What if you could raise your prices and find that your customers are happy to pay more? In our price-sensitive world, this may seem unrealistic. But one company charges 150% to 400% more than average for its services while consistently scoring high on customer satisfaction.
The most expensive meal I ever ordered was at the Four Seasons Hotel in New York City, during the 1990s. The same meal today would likely cost over $200 (Rs.13,000), and the average room there is priced at around $1,000 (Rs.65,000) a night. How can any company attract customers with such high prices? The same kind of innovation that enables Four Seasons to succeed is available to your company, as well.
High-Value Innovation Leads to Higher Pricing Power
High-value innovation starts with understanding exactly what it is that your customers value. Four Seasons knows what corporate titans, high-ranking diplomats, celebrity performers, and star-struck honeymooners are looking for because it has served this clientele for many years. Deep insights about customers come from careful observation, and Four Seasons has been observing its customers for decades.
It doesn’t stop with understanding, though. To be successful, the company had to be innovative not only in its physical plant and service offerings, but also in its human resources policies and practices. At Four Seasons, staff members are recruited, trained, and empowered to deliver the type of service that prosperous and demanding guests are known to prefer and demand.
At most companies, customer research barely scratches the surface. Management feels no need to go any deeper than the sales force’s report that customers care only about getting the cheapest price. As a result, opportunities to earn additional revenue by helping customers to meet their goals are often missed.
Likewise, at most companies, the innovative energy of the team is focused exclusively on improving the product or service. Little if any thought is given to the “soft side” of business, including human resources, customer service, marketing and branding. Yet, these are the exact areas where many companies earn the loyalty and the orders of their most profitable clients.
If Four Seasons were like most companies, they might still serve the top end of the market, but there would probably be little to distinguish them from other luxury hotels. They certainly could not command the premium prices that their guests now willingly pay.
Which type of company would you prefer to be? What do your customers value besides low prices? What types of innovations will enable you to charge more and get it? What lessons can you learn from Four Seasons (watch a brief video here)? Your comments below are most welcome.