Applying the Pyramid of Expectation in the hospitality and leisure industry

The hospitality and leisure industry is all about creating experiences. By staging compelling experiences, guests can forget about the worries of everyday life and dream away. The more impressed guests are by the experience, the stronger their emotional bond with the company, which leads to higher customer loyalty, turning guests into advocates of the company. This should be the goal of every company in the hospitality and leisure industry.????

Making sure customer expectations are met and exceeded is a key element in experience building. We’ve all had experiences with companies that have convinced us to try out their offering a first time by setting high expectations through attractive commercials or clever marketing campaigns. In some cases, our expectations weren’t met and we decided not to use the company’s services any more. In other cases, our expectations were at least met and we decided to try out the service again. In the latter situation, our expectations towards the company and the offering will most likely have shifted. The offering we received the first time, became the ground level of our expectations. Anything below this ground level would mean that the company is not capable of providing a consistent service level. And we all want the bar to go up a little bit every time, don't we?

Companies that are actively managing customer expectations, know how to appropriately set the expectations for convincing a potential customer to try out their offering the first time, they know how to meet and exceed the expectations the first time and they make sure they are consistent in their service delivery. There are companies that take it a level further by regularly surprising their customers. Some companies even succeed in getting their customers so excited that they are eagerly waiting for the next encounter.??

Applying the principles of the Pyramid of Expectation can help companies within the hospitality and leisure industry to actively set and manage customer expectations.

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The Pyramid of Expectation

The Pyramid of Expectation depicts 4 stages in customer expectations. The customer’s expectations shift and it’s the company’s challenge to come up with appropriate answers for each layer.??

Customer sacrifice is the difference between what a customer exactly wants and what he settles for. In almost every offering, there is ‘something’ that is lacking in order to fulfil a customer’s wants for 100 per cent or there is ‘something’ that is included that doesn’t interest the customer, but for which he has to pay. Since each customer has his own specific wants, it would be operationally nor financially feasible to fully satisfy each individual customer’s wants. However, limiting the sacrifice as much as possible for as much customers as possible is the first challenge in expectations management.

‘Mass customization’ can provide a solution to this challenge for companies within the hospitality and leisure industry. Mass customization is a powerful response to a trend that has been going on for some time and is still picking up speed: customers more and more want offerings individualized to them. The combination between “mass” and “customization” means modularizing the offering, which opens up lots of possibilities. The chosen market segments can be large enough to service in an operationally feasible and financially interesting way, while giving enough choice to the individual customer to limit the personal sacrifice. The combination of several 'standardized' choices tends to the individual wants of the customer. The concept is ease to understand. It is what ice cream vendors all over the world have been doing for a long time. They have a couple of cones, a number of flavours, some toppings and a choice of sprinkles. The choice for each individual element is limited, it is the combination of all elements that provides huge possibilities for individualizing the offering. A spaghetti restaurant that offers a choice between 3 different types of pasta, 7 different sauces and 5 different toppings, in reality offers a total of 105 different choices. If it serves 3 different sizes, it actually offers 315 different possibilities. How about that for individual choice?!

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Customer satisfaction is the difference between what a customer expects to get and what the customer perceives he gets. What a customer expects to get largely depends on two things. First, a customer has basic expectations. When a customer goes to a restaurant, he expects the food to be warm; when a customer goes to a hotel, he expects the room to be clean. When these basic expectations are not met, the customer is left feeling under satisfied. Next, a customer has expectations coming from the signals the company sends out. This can come through an attractive promotion, an appealing look and feel, an influencer promoting a venue, etc. All the different clues that are given to a customer set expectations about the company and the offering.

Giving the appropriate clues in order to set a correct expectations level is difficult. The temptation to oversell (a little bit) is always there. This is however the surest way to disappoint customers. If the customer’s expectations are not met, it will be very hard -not to say impossible- to get the customers to favour the company. Most probably, the customers will turn their backs on the company and some of them will utter their dissatisfaction through social media. Asking the customers feedback about the company is always a good idea. Actively asking that is, not just sending out an inquiry asking about their satisfaction levels. This will give you some clues, but not the concrete information you are looking for. The information you are looking for is what the specific needs and wants of your customers are. “Underpromise and overdeliver” is a well-known statement. However, I strongly recommend “promise and deliver” in a consistent way. Don’t we all like people and companies that live up to their promises and don’t we all dislike people and companies that don’t keep their promises?

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Customer surprise is the difference between what a customer gets to perceive and what the customer expects to get. This doesn’t mean trying to exceed expectations. It means doing something unexpected. It means refreshing the experience on a regular basis by changing or adding elements that keep the offering new, exciting, and worth paying money for over and over again. Failing to do so devalues the offering. Integrating customer surprise is perhaps the most important leverage for a company to begin staging memorable experiences. The company deliberately attempts to transcend expectations, to go off in new (and unexpected) directions. The mindset has to shift from setting routine expectations to start thinking creatively about how to leverage key elements in the offering to stage surprise.

Having Christmas carol singers perform in a movie theatre before the start of the movie is something you wouldn’t expect, but something that leaves a memory for quite a bit of time (as I found out myself while I was thinking about a good example and came across this one which took place some 20 years ago). Surprising frequent guests by giving a meal for free at the end of the diner surely leaves a lasting impression; compare that to the feeling those guests would have from getting a free meal after having collected stamps on a frequent purchase program.

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Customer suspense is the difference between what the customer does not yet know and what the customer remembers from the past. “Customers always seem to expect more” is a frequently heard remark. So? Isn’t this just human behaviour? Don’t we all expect more in our everyday lives? Why should this be different in a customer-company setting? Companies who take this as a given, look for possibilities to get their customers to a level of excitement about the next encounter with the company.

Several theme parks have succeeded in getting to this level of customer expectation. Whatever they do, be it installing a new attraction, opening a new hotel, launching a new show, starting up a new restaurant,… ?they always seem to come up with something extraordinary and always succeed in amazing their guests. From the moment the first information about a new project is launched, guests start sharing their comments and feelings of anticipation with each other, having sleepless nights until the day they can go and find out what they have been waiting for so long. And from that moment on, the cycle begins all over again and they return home waiting for the next highly-anticipated announcement.

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Building the Pyramid

Building a Pyramid means starting with the bottom layer and working up to the top. It also means ensuring that all the underlying layers are firm in place before starting to work on the next level. Without the ability to drive down customer sacrifice and drive up customer satisfaction, there is no foundation on which to instigate customer surprise or customer suspense.???

The Pyramid of Expectation provides a framework for enhancing customer relationships. When managed properly and consistently, sacrifice, satisfaction, surprise, and suspense help companies build a solid relationship with their customers, turning them into loyal guests and advocates.

The hospitality and leisure industry is particularly well suited for applying the Pyramid of Expectation. There are huge possibilities for each company within the industry. Applying these principles is a firm step in staging memorable experiences for guests.

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If you have the ambition of applying the Pyramid of Expectation and you feel you are in need of inspiration, support or assistance, please contact me by email on [email protected] or by phone on +32 474 96 77 07

If you are curious about other articles, please check the blog section of my website www.dvwconsulting.be

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Source: Pine, J. and Gilmore, J. (1999)?The Experience Economy, Harvard Business School Press, Boston, 1999