Hilton Hotels has recently come under widespread criticism for their decision to devalue the points that members of the Hilton HHonors program have accumulated. As of January, members will need to redeem approximately 25% more points for reward nights at Hilton properties.

By taking this step at this time, Hilton has created a monster. Travel journalists and Hilton HHonors members have been burning up the electronic airwaves. Some see it as the epitome of bad timing in that most hotel chains would welcome a few more guests in these difficult economic times. But, it’s not just bad timing that Hilton is guilty of.

Hilton’s action may be seen as just one example of a widespread practice amongst corporations that run so-called loyalty programs to reduce the trillions of points that represent contingent liabilities on corporate financial statements. If they can get us to use our points more quickly, or to spend more points to get rewards, then they will burn through more points and reduce their exposure.

Just about every time I buy something from a major retailer or stay at a leading hotel these days, I am being asked to tell them how they did in serving me. They are all using "cash register tape" research—the modern-day equivalent of what I used to refer to as "seat pocket" research.

You remember; years ago when you would get on an airplane, there'd be a questionnaire in the seat pocket. Part way into the flight, the flight attendant would ask you to complete the survey and she would collect it just before landing. Among other problems, it seemed to me they were never able to capture feedback on how the pilot handled the landing or whether your bag showed up intact at the baggage carousel or was on its way to Miami.

These days, many companies are using a similar approach that involves inviting you to visit their website to complete a survey. In the past week, partly because I wanted to see what kind of survey was being administered, I have completed three of these.

Online customer feedback is now phenomenally popular because it's possible, it's easy and it's cheap.

We're all focused these days on the customer experience and with good reason. But there is very good evidence that increasing customer inexperience may represent an opportunity for companies to step in and help customers accomplish things.

At the end of the day, customers need to get things done. Ted Levitt, many years ago, made the cogent observation that nobody ever went out to buy a quarter-inch drill. What's needed is the hole; the drill is merely a means to the end. More recently, Clayton Christensen has written eloquently on the jobs that customers hire products (and services) to get done. In other words, the life of the customer is full of minor day-to-day challenges—getting dinner for the kids, getting the dining room painted, taking the car in for service, finding a dress to wear to Cousin Jane's wedding.

Increasingly, customers are finding it difficult to complete many of these relatively straightforward tasks. I suspect there may be three reasons for this. First, they simply haven't got the time in their busy schedules to do it themselves. Second, they have absolutely no idea how to do it. And third, businesses often put barriers in the way of customers that prevent them from achieving what they set out to do.

Some of the biggest challenges facing executives during this recession are related to the retention of customer confidence in their brands. Some of the biggest casualties of the economic turmoil have been some of the biggest brands.

North American auto brands make an interesting case in point. GM’s current advertising suggests that managing eight brands was just impractical these days. I’m not sure just how accurate that is, as other companies seem to be doing just fine managing many more than eight brands. What is true is that GM has been singularly unsuccessful in managing the appeal of THEIR brands.

With all of the changes in organization and ownership at the “Big Three” in particular, important questions are raised about their remaining brands and how those brands should be positioned and about how new owners should manage the brands that they have acquired. What equity remains in North American car brands?

The reborn GM will have shed its Pontiac, Hummer, Opel and Saturn brands and will, one hopes, emerge from the ashes leaner and stronger. But a very real concern remains as to whether GM will be able to regain the confidence of the buying public around the remaining four brands.

A company's value proposition can't be carved in stone; it must be flexible and adaptable. The value we offer to customers is constantly changing, whether we intend it to or not.

The challenge we face in business is ensuring that a large percentage of customers, and particularly those customers who are critical to our long-term success, view our value proposition consistently and as we intended, and that they see real value in it.

The customer's perception of value is individualized and dependent on context and circumstances. What to one customer represents great value is to another a waste of money. What customers perceived to be great value in early 2008 may not represent the same value a year later.

What is Value Today?

If customer experience is a viable differentiation strategy in good times, it is doubly so today. At a time when most firms will naturally gravitate toward a strategy of cutting back, hunkering down and laying off—because that's what one is expected to do in hard times—this is a wonderful time for those who truly understand the potential of the customer experience to rise to the occasion.

I set out this morning to write a blog with no mention of subprime mortgages, recession, economic downturn, or bailouts. I figured that maybe we have all heard enough gloom and doom in the past few weeks. My message was to be about the role of the HR department in ensuring solid customer service and in delivering jaw-dropping customer experiences. Then, as I began to collect my thoughts, I realized that, in the midst of the economic crisis that has galvanized us all, I am still hearing customers complain loudly about terrible customer service, and occasionally regaling others with less frequent stories of wonderful, caring service encounters.

I attended two enjoyable social functions over the weekend, marking the holiday season. At both, I listened to conversations in which customer service seemed to be the second most discussed topic. Where I live, the weather is always the most discussed topic (it’s unusually balmy at the moment).

I find myself paying a great deal of attention in recent years to the content of human conversation, and am continually impressed by the percentage of conversation devoted to the details of how customers are treated by service providers; by retailers, restaurants, airlines, and telecoms, in particular.

Suddenly, and with very good reason, everyone is focused on the impact of the current world-wide economic crisis. How does a company maintain a customer focus in the face of an environment that cries out for cost-cutting, downsizing and laying off? There is much comment on websites such as this on the need to retain a sense of balance when faced with the temptation to cut back on expenditures on customer service and on the creation of positive customer experiences. The payback from such expenditures is not obvious when the emphasis will be, for the foreseeable future, on justifying every nickel spent.

The Economist newspaper recently labeled 2009 "the year of the CFO". Its editors predicted that the coming year will be characterized, as is virtually every period of economic downturn, by a return to an emphasis on financial leadership, exemplified by ruthless cost-cutting.

There is a conventional view that, if they are to achieve long-run growth, companies should create as many loyal customers as possible. It is also acknowledged that customers move through a series of stages en route to that exalted state where they are commonly known as "advocates." In fact, we may view the notion of customer loyalty along a continuum ranging from "blissfully unaware" at one end to “single-mindedly loyal" at the other. As part of a customer loyalty strategy, companies must have some idea of how to move customers successfully along the continuum.

But, first, let's disabuse ourselves of the notion that all customers are destined to become "advocates" or "raving fans." In fact, only a small minority of customers will become truly loyal. Some will try our products and services once or twice, having been attracted by our advertising or a special deal, and, having found us lacking, will decamp for the competition. Others, initially satisfied, will come back to buy again, until such time as a more attractive suitor comes along, or we do something really stupid and they leave disgruntled, dismayed, and disappointed.

A young woman in a research project I was conducting a couple of years ago told about a particular service provider she had called, angry as hell, fully intending to cancel her service. But the representative she encountered on the phone changed everything.

"I was really angry," she said. "As far as I was concerned, they had sold me the wrong service and I was paying far too much. But the woman on the phone was wonderful. She seemed to really care about me. She made sure I got the right service. She talked with me like a friend." In the end, the customer was fitted with the correct service and was quite happy.

Now, that's performance. But chances are, the service rep who helped our research participant did not get rewarded for her troubles. In many firms, incidents of successful performance such as this go unnoticed and unrecorded.