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The Price and Value Journey of Delta Airlines

Delta Airlines
Image Credit: Mertbiol, CC0, via Wikimedia Commons

Yesterday I attended a Greater North Fulton Chamber of Commerce luncheon, and the speaker at this event was Glen Hauenstein, President of Delta Air Lines.


He offered several interesting comments, none as interesting to me as his comments on price, value, and what consumers desire.


He noted that twenty years ago, ‘consultants said that all customers cared about was price.’ For reference, Hauenstein is referring to Delta’s bankruptcy and subsequent reorganization, which began in September 2005 and lasted until Delta successfully exited bankruptcy in April 2007. There were a number of reasons for its bankruptcy filing that Delta cited, including spiking fuel costs and labor costs.


Another reason cited for the bankruptcy filing was increased competition from low-fare or discount carriers, particularly on domestic routes.


“Customers care about value”


The consultants Hauenstein referred to at the time appeared to be arguing that customers only cared about price and that Delta’s operating strategy needed to be based on that "reality."


Delta’s management team wisely chose to ignore that notion.


Delta Airlines
Image Credit: Rookmin Maharaj

“Customers care about value, not price,” Hauenstein observed in his remarks yesterday, a sentiment he underlined in a conversation I had with him afterward. “We continue to add value here and there and see what customers are willing to pay for.” He referenced Delta One, the airline’s premium luxury ground-to-air experience, noting that Delta One airport lounges are now being rolled out. He pointed to Delta’s goal to offer free WiFi on all domestic and international routes.


In response to a question in a recent quarterly earnings call, Hauenstein offered commentary that further amplifies the company’s philosophy on value and pricing:

. . . what really pushed us to do this journey several years back was the fact that on the premium products and experiences side, we controlled more of our destiny than we did on the commodity side. And so absolutely, that's been our journey, is to continue to play the game against ourselves as opposed to playing against the lowest common denominator. [emphasis mine]

Delta could have responded to their bankruptcy by trying to out-discount the discount carriers, in which case they might not be around today. Instead, they ignored the competition, deciding to diagnose where their customers saw value and give it to them.


By almost any financial metric, such as revenue growth, market share, size, debt load, profit margin, or return on equity, Delta is currently at the top of its field.


Takeaways for the Rest of Us


What can the rest of us, particularly those of us who are service providers that sell our expertise, learn from the Delta story?


Here are a few ideas: 


  • Maintain a Singular Focus on Value: Delta's belief that customers prioritize value over price led to their focus on quality service and differentiation. Likewise, whether you’re selling your expertise as a consultant, coach, accountant, or some other discipline, focus on making sure that your offerings are of the highest quality and high perceived value. If you do, you'll find that clients will pay more.


  • Continuous Value Dialogues: Delta’s strategy involves continuously understanding and meeting customer needs, leading to innovations like Delta One and free WiFi. Although vital and necessary, it's not enough to just have value conversations with prospects who become clients and leave it at that. Engage with clients regularly to understand their changing needs and desires, which, in turn, change their perception of value.


  • Ignore the Competition, Focus on Clients: I've written previously that professional service providers often spend too much time thinking about the competition, and when they do, they're often focused on the wrong competitors. Delta didn't allow the behavior of discount carriers to govern their strategy; they concentrate on delivering what their customers valued most.


  • Play Your Own Game: Delta’s philosophy of competing against themselves rather than the lowest common denominator underscores the importance of self-improvement. Make it a priority to stretch and achieve higher standards for your services. That continuous improvement in value delivered will lead to better pricing.


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Are you frustrated by your pricing? Need help articulating your value? Do you need a better way to identify and close your best-fit clients? Do you want to restore the joy you used to have for your business? I may be able to help you.


I’m John Ray, a business consultant and coach, author, and podcaster. I advise solopreneurs and small professional services firms on their two most frustrating problems: pricing and business development. I’m passionate about how changes in mindset, positioning, and pricing change the trajectory of a business and the lifestyle choices of a business owner. My clients are professionals who are selling their expertise, such as consultants, coaches, attorneys, CPAs, accountants and bookkeepers, marketing professionals, and other professional services practitioners. Click here to learn more or contact me directly.


The Generosity Mindset

I’m the author of the national bestselling book, The Generosity Mindset: A Journey to Business Success by Raising Your Confidence, Value, and Prices. The book covers topics like value and adopting a mindset of value, pricing your services more effectively, proposals, and essential elements of growing your business. The book is available at all major physical and online book retailers.



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