A couple of days ago I read an excellent piece on Venturebeat in which serial entrepreneur Scott Olson talks about how easy companies can loose (and win) customers. When I read the article I recognized a lot of what he said, so I decided to use it as the basis for a blog post as well.
Scott’s point is that companies often loose clients because of minor annoyances. He gives an example of a bureaucratic procedure to deposit a check at his bank that ticks him off, a procedure other banks do not have. It would be a simple thing to change, but often companies don’t realize that their customers are not happy.
I have the same with many companies that I am a client of. I especially hate it when they try to charge me for something that used to be free or that is free at many of their competitors. One example is wifi in hotels, unless there is no other solution I refuse to stay in hotels that charge me for wireless Internet. I changed the standard hotel I used to stay at in Amsterdam a few years ago because of this. I now normally stay in a hotel that is a bit more expensive but has free (and fast) wifi. A lot of hotels have missed my stay there just because they decided to charge USD 10-20 for wifi. I always check it out online before I book, and I know a couple of other business friends that have exactly the same attitude towards this.
When other companies make mistakes, this is a great way for their competition to come in and gain market share. As Scott Olsen put it in his article:
Want to steal your competition’s customers? Identify areas where they may be irritating their customers and ensure your company handles those smoother.
For example, Does the competition charge to pilot their product or service? Find a way not to. Does your competition have complicated, line item pricing? Find a way to simplify your own pricing. (This is an ongoing effort in the telecommunications industry.) For customer support, does your competition subject customers to a maze of automated phone tree responses? Get a person on the line with a command of the English language.
Some companies do not seem to understand the opportunities that this gives them. An example is KLM, since November 1 they charge their customers an additional EUR 50 per suitcase if you bring more than 1 suitcase on flights to and from the USA. A great way to make your customers unhappy before their trip has even started, when they during check-in have to pay EUR 50 (or more) extra. And you know what their argumentation is? Because many other airlines also do this. What’s the management thinking?
This would be a great way to differentiate yourself from the competition, show their passengers that KLM does not charge this and you might win some of them. How much money would KLM make from this? Most business travelers have only 1 suitcase or only travel with hand luggage, tourists normally travel together and likely won’t have more than 1 suitcase per person either. So let’s say an additional 50 suitcases per flight @ EUR 50 per suitcase, makes EUR 2500 more revenues per flight. Does that outweigh the number of unhappy customers? In the short term maybe, but in the long run I don’t believe it.
There are always easy opportunities to do a better job than the competition, but only a few seem to to something about it. For example, I used to use Twitpic for uploading pictures to Twitter. But I got tired of always having to email the pictures (it only takes about 30 sec. but it’s annoying). Also their iPhone app is useless, check the comments here. Then I saw a tweet about how well Mobypicture‘s app works on the iPhone and I downloaded the free app. It works flawless and very fast, and I can upload my pictures not just to Twitter but also to many other services such as Flickr and Facebook. I started using it last week and I don’t think I’ll ever use Twitpic again. Making an app is not very difficult, but it can make a huge difference for customers. Mobypicture did it right. As Scott Olson put it, don’t follow the competition, but excel where your competitors suck.
You make good points, but remember in KLMs case, the suitcase issue provides additional benefit in the sense that there will now be more space for cargo (revenues from this are very high – especially on US routes) and in the event the space stays empty, quite a bit of fuel can be saved. So the benefit is a little more than 2500. But still, KLM could definitely market it differently and use a different excuse other than saying other airlines are also doing it!
You're right, there are indeed more benefits for KLM than just the additional EUR 50/suitcase. Still I think it's not a smart thing to do 🙂
"I now normally stay in a hotel that is a bit more expensive but has free (and fast) wife"
Might want to change that 😉
Cheers,
Toine
"I now normally stay in a hotel that is a bit more expensive but has free (and fast) wife".
I like the pun 🙂
That may not only apply to the compete to win clients but also to the talent competition as well. Company can easily provide a set of luxurious keypad and mouse to star developer however at some bureaucracy huge firms star developer have to bring their own favorite keyboard. The cost of keyboard is trivial compare with salary but it can makes people happier and feel company care about them. By the way, in 3rd paragraph there is a "wifi" spelled as "wife" 🙂
@Rooijmans @Anonymous @Leo Thanks for noticing, changed the typo 🙂
Hi Marc,
I should have had this post in my pocket at the moment when I was in Beijing when I checked out. I had EXACTLY this sort of difficulty at a hotel we were staying at near the Forbidden City, which precipitated a rather lengthy debate with the property's On Duty Manager, the GM, and then when I wasn't satisfied, the Regional Manager of the chain's Asia ops based in Sydney.
I eventually paid the toll with a 20% rebate — because we were running terribly late for our SHA return flight at that stage already — but since they *twice* sent me an online survey to complete after I'd gladly paid and partially admitted fault, I replied diplomatically and accordingly but didn't pull any punches. I told them their internet policy was highly deceptive (especially given the rating of the hotel) and IMO totally counter-productive to the image they were trying to leave in the minds of their target market, not to mention their disgruntled guests.
By the way, I've sent the GM this in solidarity. 😉 I'm still kicking the issue around with them.
–ADM
So true. In law, it's the "extra" charges that really slay people. Things like charging for a small copying job, or for sending a fax, or for long distance telephone calls. My firm long ago decided that we would spend nearly as much money tracking these sorts of things as we would collect on them. Not to mention the not so small side benefit we realize by not pissing off our own client.