There is a cost to everything we do in life. Everything. Try to think of the least expensive way to spend your time - sitting on a bench in the park - and there is a cost. It's called opportunity cost, and it's an economic term.
To explain, say you work at a job where you make $10 / hour. You have a 4-hour shift on Saturday. After work, you are going to a movie with your friends - it costs $10. Your boss asks if you would like to stay an extra two hours to fill in. You decide to go to the movie instead.
The actual cost of going to the movie is $10. That is the accounting cost. The opportunity cost is $20 - $10 / hour for the two hours you could have been working. You never actually paid $20 to go see the movie, but you lost out on the opportunity to earn it.
In the same way, sitting on a bench in the park has a cost because you could be doing something else. The opportunity cost of sitting on a park bench is missing out on reading a book or watching a TV program or talking to your friend.
I have recently encountered the consequences of opportunity cost in a bad way - on my radio. First of all, let me explain how I have my car radio set up. I have six stations saved. On my way to work, I like to hear talking - I think music puts me to sleep. On the way home, I like music to sing along to. If none of my six stations have something I am interested in hearing, I scan the other stations - usually looking for one particular Sugarland song in particular (the opportunity cost of not listening to country stations is that if the one song you like is country, you won't hear it)!
My stations are as follows:
1. Mixed rock. The morning show is fun with lots of prizes, people calling in, laughs, jokes, and more. It makes you feel like you're with a popular crowd just to listen to it.
2. The Lawrence Station. This station plays some good songs every now and then, but then you have to put up with the sickening feeling you get in your stomach from the constant Jayhawk propoganda. Yuck. In the morning there is a show called the Bob and Sheri chatroom - people call in and talk about a subject. I have heard some crazy stories on it!
3. This is my favorite station both for music and talk. The morning show is two guys that crack me up and have fun games and informational tidbits. I usually can hear a good song on this station.
4. Christian station. Now that the dysfunctional married couple is no longer hosting the morning show, it's actually interesting sometimes, but the music is not varied at all. Even songs I like are overplayed.
5 & 6. These are both light rock stations. They have morning shows, but they play a larger percentage of music in the morning. The only difference I know between the two is that at night 5 plays Delilah and 6 plays John Tesh. Also 6 plays Christian music on Sunday mornings.
Now that you know what my choices are, I will tell you my problem. Chances are you've had the same problem. When I get in my car (usually to go home after work) I hear an advertisement. So I switch to the next station: advertisement. Then the next three are songs I don't like, and then one more advertisement. :(
I try again, hoping that either one of the advertisements or songs will have just ended, and a great new song will start. Still nothing. Out of desperation, I settle on one station (say #5) and listen to a song I only halfway like. When that's over, I start my channel surf again, only to discover that station 1 was playing my song! You know - that song that's fairly new and you just can't get enough of it? And by the time I get back to station 1, it's over.
That is opportunity cost at its finest. If I had kept channel surfing for just a few seconds I would have heard a five-star song, instead of a three-star song. Now I've had to waste 3 minutes of my drive home on a song I barely like, and I didn't get to hear the good song.
The crux of the matter is that once you catch the tail end of your song on a station, you know it's going to be a while before they play it again. Your only hope to hear the song now is to go to another station. (This is the problem with my Sugarland song - whenever I hit a country station, they are playing a Sugarland song, but it's the wrong one).
As of right now, I have no idea how to fix this problem. If I stay on one station, I am essentially multiplying this effect five-fold by never listening to the other stations. I suppose I could just buy the song on iTunes and listen to my iPod in the car. But you miss out on some of the fun by not listening to the radio in the car.
And once again, we're back to opportunity cost.
Sunday, September 27, 2009
Friday, September 18, 2009
The Pitfalls of Brand Loyalty
I stand in line at a ticket counter. The attendant is talking to a friend on the phone and glaring at me as though my presence is somehow interfering with her job. I get on the airplane – they hold us on the runway for two hours for a one hour flight because the air conditioner doesn’t work. There is no apology. There is no getting off the plane. You are expected to deal with it. I ask for help at a store. The lady at customer service says she can’t help me, shrugs her shoulders and moves on to the next customer.
Whatever happened to customer service?
I’m not that old, but in the world I was raised, the customer is always right. If the person behind the desk promises me points for my hotel stay, I should get them. I don’t want the company telling me that it’s against policy to award them. It’s not my fault that one of their employees got the message wrong. I’m the customer. I’m right.
And what about deals? What happened to the world where companies try to match their competitor’s deals? I know not all companies can afford to do this. However, there are situations where a little customer service would go a long way. Recently we were at a craft store where the item we wanted (which was on sale) was sold out. We asked if we could get a similar item at a discount. The store said no. Absolutely not. They didn’t even offer us a rain check on the sale. Instead, we found a similar item on sale for twice the discount at a competitor. The craft store lost its sale because it wasn’t willing to deal.
And when a company can’t bargain, at least they can provide good customer service. I have been going to the grocery store by my house for a year. No one has ever smiled at me. If they wish me good day it is heartless. This lack of service really gets to me because I used to be the one working at the checkout counter. And I loved my job! Even when I didn’t feel like it, I grinned at customers and was polite, and that forced smiling rubbed off and made me happy! And when a customer asked me for help, I got them help! I accompanied them around the store, and if I didn’t know the answer, I stayed with them until I could drop them off with another associate who really could help them. I didn’t just shrug their question off.
I write this little rant because I feel like the service in the world around me is collapsing at an alarming rate. I would think that people would try extra hard at their jobs in these times because of fear of losing them. How many laid off workers would love to have a job in customer service? I would imagine that a company that noticed poor service among their employees would trade those employees out for new ones that could actually retain customers.
And therein lies the problem. Customer retention.
There is a certain loyalty in all of us that brings us back to the same brands over and over again – usually some perceived benefit. That benefit should be perceived quality – which includes service. However, sometimes we find ourselves returning again and again to brands where service is poor. Like a person in an abusive relationship, we take the poor service over and over again expecting it to end someday. Why?
The number one reason is money. For instance, I will take a flight on the cheapest airline I can find, even if I know that they will be late, that they will be rude, and that the entire experience will stress me out. Fortunately, the only airline that even pretends to show customer service, Southwest, usually also has the most competitive prices – and no extra fees. I would have thought other airlines would have tried to benchmark Southwest’s models. But why should they? If they can undercut their competitor’s price – even by a fraction – people will fly with them. I do.
Another reason is convenience. I go to the grocery store near my house because I can walk to it. If I have a lot of shopping to do, I prefer go to Wal-Mart – service is better, selection is just as good, prices are lower, and the store is clean. But I enjoy a walk now and then, so I keep going back.
What about other offers? The reason that I stay at the hotel chain I do is because of points and rewards. Because I’m the highest level of customer they have, I usually have a great stay. My loyalty has been purchased by great treatment in the past. But what happens when that treatment fails, as it has recently? For some unknown reason service dropped off, and without a check on the faulty hotel by the chain itself, it will continue to fail. But what do I do? I still go to that chain because I want to maintain my high status – and because I can get points (to use at future stays where inevitably I will be treated rudely).
And finally, sometimes we use a vendor because we have no choice. I have to shop at the store with bad service because I am buying a specialty item for a friend I can’t get anywhere else. I go to the dirty gas station because I am out of gas and it is there. I go to the restaurant that has proven to have bad service time and time again because that is where my friends are going (and they won’t listen to me)!
What I’m trying to say is – there is a sense of helplessness in dealing with companies today. I can write letters and talk to the manager all I want. But in the end – it’s sometimes impossible to follow through on threats to quit using them. (And sometimes it is a manager or a corporate help line who is the offender). Every time I fly a certain airline I promise myself it is the last time. But my credit card gets points through them – I’ll have to use those sometime – which means, at a minimum, one more flight. And then I book yet another flight with this carrier because it saves money.
We are often told that we should do the right thing even if it’s hard to do. This is usually in reference to being kind to others. But perhaps doing the right thing means doing the right thing for ourselves. I can save my health by cutting back on stress, and that means avoiding stores that provide horrible service.
In addition, I can offer a service to the company as a whole – “So and so was incredibly rude. As such I can promise you that I will not shop in this store ever again.” And make good on the promise! And companies will respond. (You have to let someone know about the poor service you are receiving or it won’t change – a company may not notice your exit, but they will take note that you left. For fear of it happening over and over again, they will do something about the situation. If you just leave, the rude service will continue – it will just be addressed toward someone else).
So what does this take? Am I ready to threaten to switch hotel chains – and make good on it? Am I ready to pay up to $100 extra per ticket to fly on a plane that will treat me right? Am I ready to cancel my credit card so I no longer get points through a faulty service? Or do I continue to aid and abet the system that gets away with treating the customer poorly?
It’s hard – but maybe somebody has to do it.
Whatever happened to customer service?
I’m not that old, but in the world I was raised, the customer is always right. If the person behind the desk promises me points for my hotel stay, I should get them. I don’t want the company telling me that it’s against policy to award them. It’s not my fault that one of their employees got the message wrong. I’m the customer. I’m right.
And what about deals? What happened to the world where companies try to match their competitor’s deals? I know not all companies can afford to do this. However, there are situations where a little customer service would go a long way. Recently we were at a craft store where the item we wanted (which was on sale) was sold out. We asked if we could get a similar item at a discount. The store said no. Absolutely not. They didn’t even offer us a rain check on the sale. Instead, we found a similar item on sale for twice the discount at a competitor. The craft store lost its sale because it wasn’t willing to deal.
And when a company can’t bargain, at least they can provide good customer service. I have been going to the grocery store by my house for a year. No one has ever smiled at me. If they wish me good day it is heartless. This lack of service really gets to me because I used to be the one working at the checkout counter. And I loved my job! Even when I didn’t feel like it, I grinned at customers and was polite, and that forced smiling rubbed off and made me happy! And when a customer asked me for help, I got them help! I accompanied them around the store, and if I didn’t know the answer, I stayed with them until I could drop them off with another associate who really could help them. I didn’t just shrug their question off.
I write this little rant because I feel like the service in the world around me is collapsing at an alarming rate. I would think that people would try extra hard at their jobs in these times because of fear of losing them. How many laid off workers would love to have a job in customer service? I would imagine that a company that noticed poor service among their employees would trade those employees out for new ones that could actually retain customers.
And therein lies the problem. Customer retention.
There is a certain loyalty in all of us that brings us back to the same brands over and over again – usually some perceived benefit. That benefit should be perceived quality – which includes service. However, sometimes we find ourselves returning again and again to brands where service is poor. Like a person in an abusive relationship, we take the poor service over and over again expecting it to end someday. Why?
The number one reason is money. For instance, I will take a flight on the cheapest airline I can find, even if I know that they will be late, that they will be rude, and that the entire experience will stress me out. Fortunately, the only airline that even pretends to show customer service, Southwest, usually also has the most competitive prices – and no extra fees. I would have thought other airlines would have tried to benchmark Southwest’s models. But why should they? If they can undercut their competitor’s price – even by a fraction – people will fly with them. I do.
Another reason is convenience. I go to the grocery store near my house because I can walk to it. If I have a lot of shopping to do, I prefer go to Wal-Mart – service is better, selection is just as good, prices are lower, and the store is clean. But I enjoy a walk now and then, so I keep going back.
What about other offers? The reason that I stay at the hotel chain I do is because of points and rewards. Because I’m the highest level of customer they have, I usually have a great stay. My loyalty has been purchased by great treatment in the past. But what happens when that treatment fails, as it has recently? For some unknown reason service dropped off, and without a check on the faulty hotel by the chain itself, it will continue to fail. But what do I do? I still go to that chain because I want to maintain my high status – and because I can get points (to use at future stays where inevitably I will be treated rudely).
And finally, sometimes we use a vendor because we have no choice. I have to shop at the store with bad service because I am buying a specialty item for a friend I can’t get anywhere else. I go to the dirty gas station because I am out of gas and it is there. I go to the restaurant that has proven to have bad service time and time again because that is where my friends are going (and they won’t listen to me)!
What I’m trying to say is – there is a sense of helplessness in dealing with companies today. I can write letters and talk to the manager all I want. But in the end – it’s sometimes impossible to follow through on threats to quit using them. (And sometimes it is a manager or a corporate help line who is the offender). Every time I fly a certain airline I promise myself it is the last time. But my credit card gets points through them – I’ll have to use those sometime – which means, at a minimum, one more flight. And then I book yet another flight with this carrier because it saves money.
We are often told that we should do the right thing even if it’s hard to do. This is usually in reference to being kind to others. But perhaps doing the right thing means doing the right thing for ourselves. I can save my health by cutting back on stress, and that means avoiding stores that provide horrible service.
In addition, I can offer a service to the company as a whole – “So and so was incredibly rude. As such I can promise you that I will not shop in this store ever again.” And make good on the promise! And companies will respond. (You have to let someone know about the poor service you are receiving or it won’t change – a company may not notice your exit, but they will take note that you left. For fear of it happening over and over again, they will do something about the situation. If you just leave, the rude service will continue – it will just be addressed toward someone else).
So what does this take? Am I ready to threaten to switch hotel chains – and make good on it? Am I ready to pay up to $100 extra per ticket to fly on a plane that will treat me right? Am I ready to cancel my credit card so I no longer get points through a faulty service? Or do I continue to aid and abet the system that gets away with treating the customer poorly?
It’s hard – but maybe somebody has to do it.
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