Southwest Airlines is a personal favorite for domestic travel. I’ve lost count of the times they have gone way, way above my expectations — and my family’s — to help our travel experiences be more stress-free, and even enjoyable. (Notice I didn’t say cost-effective, however, they’ve done that too) Like other travelers, I’ve had a good chuckle on more than one flight where both the flight attendants and pilots have used the passengers’ lazy attention as a means to test out their comedy routines and ‘passenger-roasting’.
They of course are not a Service Provider, in the truest sense. They sell you a ticket to fly from Point A to Point B. However, built into the DNA of every employee is their focus on customer service, the HOW you get from Point A to B, the experience — and the adjectives they describe to measure it (as seen in their mission statement).
This got me to thinking about something Box’s Jon Herstein said on a SaaStr podcast about customer delight vs customer value. Essentially, that customer delight is important, but insufficient. You must first ensure customer value. Is the customer saving money, making money, growing successfully, or all three, in some way by their engagement with you? Ultimately, you are first judged on those measures. And, admittedly, this is difficult to measure in some software product solutions (Jon discusses this as it relates to Box’s offering). Nevertheless, it must be done for a company’s growth and sustainability.
In Southwest Airline’s case, price is one of their competitive differentiators. (But not always) Their growth (profitable since 1975!) and sustainability hasn’t rested on price alone.
We’ve all encountered products and/or services where delight was either a company’s after-thought (too many instances to name in healthcare or health insurance) or just completely absent (looking at you, the IRS). Even value sometimes has us stumped (have you tried RentTheRunway’s new membership program lately?).
Stepping away from SaaS businesses or the airline industry for a minute, what about the services industry? Event planners, mental health counselors and doctors, management consulting, coaching, and the like. Can they escape the value vs delight argument? If so, for how long?
Looking at all of those types in one blog post would be unreasonable and intellectual suicide. Instead, and with the willing participation of one seller of this types of service, I dove in to try and understand their definition of customer value. I also drew on my former experience as a customer success/experience consultant for a SaaS company, where I was responsible for revenue and partnership network growth, to augment my exploration of this question.
My first thinking about this resulted in a quickly drawn sketch around the main differentiators for product/service purchase decision-making. The arrows are flex…. they could be pointed in any direction depending on the service offering. Importantly, they can even flex with the relationship between buyer and seller over time. It’s not always true, of course, that if a product or service is MORE expensive that people won’t buy it. In fact, that is also a real driver towards stoking the human’s desire to purchase the thing (alongside, the relative scarcity of that product or service). I give you Big Five consulting, Hermes bags, Dolce&Gabbana suits, Tesla cars or any bar with red velvet ropes outside and a handsomely dressed “greeter”.
What is also true is the relative ease with which we can USE the product or service, and secondarily, how it makes our life easier or more productive (convenient and productivity are wrapped in one for this example). For the early-tech-adopters amongst us, we know well that the first iPhone, Uber app or any other new technology ‘we just-had-to-try’ was either feature-poor or disastrously unreliable, or both. It didn’t matter to this group, though, because our belief system around those products and services weren’t so much about us deriving real value from those products as it was about getting in first and trying something out.
So far, I’ve contradicted my own sketch’s viability in two paragraphs.
I stick by my stick-figure drawing, however. It is a simple framework from which to start thinking about my question. These levers, alongside a list of others not listed (brand image, risk reduction, even environmental/societal considerations), constitute the utilitarian (and very rational, non-context driven) levers of the purchasing decision, so I’m starting there.
Where this exploration got interesting was in the conversation with an SMB employee around their service; event-planning. In one question about the value of the service they offer, I was told they don’t put a dollar value on it, because it’s “priceless”. This felt a bit like I was living in a MasterCard commercial, and so I continued with my questioning. To the employee’s credit, they hung in there with me.
For some context:
Event planners organize and put together large and small- scale events like corporate meetings, sports events, weddings, family reunions and the like. They specialize across these event types, and what they offer through their pricing strategies are all as variable as the buyers who hire them. My former experience was dissimilar in that the company sold a software product, alongside services and books, to large F1000 companies. My focus, for all offerings, was on providing and demonstrating real quantifiable value for customers, so I’m leaving that comparison out for the purpose of this post.
For this service-provider, the “what they offer” part, against their pricing strategy, is what I was interested in understanding better. It turns out, value was described as reduced anxiety through improved convenience (emphasis my own). I wanted to know more about the quantifiable metrics lying underneath that statement so I asked about what that looked like in practice (for the customer) — in other words, was there a dollar amount or a time savings saved or other quantifiable metric associated with that?
The answer: it was “priceless”.
From their perspective, the buyer’s responsibility was:
- all contract negotiations (with venues and any other service or product providers who would be part of the event),
- actual payment for those services, and
- choosing from all the providers the event planner sent their way.
The vendor’s fee bought:
- research into venues (or other service and product providers), and
- send those to the buyer in an email – in this vendor’s case, it was done informally via email, and with no particular organization or facilitated introduction to providers.
- coordination of people during the event, and pick up and delivery services (for various accoutrements for the event).
From this I imagined there still had to be some quantifiable value to a customer. Lambda School Founder, Austen Allred, had discussed this quantifiable value in a great video (here) describing how their team focused on the real “job” the customer was hiring them for, and how they took responsibility for owning and building for that up front. My brain was going back to that as I thought through this conversation.
The time might be one. “Research” varies across expertise levels, and service provider types; be it a lawyer, event planner, or consultant. For instance, a leader in their industry, field or discipline will have a ready supply of contacts and superior expertise that ‘match’ the requirements of the buyer’s needs and problems-to-be-solved. As a result, research time is not part of the equation at all but the ‘matches’ or expertise may be significantly better and more qualified, with a recognizable difference in customer outcome.
With that comes a higher cost (likely) — but I imagine those providers also more able to quantify the customer benefits derived by hiring them.
But in this particular vendor’s case, the research time had “already taken hours and hours” for specific venue choices and other service provider recommendations. The buyer’s responsibility at that point was to choose one, and pick up the ball from there. (See buyer’s responsibilities above)
The vendor explained their value, at that point, was to be “on calls” with the buyer (with venue and service providers) and be on hand the day of the event. (See third bullet in vendor fee section above)
This was an N of 1, of course, but I came away with a few learnings:
- Analytical customers: Customers who care about quantifying the value of outsourcing tasks to small, event-planning service-providers like this one would do well to inquire up front about the saved costs, in money, time and/or effort that they’ll get by using that provider. Getting an answer like “priceless” may not suffice for this kind of customer, especially if they are resourceful and organized.
- Benchmarking – or “Social proof”: Customers who are making decisions based on the value and quality of a provider’s network and expertise in order to realize an end result (again: clearly defined quantitatively) would do well to get references in that regard from other similar customers. How have other customers benefitted and were those benefits the same as you expect in your engagement?
- Flexibility of contracts: This specific service provider did not guarantee their value (in my definition: reduced anxiety through improved convenience). But they were flexible with their contracts and should customers feel like they were not getting value, could cancel their contracts mid-stream, essentially churning out. Customers who find themselves not getting the value they perceived, in the way they defined it originally, should check with their provider up-front if their company practices are as flexible as this one provider.
- Long term sustainability: I suspect that such smaller service providers, with unclear value propositions and benefits, will be short-lived and replaced by SaaS companies offering something like virtual assistants, augmented with advanced technology services in machine learning and AI human-supported models. Where more of a human touch is required, these companies (Like Box) will offer Client or Consulting Services for an additional fee and more high-touch services.