Speaking of hotels, I recently had an incredible experience—from a pricing perspective—with a Starwood telephone agent.
I was looking at options for a hotel near Walt Disney World for an upcoming trip to Orlando. Since I recently—finally is more like it—made Platinum status I asked her if this gets me preferred rates.
Her response would make her pricing department quite happy I’m sure:
The Starwood Preferred Guest is a loyalty program, not a discount program.
What a fantastic answer, one that is quite sophisticated for the front line. Compare this to Borders Rewards program, which is really nothing more than a discount program, since you really don’t have to do anything to receive a discount, usually from 20-30%. Even some Border’s cashiers will go out of their way to provide you with a discount, even if you don’t have a coupon. This is lousy pricing.
Since we advocate all professional knowledge firms establish a pricing cartel where the majority of pricing decisions are centralized, some forget that one the vital roles of that cartel is to educate everyone in the firm regarding the language of loyalty, value, and pricing, even if those people have no responsibility in that area.
Have you ever had an airline representative who had to call someone in Yield Management because he was unable to reprice an itinerary change? I had one United rep say to me: “Sometimes I think these price changes are made randomly.”
Hardly. Airline pricing is one of the most sophisticated strategies you could ever attempt to get your head around. The fact that the front lines don’t understand it is ineffective leadership on the part of the pricing group.
What does your front line know about your pricing? What language do they use when communicating with customers?
[If you’re wondering why I write glowing things about Marriott but stay at Starwood, perhaps the best explanation is from JW Marriott himself: Success is never final. Competition is relative, and Starwood has offered a better overall experience than Marriott in the past few years, in my humble opinion. I realize this is just my experience, since hotel service levels vary dramatically from place to place. Providing TQS, like Value Pricing, is hard work, requiring constant vigilance and effective leadership].