The cost of brand favorability

June 17, 2013

I recently took a trip to Alaska. During our two-week stay we experimented with a wide variety of transportation options. Every segment of the trip had staff go out of their way to ensure our comfort and satisfaction. There was one glaring exception: The airlines and airports.

I recently took a trip to Alaska. During our two-week stay we experimented with a wide variety of transportation options – jets, trains, and automobiles plus ships, water taxis, ferries, rafts, and float planes. At the end of our trip as we returned to the airport, it occurred to me: on every segment of the trip, drivers, pilots, conductors, captains, and crews had gone out of their way to ensure our comfort and satisfaction. Generally, the level of service was unsurpassed. I would travel with any of these companies again without hesitation.

There was one glaring exception: the airlines and airports.

We’ve all experienced it. There’s no need to detail the indignities. All told, it seems that airlines and airports have lost sight that they operate service businesses. (At one time, they were even luxury businesses.) These days, each seems to believe they are in the cargo industry. Unfortunately, you and I are the cargo.

Have the airline’s brands suffered as a result of poor service? I believe so. Without naming names, I am certain I will never travel on our outbound airline or through our outbound airport again. Nearly two hours to check a bag when I already had a boarding pass. Forced to sit on the floor of the concourse to remove a pair of shoes and sweatshirt from a bag because it was 1.5 pounds over the permitted weight. Security lines so long, I nearly missed my flight, which was finally held only after 20-30 people complained. And for this I paid – to check my bag, to upgrade my seat, to eat a snack and watch a movie on a six-hour flight.

Are other airlines better? Perhaps, but not entirely. Those that place an emphasis on their brand, such as JetBlue, Southwest and Virgin America, surely seem to offer better service. For instance, JetBlue does not charge for the first bag. Southwest permits two bags without charging. In addition, Virgin America offers complimentary television and snacks.

So how much do excessive fees impact how we measure airlines’ service? Is it primarily cost that is bringing down our perception of service?

On the other side of the coin there are establishments embracing the pay-what-you-can (PWYC) model. While many are local restaurants, clinics and museums, there is one large, national brand also experimenting with the idea: Panera.

Implemented in five dedicated cafes three years ago, the company proposes suggested donations, but does not have set fees for its food items. Based on a track record of success - 20% of customers leave more than the suggested donation, 60% leave the suggested donation, and 20% leave what they can, but often significantly less – Panera is now testing one PWYC item at for-profit stores in the St. Louis market. The hope is to extend the concept to all 1,700 of its for-profit stores.

Additionally, Panera offers a unique loyalty program. Unlike traditional loyalty programs, MyPanera is tailored to customer preferences and aims to “show our appreciation and reward you in unexpected and surprising ways.” Rewards include complimentary items, exclusive previews and invitations to special events.

Have these cost-associated benefits also benefited the Panera brand? Using loyalty as a measure of brand success, I’d say so. Currently, the company’s loyalty program includes 14 million members and represents approximately 45% of customer transactions. The limited PWYC cafes serve more than 1 million repeat customers. Much of the Panera brand is tied to affordability – quality food and a customer-centric experience all delivered at reasonable prices.

Perhaps that is the key, understanding that price is but one piece of the brand puzzle. Is it effective to build a brand around price? In my opinion, it is not. Price is not a sustainable differentiator as it can fluctuate quickly and be easily matched by competitors.

But companies like Panera, Target and IKEA have proven that brands built around value succeed. Value incorporates more than price; it includes service, location and quality. Yet remains aware of consumers’ price consciousness.

Perhaps if I got more value for my dollar, airline fees wouldn’t be so bothersome and I wouldn’t feel like cargo when flying.

Does quality of service make you more or less loyal to a brand? How much does cost play into your perception of a brand? We’d love to hear some of your experiences.

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