Value Based Customer Service

It has been said that the airlines are one of the primary examples of value based pricing. They have convinced the public that if the person next to them is flying for much less than they are it is because of some factor that we (the passenger in the seat next) could not get because of time or some other nebulous consideration. The airlines have convinced us that we should pay additional to fly with luggage with an increasing rate for 1 bag or 2 bags and a horrendous rate for 3 or more bags. Here have a couple of cookies and a pop … really it’s on us! We seem to accept this and are happy to fly on their airline. 

What they have missed was the unintentional results of this “value based pricing.” As they started to charge for luggage, passengers reduced the larger bags and started using the carry-on.  The consequence was the carry-on bag now filled the overhead bins to the extent that the airlines were forced to offer to check your bag for free at the gate. Today you get on a plane and often have to place your laptop bag under the seat rather than into the bin because there is no room. Or you can pay an additional fee for more “value” and jump to the front of the line so you can be the one to get your bags into the overhead bins.

What the airlines have forgotten is the other “value” and that is the value of the passenger who is the customer. It is the customer that pays the fares, the customer which generates the revenue base that allows the airline to schedule the flights.

 The formula is Customer> Value> Price> Cost.  The idea is the customer perceives the value and is willing to pay the price. 

A further unintentional result is the manner in which the employees end up treating the customers.  The culture runs down from the top and when the CEO’s and CFO’s decisions are based upon selling perceived value that philosophy carries over to every department of the company.

A real life example … recently I was flying from Boston to Denver on a United flight. The passengers were herded into Groups 1, 2, 3, and 4. Group 1 boarded and then group 2 and so on until it came to group 4. At that point there was an announcement that the overhead bins on the aircraft were virtually full and it was probable that you would have to check your bags or place them under your seat. One CSR came down to the agent who was checking the tickets and asked if he could announce that people that were willing to check their bags could come forward and they could board right away.  In a loud voice and with complete disdain this agent stated, “I do not do that any longer as the passengers were getting smarter and simply tore the tags off while going down the ramp and then boarded the aircraft with their carry-on in tow.” Of course the cattle in Group 4 were supposed to hear this and be properly chastened, as they were the group that placed the lowest “value” on the flight and as a result were the last group to board the flight. It was a despicable display that treated the airlines customers as worse than second class customers.

The question is how was all of this allowed to come about? We the passengers must take some blame but that is difficult because for the most part all of the airlines do the same. Banks are another example, do it our way or don’t do it at all. This whole value system comes down from the top of the organisations. Pricing executives are hired and moved to the upper floors of the corporation. Value has become king and service moved to the lower realms.

I am not against sales and purchases being made on value.  I am willing to pay what I think/believe something is worth; but it cannot be at the expense of courtesy, dignity and customer service. It cannot be because each company has gone the same route and left the passenger with no choice except to accept they are cattle to be herded into Groups. These same executives that preach value based pricing must also preach excellence in customer service. Every passenger is important and should never be made to feel lesser and unimportant to the airline or any other company. 

I have railed against an airline and in particular United because I had firsthand experience; but the principle remains the same for all business. Price on value and sell on the perceived value, but always remember the basic truth and that is the customer is always number 1.

Starbucks does it well … ever paid for their coffee? You are paying for the experience and the perceived value and you are treated well.  Airlines and banks figure it out and do it better.

Ian Conklin is the President of OTR Web Solutions a web development company building marketing websites since 2000 with offices in Canada, USA, Europe and South America.

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