues were up $200 million and, interestingly enough, fuel was down $200 million and the result was a beautiful thing,” Kelly said according to Seeking Alpha. “So for the first time in 14 years, we achieved our ROIC target and in this case we exceeded it with a 21.2% return on invested capital. The operating performance was propelled by the successful deployment of our strategic initiatives, very pleased with the Rapid Rewards for the year, that was an almost $400 million revenue contribution.”
Southwest Airlines revamped the Rapid Rewards loyalty program in March 2011 to increase relevance and appeal among a broader range of travelers. The company measures a range of metrics, including engagement, overall growth and acquisition, and revenue targets, also paying close attention to the “soft” metrics that speak to program health. Examples include satisfaction, the compliments- to-complaints ratio, depth of awareness, and annual Net Promoter Score.
Kelly paid tribute to Southwest Airlines employees.
“Our people have done a magnificent job managing all the transformational change over the last five to ten years,” he said. “They are passionate about Southwest, passionate about serving our customers, better than our competitors, and with a 
reliable and low-cost operation, and I could not be more proud of them. Strategic initiatives aside, we would not have Southwest as we know it without these incredible people.”
Business remains steady, Kelly said.
“The collapse in oil prices since September, of course, is very big news,” he said. “I think it’s safe to say that we’re still trying to digest all of the news and the ramifications for us. Of course, in the meantime, we have significantly lower fuel costs and it drops straight to the bottom line for the most part.”