The monetisation of customer experience has become one of the central themes of contemporary management. In a context where many products and services have become easily replicable, companies seek to differentiate themselves through the experience they provide to customers. This shifts the focus of competition away from the product itself and towards the value perceived by the customer. It is well understood that when this experience is consistent, relevant and emotionally meaningful, customers are more willing to pay a premium price.

The core idea is simple: consumers do not pay only for the product, but for the set of sensations, convenience, meaning and trust associated with the brand. In this context, customer experience becomes a strategic asset that can be monetised, although not all companies are able to convert experience into real economic value.

If creating experience helps sustain premium pricing, removing elements of value can have the opposite effect. Many companies, under cost pressure, end up eliminating components of the experience that were central to the customer. The problem is that, in doing so, they may destroy precisely what justified the customer’s choice in the first place.

A commonly cited example can be found in the aviation sector. When an airline removes services such as onboard meals, comfortable space or personalised assistance simply to reduce costs, it may be drifting towards a low-cost model without having the cost structure to support it. At that point, it loses differentiation without gaining price competitiveness.

This type of decision often reflects a limited view of cost management. What is internally seen as a cost, such as catering, personalised service or comfort, may, from the customer’s perspective, be a central element of the experience and value proposition. When these elements disappear, the brand no longer justifies the price it charges.

This reasoning applies to any sector. Removing variable costs, those borne by customers, is not a sound basis for defining a business model. After all, these costs only exist when there is revenue. From a short-sighted perspective, one could eliminate all costs if there were no customers. And we all know how that story ends.

In many cases, failing to understand the true business model leads to the erosion of the value proposition. The company enters a cycle of successive cost cuts that gradually degrade the customer experience. When this happens, customers begin to question the relationship between price and perceived value, opening the door to competitors.

Several lessons emerge from both successful and unsuccessful cases regarding customer experience:

· Customer experience must be understood as a central part of strategy, not as an ancillary cost. What creates value for the customer may well be what sustains the company’s profitability;

· Premium pricing is a consequence of superior perceived value. Attempting to maintain high prices while reducing elements of the experience tends to undermine trust in the brand;

· Strategic management requires a deep understanding of what customers truly value. Not all elements of the experience carry the same weight, but some are genuine pillars of the value proposition;

· Reducing costs without understanding their impact on the experience can lead to a gradual loss of positioning. Many brands fail not due to a lack of strategy, but because of a series of decisions that weaken what once made them unique.

The key question managers should ask is not only “how much does this experience cost?”, but above all “how much value does it create for both the customer and the brand?”. When this question is ignored, the path may lead to a loss of differentiation and, in extreme cases, to the decline of the business itself.

The graveyard is also full of great brands that are no longer great.

Pedro Celeste, Professor at CATÓLICA-LISBON