With the advent of the Internet and e-commerce customers are faced with a wide selection of choices for products and services. In this 'clicks and mortar' environment companies, governmental agencies, educational institutions and not-for-profit organizations must deliver value to customers that equals the difference between what the customer thinks is of value and the total cost of the product or service. If the customer thinks that this difference is large enough to generate benefits then the customer will buy and will continue to buy. The question for those organizations that provide products or services is, does the providing of customer value result in positive business value? A body of marketing research has begun that provides some insights into the answer to this question. According to Kevin Coyne of McKinsey and Company (1989, p. 69) many executives are skeptical suggesting that these executives wonder, "Can companies truly distinguish themselves from competitors based on greater service?" Coyne (1989, p. 70) argues that service investments should be expected to produce a value to customers disproportionate to the cost of investment and a demonstrable change in customer behavior." However, more recent market researchers (Kamakura, et al. 2002, p. 295) argue that "the strategic focus has been on maximizing profitability by optimizing operational resources allocated toward service quality efforts." Bolton and Drew (1994) discussed a critical requirement for comprehensive business models that measure customer perceptions of value and business outcomes. Responding to this requirement some recent research has been introduced based on the model, The Service-Profit Chain (Kamakura, et al. 2002). Using extensive customer survey results in the banking industry these researchers discovered that firms that focus on value through operational efficiency and customer retention achieve higher profits (Kamakura, et al. 2002). Adding to this body of research this paper introduces a model that qualitatively analyzes what a company in the airline industry that has a successful track record over three decades in revenue and profit growth has done to provide more value for its customers.
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