Editor's Letter: Value Isn’t Always About Money

When McDonald’s and Starbucks failed to hit their Q1 earnings goals recently, both companies were blamed by analysts for not demonstrating the value they deliver to customers. For Starbucks in particular, which thrives on die-hard, loyal customers, store traffic was down, partly because some folks hit by inflation have likely cut back on their second daily cup of $8 coffee. However, visits from the “occasional” customer were also down. That would be people like me; I don’t especially like Starbucks coffee but when I feel like a scone and a hibiscus iced tea, I’m all in, occasionally.

The challenge here is that the ability to communicate value diminishes when you’re forced to charge more for your products. In the case of McDonalds, Starbucks and every other retailer, items cost more these days and cutting prices is not an option. And so what’s left? Where does the opportunity to provide value present itself?

Value can be provided in the customer experience. What’s the feeling when you interact with a brand? Do you like their messaging? When a person crosses the threshold of a storefront, do they feel great? Is this a reprieve from the real world? How are the wait times, the vibe and energy of the venue, what does the human interaction look like?

Jim Cramer of MSNBC in particular challenged the CEO of Starbucks, Laxman Narasimhan, the day the company’s earnings report was published. Cramer’s criticism was that the company didn’t warn Wall Street at least a month ago that revenue would miss analyst estimates by 6.5 percent.

Ruthanne Terrero
Ruthanne Terrero is shown here on a private jet from Rome to Crete with A&K on a Wings Over the World itinerary, which supplied seamless support and service throughout the entire journey. (Ruthanne Terrero)

Consider yourselves forewarned. “Foot traffic,” even for the luxury client is slowing down. Gucci, which is owned by Kering, had a rough first quarter, as well. Management said it’s because luxury is strong at the top of the market and at the lower end; it’s that mid-luxury customer who’s slowing their spending. Something to keep an eye on.

This is not a gloom and doom message. It’s more about post-pandemic travel losing some of the hysteria in the consumer’s need to just get out of their houses. Luxury customers are scheduling travel back into their lifestyles in a more organized manner. As a travel advisor, you’re likely still trying to find ways to handle the strong amount of trip requests coming in, but I urge you to stay in touch with that mid-luxury customer to be sure they’re booking for months and even years to come.

Which comes back to getting the word out about the value you provide. One huge message you should be delivering consistently is that YOU take the chaos out of travel. If your itineraries provide protection and peace every step of the way because you’ve got the right people on the ground to ensure there are no issues with car transfers and hotel check-ins, that’s gold. If you provide unique excursions and experiences, you’ve got to figure a way to market that. Don’t assume this influx of business is going to continue at the same rate. Get your value messaging out there so you can maintain the strength of your bottom line. And remember that value sometimes has nothing to do with price; it’s all about how you make your customers feel when they are with you physically or virtually and, even more importantly, when they’re out in the big wide world, without you, but being protected by your supplier partners.

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