The Value Gap

00

The possibilities in every encounter

Every situation you walk into has various possibilities depending on your intention and imagination.

A short conversation at the right moment can change a relationship. An inconvenience, handled with real thought, can become the moment someone realises how well they are cared for. A simple transaction can leave a memory that lasts a lifetime. These possibilities sit inside almost every encounter. Most of them pass unseen.

I know, because I have watched what happens when they are seen. Over more than three decades of serving people, in hotels, at sea and in private homes, I have seen ordinary encounters become something neither person expected. Employers have become lifelong well-wishers. Doors have opened that I could not have imagined. Encounters that began as routine responsibilities have become memories and relationships that have enriched my life. None of it was planned, and almost none of it was visible at the time. In each case, the value that emerged was far larger than the task that began it.

The difference, I have learned, is rarely knowledge. Two professionals can learn the same standards, follow the same procedures and wear the same uniform. The person who makes the difference is the person who notices the moment, the person who believes there are more possibilities within it.

That way of noticing grows from two roots. The first is intention: a sincere wish for the other person to be better off, which keeps attention on them rather than on the task. The second is imagination, which looks past the obvious response to the one that would truly matter. Each fails without the other. Goodwill without imagination arrives in the wrong form. Imagination without intention becomes a performance for the performer. Together, they make service come alive.

And yet I have watched both qualities fade in people who clearly possessed them. Someone rushing from one unresolved problem to the next has no room left to notice anything. Someone criticised for using their judgement learns to choose the safest response. The intelligence may be present. The state a person is in, and the conditions around them, do much to decide whether it can be used.

01

The entry on your desk

Organisations face the same problem on a larger scale, and they rarely see it, because they are built to notice what was done. A request is logged, actioned and closed. A complaint is answered. A gesture is offered. Each step is faithfully recorded, and in time the record becomes the organisation’s memory of the guest.

So imagine this entry reaching your desk this morning:

You would probably be satisfied, and with good reason. The problem was addressed, a generous gesture was made, and the guests took the trouble to say thank you. Having been there and done that, I know how this works. A conscientious manager reads such an entry, feels proud of the team and turns to the next item. There is always a next item.

The entry is my guess, not the resort’s record. The stay behind it is real. My wife and I were the guests.

We were staying once again at an exceptional resort we knew well. A guest-relations manager who had known us for years welcomed us on arrival. Our mini-suite was beautiful, with a large orchid and other flowers already arranged. Everything spoke of a place that pays attention, except for one thing.

The room was cold. We tried the thermostat; the heating did not work. We called reception, and later we called again. Nothing happened, and no one told us what was happening. The next morning I went to reception to speak to someone in person and asked for the guest-relations manager who had welcomed us. She was out. Each step was small and reasonable. Together, they meant that part of our stay was spent pursuing something that should simply have worked.

Eventually a portable heater arrived. And although she had been out, the guest-relations manager realised the trouble had caused us inconvenience, and she sent a lovely bouquet of flowers. We were grateful for both. On our way to the spa we stopped at reception to thank her in person, and we meant every word. It was only then, in that conversation, that we learned the room was due for full refurbishment.

Now read the entry again. Every fact in it is still correct. What it cannot show is two calls that brought neither action nor news, the morning visit to reception, the explanation that arrived only at the end, and the effort all of it had taken. Our gratitude was real. So was the disappointment beneath it, and saying thank you did not make it disappear.

Two accounts of the same stay, both true. Only one of them was ever likely to be written down.

Think of the records your own organisation closed this week. Some may read very like this one: handled correctly, thanked politely, and silent about what the guest took home.

02

The bouquet

I have thought about that bouquet many times since. It was beautiful, and it came with a handwritten card from the guest-relations team: “We are delighted to offer you this beautiful bouquet of flowers.” She had recognised that we had been inconvenienced, and she wanted to respond. It was a kind act, and we received it as one.

Yet it arrived in a suite that already held a large orchid and other flowers. It gave us more of what we already had, at the very moment we lacked something else entirely: warmth, an explanation, and a sense that someone understood what the previous day had cost us.

Many recovery gestures take this shape. They are chosen from what the organisation has to hand, what it usually gives or what looks generous, rather than from what this particular person has been through. The intention is right. The imagination stops at the familiar.

That is a costly place for imagination to stop, because a gesture can do far more than give something back. At its best, it changes how a person remembers what went wrong. Chosen with real understanding, it lets the trouble recede until the care becomes the lasting impression. Generosity alone cannot achieve that; it takes perception, imagination and judgement. It also takes the right order. First the room must be made warm. Only then is it worth asking what might change the emotional experience, and even then a good gesture can soften a memory without promising to erase it.

What would have been right for us? I do not know, and that uncertainty deserves respect. Someone might have drawn on what the resort already knew about us from earlier visits. Someone might have offered two or three meaningful possibilities and let us choose, taking care that choosing did not become one more task. Or the most valuable response might have cost almost nothing. The explanation we heard at the very end, had it come when we first called, would have changed the meaning of everything that followed. David Maister, writing on the psychology of waiting, observed that unexplained waits feel longer than explained ones. We were not short of flowers. We were short of an explanation.

A gesture that costs very little can carry extraordinary meaning, and an expensive one can carry very little. What gives it value is how accurately it responds to what matters to the person receiving it.

03

Six views of value

That principle reaches far beyond flowers. The value of everything an organisation offers is settled in the mind of the person receiving it, and it is settled in more than one way. Researchers have spent four decades separating those ways. Held together, they give a leader six views of the same stay, and most organisations look through only one.

That one view is delivered value. It is what organisations measure best, through specifications, audits, budgets and standards, and it matters, because without it nothing else is possible. But it is the giver’s view. The guest’s verdict is formed in the other five, and each of them can surprise a leader.

The first surprise is that the same delivery can delight one guest and disappoint another. In the 1980s, A. Parasuraman, Valarie Zeithaml and Leonard Berry showed that customers judge service quality by comparing what they receive with what they expected. Their model also traced where such gaps begin: in the difference between what customers expect and what managers believe they expect. For a premium business the implication is uncomfortable. A higher rate and a stronger reputation raise the standard against which the same delivery will be judged.

The second surprise lies in the parts nobody designed. Research on customer effort suggests that reducing the work customers must do to resolve a problem builds loyalty more reliably than exceeding their expectations with extras. Research on complaint handling adds that people judge a recovery by the fairness of the process and the way they were treated, as well as by the outcome. A generous outcome can still feel inadequate when the process demanded too much. Effort is a cost the guest pays that no invoice shows.

That cost matters, because perceived value is a calculation the guest makes alone. Zeithaml described it as the customer’s overall assessment of what is received against what is given, and what is given includes time, effort and attention as well as money. Jagdish Sheth, Bruce Newman and Barbara Gross showed that people weigh several kinds of value at once: functional, emotional, social, the value of novelty and the value that depends on circumstance. Two guests in identical rooms can therefore reach opposite verdicts, and both can be right. An organisation can influence perceived value. It cannot decide it.

Then the stay ends, and two more views take over. Daniel Kahneman and his colleagues found that most people preferred to repeat a longer uncomfortable experience that ended more gently over a shorter one that did not; particular moments, and especially endings, weigh heavily in what we recall. Remembered value is the version a guest consults when deciding whether to return. Beneath it lies meaning: what the stay made possible in their life. B. Joseph Pine II and James H. Gilmore described experiences as an economic offering in their own right, and Pine has since written about customers who look to businesses for help in achieving their aspirations. Not every guest wants to be transformed. Many want comfort, privacy and an excellent night’s sleep, and honouring that is intelligent service. But a booking rarely tells you what a guest is really hoping to gain.

Put the six views side by side and a well-run organisation’s blind spot comes into focus. Its attention, its measurement and most of its spending sit with the first view. When leaders assume that value delivered is value received, they invest in what is visible to them rather than what is valuable to the guest, and they judge a recovery by what was given rather than how it was experienced. The value gap is the distance between these views, and it can open even when every standard has been met.

This is why premium value is seldom a matter of providing more. It lies in recognising what matters to this person and creating more of that. A property can invest heavily in amenities its guests barely notice, while one colleague creates a lasting memory with a single well-judged act. The commercial stakes are real. Research across several service industries by J. Joseph Cronin, Michael Brady and Tomas Hult found that service quality, perceived value and satisfaction each shaped customers’ intentions, such as returning and recommending. Guests decide on what they perceived and remember; most costs sit in what was delivered. Whatever is spent on what guests do not value cannot be spent on what they do.

And the stakes are not only commercial. When the exchange is genuine, value travels in more than one direction. The guest benefits. The professional gains meaning, trust and sometimes relationships that last for decades. The organisation earns a preference it could not have bought. What slips through the gap is more than one guest’s comfort. It may be a memory, a return visit, or a relationship that never had the chance to begin.

04

Why capable people miss it

If these possibilities are so valuable, why do capable, caring people miss them?

I do not know why no one explained the refurbishment when we first called. Perhaps the colleague on the telephone had not been told; perhaps they did not feel it was theirs to say; perhaps they were doing exactly what the system asked of them. Not one of these explanations concerns character. Every one of them concerns conditions.

Across the organisations I have known, four conditions appear again and again.

Which leads to the most hopeful part of this diagnosis. Many of the professionals I have met possess more of these qualities than their working conditions allow them to show.

The capability to close the gap is often already on your payroll.

05

The conditions behind a remembered moment

Knowing what people truly value is one thing. Creating the conditions in which your people consistently recognise it and respond is another.

Where I have seen people notice more, where the explanation arrives before the guest has to ask and a gesture lands because someone took the trouble to understand, four things are usually working together.

State, Environment, Values and Actions are the four dimensions of SEVA OS®, the methodology I developed to work with them. Every organisation already has all four. The question is whether they reinforce or contradict one another. Ask a team to use initiative in an environment that punishes mistakes, and it will learn caution, whatever the values on the wall may say. The full exploration belongs to another book. Here it is enough to see that behind a moment a guest remembers there usually stands a person who could see it, and conditions that let them act.

06

If the gap stays unseen

So what happens if the gap stays unseen? Nothing dramatic, and that is precisely the danger. The records stay positive. Guests keep saying thank you. Some of them choose elsewhere next time and never explain why. Investment flows towards additions guests barely notice, while the effort they are asked to make goes unmeasured. And the colleagues closest to guests, who notice more than the system ever asks of them, slowly learn that what they notice leads nowhere. In time, many stop noticing.

Now picture the opposite. When leaders begin to see the gap, investment grows more precise because it follows what guests actually value. Fewer recovery gestures miss their mark. Guests have fewer reasons to chase and more reasons to return. Employees grow in confidence because their observations lead somewhere, and the organisation draws more fully on the people it already employs. None of this is guaranteed. All of it begins with seeing.

Think of the people who have served you over the years. Most of those encounters were ordinary and have long since faded. A few have stayed with you ever since. Ask what made the difference, and it was rarely the grandeur of the surroundings, the value of a gift or the complexity of the service. Far more often, someone recognised what mattered to you and responded with genuine care.

Somewhere in your organisation today, there are people capable of creating moments like that, and guests who would carry them home for years. The possibilities are already there. What remains open is whether they will be seen, and whether the people who could bring them to life will be given the room to do so.

07

Where to begin: the diagnostic

If you want to find the gap in your own organisation, begin with one interaction and an honest hour. Choose a recent guest encounter your team believes it handled well. It need not be a complaint; a room move, a late arrival, a spa visit or a departure can reveal as much. Bring together the people closest to it, and before anyone judges the outcome, hold one distinction in the room: what happened, what we believe happened and what the guest may have experienced are not automatically the same. Then work through these questions as a conversation, not an inspection.

The third column usually teaches the most. No organisation will ever know everything its guests feel, and these questions do not pretend otherwise. What they offer is a way for a team to check on itself, and to ask honestly whether it took every reasonable and considerate step open to it. They protect colleagues from being judged on motives no one can verify, and they give leaders permission to say “we do not know” without defensiveness. Then put what you discover to work for fourteen days.

08

A fourteen-day experiment

A fortnight will not prove a long-term commercial return, and it should not be asked to. Nor should a good result be taken as a sign that all is now well. Success in service is not certainty about what guests feel. It is the diligence, thoughtfulness and consideration to keep doing all we can. The Japanese tradition of omotenashi, shaped by the tea ceremony, offers hospitality wholeheartedly and without expectation of reward. In that spirit, the delight lies in knowing that everything reasonably possible has been done for the guest, and when the outcome is not what was hoped for, that knowledge lets people continue without discouragement. Like a bicycle, which keeps its balance only while someone keeps pedalling, an organisation stays close to its guests only by remaining present and continuing the work.

09

Notes

1. Dixon, M., Freeman, K. and Toman, N. (2010). “Stop Trying to Delight Your Customers.” Harvard Business Review, July–August.
2. Cronin, J. J., Brady, M. K. and Hult, G. T. M. (2000). “Assessing the Effects of Quality, Value, and Customer Satisfaction on Consumer Behavioral Intentions in Service Environments.” Journal of Retailing, 76(2), 193–218.
3. Demerouti, E., Bakker, A. B., Nachreiner, F. and Schaufeli, W. B. (2001). “The Job Demands–Resources Model of Burnout.” Journal of Applied Psychology, 86(3), 499–512.
4. Edmondson, A. (1999). “Psychological Safety and Learning Behavior in Work Teams.” Administrative Science Quarterly, 44(2), 350–383.
5. Hirschman, A. O. (1970). Exit, Voice, and Loyalty: Responses to Decline in Firms, Organizations, and States. Cambridge, MA: Harvard University Press.
6. Kahneman, D., Fredrickson, B. L., Schreiber, C. A. and Redelmeier, D. A. (1993). “When More Pain Is Preferred to Less: Adding a Better End.” Psychological Science, 4(6), 401–405.
7. Maister, D. H. (1985). “The Psychology of Waiting Lines.” In J. A. Czepiel, M. R. Solomon and C. F. Surprenant (eds), The Service Encounter. Lexington, MA: Lexington Books.
8. Parasuraman, A., Zeithaml, V. A. and Berry, L. L. (1985). “A Conceptual Model of Service Quality and Its Implications for Future Research.” Journal of Marketing, 49(4), 41–50.
9. Pine, B. J. II and Gilmore, J. H. (1998). “Welcome to the Experience Economy.” Harvard Business Review, July–August.
10. Pine, B. J. II (2026). The Transformation Economy: Guiding Customers to Achieve Their Aspirations. Boston: Harvard Business Review Press.
11. Sheth, J. N., Newman, B. I. and Gross, B. L. (1991). “Why We Buy What We Buy: A Theory of Consumption Values.” Journal of Business Research, 22(2), 159–170.
12. Tax, S. S., Brown, S. W. and Chandrashekaran, M. (1998). “Customer Evaluations of Service Complaint Experiences: Implications for Relationship Marketing.” Journal of Marketing, 62(2), 60–76.
13. Zeithaml, V. A. (1988). “Consumer Perceptions of Price, Quality, and Value: A Means-End Model and Synthesis of Evidence.” Journal of Marketing, 52(3), 2–22.
14. The resort episode is drawn from the author’s own experience. The service record is the author’s hypothetical illustration, not a quotation from the property’s records.