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Aiming for Perceived Value:
What Do Your Customers Expect From You?

By Mark W. Sheffert
April 2002

On a recent hot Arizona afternoon, I boarded a 757 jet that belongs to a certain Minneapolis-based airline. As usual, first-class seats were prohibitively expensive, so I squeezed my way down the narrow aisle into the coach section and settled into my tiny, little seat. The plane had been sitting in the sun for several hours, and the air inside was so hot and stale it felt like a 100-degree dry sauna.

I asked a flight attendant (as did many others after me) about the air conditioning. He shrugged off my discomfort, explaining that they didn’t want to start the engines yet and therefore couldn’t turn on the air. So all of us found ourselves roasting while we observed him and other flight attendants ignoring a petite pregnant woman toward the front of the plane straining to get her heavy bag into an overhead compartment. I guess they may have been too busy discussing their next pay strike or something.

We were finally airborne, air conditioning running, expectations of an uneventful flight back to Minnesota running through my mind. I tried to ignore the pain from the seat arms digging into my legs, and my knees bumping against the back of the seat in front of me. Visions of sardines in tidy little rows squeezed into a can kept popping into my head.

At least I could look forward to a nice meal, right? I was soon handed a small bag of pretzels and a chalk-like candy bar that some company was giving away as a promotion. This was intended to curb my appetite until I got home in three more hours. When I asked to exchange the candy bar for another bag of pretzels, the flight attendant made a face like I had asked her to shine my shoes or something. I was made to feel like a major inconvenience to her and a pain in the airline’s red tail.

Actually, the whole experience made me realize how a cow squeezed into a cattle truck on its way to slaughter must feel. Just another commodity, a number, a thing that someone had to move from one place to another to make some money. I felt the airline didn’t care one iota whether I enjoyed my experience, or whether I received anything of any value from it. Sure, the flight was safe and almost on time … but I expected more.

Since then, I have been talking to other travelers and have heard about an airline based in Milwaukee called Midwest Express Airlines. Along with several subsidiaries, it serves Toronto and about 30 cities in the U.S. (its subsidiary Skyway Airlines serves Minneapolis). Midwest Express apparently has a different attitude toward its customers: It’s called customer service - maybe you’ve heard about this novel concept?

Imagine sipping on complementary coffee and reading from a choice of newspapers prior to boarding. Then being escorted to your seat, which is a roomy leather chair next to only one other seat and has plenty of legroom, and where someone helps you with your luggage. Meals are served on china with linen napkins along with complimentary wine or champagne. The food is comparable to that of a fine restaurant. On select flights you can even enjoy fresh chocolate chip cookies baked onboard. And this isn’t first class - it’s coach!

Midwest Express makes cost sacrifices: Its planes (DC-9s and MD-80 series aircraft) have onethird fewer seats than is standard, and it spends twice the industry average on food. But the company has found other ways to hold down expenses, like flying refurbished used planes, in order to offer competitive prices. Its commitment to customer service has earned Midwest Express many industry awards - and loyal customers.

What is the main difference between these airlines, from a customer’s point of view? It’s perceived value. Perceived value is how customers value a company’s brand based on their perception of what they gave up for what they received. A company provides perceived value when what it offers to customers meets or exceeds customer expectations. This give and take is the basis for the customer’s relationship with the company. It’s moot whether a company believes it delivers value to its customers. What matters is whether customers perceive that they have received value.

My recent experience was not pleasant because the airline’s management apparently believes I don’t have any choice but to fly with them. The fact is that they do have an oligopoly. The next time I want to fly, I will be forced to go back to their airline because there are not any other realistic choices. However, over time, enlightened airlines that compete on more than just dominant market position will supplant these dominant airlines, because they’ve figured out the concept of perceived value.

There are basically two ways to improve perceived value: Give the customer more of what he or she wants, or reduce what the customer must give for what he or she gets. In other words, improve quality, price, or convenience.

Look at the local grocery market, for example. If a large variety of product choices and extra customer service, such as having your groceries bagged and carried out to your car, is important to you, and you are willing to pay more for those things, then you can shop at Lunds or Byerly’s. If low prices are important to you, then you can shop at Cub Foods or Rainbow Foods, where there are fewer choices and you bag and carry your own groceries. It just depends on what you value.

If a business wants to improve perceived value through product quality, there are basically seven dimensions of quality it can change: performance, features, rate of defects, reliability, durability, serviceability, and the appearance of quality.

Service businesses should improve the competence of the people providing the services and offer tangibles as proof of their competence and performance. Keep in mind that customers generally don’t have the knowledge to judge the competence of technical service providers, such as automobile mechanics, lawyers, or surgeons. Customers assume that these providers can do the job, and therefore judge competence based on things that may seem trivial, like the neatness of the waiting room or appearance of the mechanic’s clothing.

Some marketers tie perceived value to branding. They say that a company’s brand associations are the attributes customers think of when they hear or see the brand name. Volvo means safety. Nike means Michael Jordan or “Just Do It.” McDonald’s means Happy Meals and consistent food quality.Allstate means you’re in good hands. They say the positive associations consumers have with certain brands make them select those products over others and perceive that these companies offer more value.

But I say “horse-pucky.” That’s way too simple. It assumes that customers are mindless groups of sponges, naïve enough to be swayed to buy something by slick advertising and promotion. As a consumer, it offends me to think that they think I’m that dumb. As the saying goes, “what they do speaks so loudly I can hardly hear what they have to say.”

So, I’m challenging businesses out there to think of customers as individuals with minds and preferences, understand what they value, and take action to offer real perceived value.

It doesn’t matter if a mission statement says that your company strives to provide galactic-sized value to its customers. It doesn’t matter if you get your mission statement printed on thousands of little laminated cards and have all of your employees carry them around during the day and sleep with them under their pillows at night. If your company doesn’t provide real perceived value, then its mission statement is nothing more than a bunch of meaningless words.

In fact, both airlines I’ve written about in this column say in their mission statements that they strive to exceed customers’ expectations and provide quality customer service. As you can see, only one of them seems to get it.

If customers don’t perceive any value from their experience with a company, or if they have a bad experience, then that business is aiming at eventual failure and will hit it with remarkable accuracy. What are you aiming for?

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