Do your customers “get what they pay for”?

I was meeting someone in the lobby of the Four Seasons Hotel in Chicago, and overheard a conversation.   A guy was waiting for a ride to the airport and was on his mobile phone telling someone about his wonderful stay at the hotel.  He went on and on and then told the other person “….Marriott and Sheraton could learn what customer service really means from this hotel”.  Of course, he failed to mention that he had paid about 80% more for his stay at the hotel vs. one of those other brands.  The cost difference did not factor into his opinion.  I hear comments like this a lot when people talk about customer service and compare providers, and it fascinates me.

No one will argue with the fact that there are clear standouts in customer service and the experience you receive from these companies.  Nordstrom’s sales associates are amazing.  Whole Foods presents its groceries like few others in the business.  If you have ever ordered anything from a Williams Sonoma catalog - you will order something from there again.  And the difference between going into a Lexus dealership and a Toyota dealership is substantial.  Has Lexus just “figured it out”?  Have they found the secret to hiring better people and designing and maintaining a first-class facility?  Of course not – it’s the same company!!  The common thread to these top service providers is the absolute premium price they receive for their services and the niche market they have decided to cater to.  The additional revenue from their premium pricing allows them to provide superior service (although, of course, it doesn’t guarantee they will).  Most important – for the right service, people are willing to pay the premium and then feel like they got a great value in return.

All service businesses walk a critical line between the experience they provide, and what customers are willing to pay for it.  Too many companies push premium service in a market segment where no one wants it.  Likewise,  organizations often under deliver on a customer experience based on their perceived value proposition.  Nirvana is when an organization can marry expectations, pricing and delivery.  Southwest Airlines is a great (… and overused) example of this difficult balancing act - particularly when compared to their competition.  Despite being branded as a low-price airline, Southwest’s flights no longer cost less than their competitors (unless they are entering a new market).  Their customers are really paying for on-time flights, and dependable service  – and they don’t pay for baggage!  They can live with the lack of amenities, and those incredibly annoying singing flight attendants.  Southwest customers perceive value – essentially no matter what they pay.

The best service companies have figured out this balance between what they charge, the expectations of their customers, and what they deliver.  When it is done correctly, customers – like my friend in the hotel lobby - forget that they paid extra to receive a superior level of service and feel like they “got what they paid for”. 

Has your organization found that balance?