Page 325 - (DK) The Business Book

DELIVERING THE GOODS 323

Hotel guests are pleasantly surprised
to discover luxury extras that they
were not expecting. These could be
complimentary services or products.

Other hotels have been even bolder
in pursuing value added. In the
premium segment of the market,
hotels create additional value by
redefining their core function.
These hotels do not just sell a
comfortable place to sleep; they sell
an “experience,” in which guests
are offered a range of “delighters”— W. Edwards Deming
aspects of the hotel’s service that
Zurich also has protocols for delight the guest, but which are not William Edwards Deming was
born in 1900 in Sioux City, IA.
reacting to unhappy customers; usually expected. Examples include
He studied physics at the
when several customers complained HD televisions; branded, high-end
University of Wyoming before
that payment was too slow when shower gel and shampoo; free
going on to receive a PhD from
their policies matured, Zurich used champagne; and free slippers that
Yale. After leaving full-time
the “five whys” to discover that the guests can take home with them.
education he worked for Bell
problem lay in a delay in sending Adding value is a constant Telephones, where he was
out claim forms. The company put battle because a “delighter” can part of a team working to
in an automatic system to send out soon become an expectation. If a improve quality control.
the forms 10 days before policies hotel fails to meet the constantly One of his key ideas was
matured, resulting in a 78 percent rising requirements of its guests, that the quality of bought-in
drop in complaints. Zurich has won it will lose customers to its rivals. raw materials and components
many service awards, including two Successful hotels are constantly on matters more than their price
“Five-star Service Awards” based the lookout for new “delighters” that because their quality will be a
on 25,000 completed questionnaires. will surprise their guests without major factor in determining
the quality of the finished
becoming too expensive. Low-cost
Added value delighters are the ideal way to product. Consequently, he
argued, manufacturers should
Businesses can also create high- create value added, generate repeat
not choose their suppliers
quality products by adding value. purchases, and ultimately produce
solely on the basis of the price
Value added is the difference healthy profits. ■
charged. Ideally, companies
between a product’s price and the should try to develop a
raw material cost of making the long-running relationship with
product. Companies can add value a single supplier, which is
to their products with new features, based on trust. This approach
innovative functions, or add-ons would be more likely to lead to
designed to benefit, and appeal Quality ... is not what the better-quality materials.
to, actual and potential buyers. supplier puts in. It is what the In addition, Deming also
In the hotel business, Ibis adds customer gets out and is believed that quality came
value by promising customers that willing to pay for. from a production process that
their specially designed beds, Peter Drucker was stable and consistent.
mattresses, comforter, and pillows
US management guru (1909–2005) Key works
will give them a better night’s
sleep. The cost of these items is
1982 Out of the Crisis
balanced against improvement in
1993 The New Economics
retention of customers, or by higher
prices that create extra revenue.