Why Status Sells Better Than Service

And how many times have we heard retail executives complain that they can no longer afford to have a satisfactory number of experienced, well-trained salespeople on the floor because the added cost would make them uncompetitive?

You get the same story from insurance companies and software makers in explaining why you have to wait endlessly on hold to talk to someone who can explain why your claim was rejected or how to unstick your computer: Our customers won't pay for that.

In the lingo of business strategy, these industries have become commoditized, no different than the businesses of selling gasoline or corn oil. And the common view among executives in these industries is that no matter how much or how little service you wrap around these commodity products, customers will invariably base their decisions on price.

Except, of course, when they don't.

I wonder what the beleaguered chief executive of JetBlue would say this week if you asked whether his passengers would have been willing to pay a bit more to make sure their favorite airline had the people and systems in place to respond to inevitable weather emergencies.

Would the owners of Woodies or Marshall Fields or Jordan Marsh still have department stores to run if they had tried to match Nordstrom's service rather than Wal-Mart's prices?

And who do you think will win the "broadband war" between the cable companies and the phone companies -- the ones with the lowest price or the ones with the best service?

Not every business can be lucky enough to be selling thousand-dollar handbags to rich women who have gone handbag crazy. But every business can learn an important lesson from Hermes, Dior and Jimmy Choo -- namely, that you'd be surprised how much people are willing to pay for something they really value.

Steven Pearlstein will host a Web discussion at 11 a.m. today athttp://washingtonpost.com. He can be reached atpearlsteins@washpost.com.