Can an Amazing Customer Experience Trump Price?

By Stevi McCoy Co-founder, Revel Experiences | November 23, 2014

How much is a good customer experience worth? Some might argue that it is priceless. Most will agree that the holistic brand experience can make or break effective customer engagement. But will consumers pay more for an amazing experience? Recent data on this subject indicates that consumers do indeed make decisions based on factors other than price.

According to a CEI Survey, 86% of buyers will pay more for a better customer experience. But only 1% of customers feel that vendors consistently meet their expectations.

Experience also impacts customer loyalty. A recent Forrester survey of more than 7500 U.S. individuals found that customer experience accounts for nearly 55 percent of customer loyalty to banks, and about 46 percent to retailers. Interestingly enough, the research firm even admits that it was "surprised" at how much more important customer experience was in driving loyalty than price.

This data is not surprising to behavioral and engagement marketing executives, who have been analyzing these shifts in the market place over the last few decades. Technology and market conditions have empowered the consumer like never before. Competition and increasingly demanding consumer expectations have created a complicated series of variables that ultimately drive purchase. Across a myriad industries, the well-informed consumer rules – and the travel and hospitality industry is no exception.

A Time When Price Was King

There was a brief moment in recent history, however, where price seemed to emerge as the leading indicator in purchasing decisions. When Internet travel booking arrived on the scene in the mid-1990s, consumers were suddenly empowered with the insight and visibility that was once reserved for licensed travel agents. Sites like Expedia, Orbitz and Travelocity provided ultimate transparency - the curtain was pulled back and the playing field was leveled.

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The hotel industry has undertaken a long-term effort to build more responsible and socially conscious businesses. What began with small efforts to reduce waste - such as paperless checkouts and refillable soap dispensers - has evolved into an international movement toward implementing sustainable development practices. In addition to establishing themselves as good corporate citizens, adopting eco-friendly practices is sound business for hotels. According to a recent report from Deloitte, 95% of business travelers believe the hotel industry should be undertaking “green” initiatives, and Millennials are twice as likely to support brands with strong management of environmental and social issues. Given these conclusions, hotels are continuing to innovate in the areas of environmental sustainability. For example, one leading hotel chain has designed special elevators that collect kinetic energy from the moving lift and in the process, they have reduced their energy consumption by 50%  over conventional elevators. Also, they installed an advanced air conditioning system which employs a magnetic mechanical system that makes them more energy efficient. Other hotels are installing Intelligent Building Systems which monitor and control temperatures in rooms, common areas and swimming pools, as well as ventilation and cold water systems. Some hotels are installing Electric Vehicle charging stations, planting rooftop gardens, implementing stringent recycling programs, and insisting on the use of biodegradable materials. Another trend is the creation of Green Teams within a hotel's operation that are tasked to implement earth-friendly practices and manage budgets for green projects. Some hotels have even gone so far as to curtail or eliminate room service, believing that keeping the kitchen open 24/7 isn't terribly sustainable. The May issue of the Hotel Business Review will document what some hotels are doing to integrate sustainable practices into their operations and how they are benefiting from them.