My friend Dorothy and I checked out a new restaurant in Philadelphia this week that's supposed to be an updated take on South Philadelphia's famed Italian restaurants where spaghetti and meatballs are serious business, and the sauce is called "gravy" — Ralph's, Dante & Luigi's, Marra's, to name a few. Once we placed our orders and settled in, we drank a couple sips of wine and began wondering when they'd bring the yummy bread Italian places are always known for.
No such luck. They charge for bread, and when it arrives, we notice that it tastes like a regular old hoagie roll. That's no update over these older establishments' bread quality and generosity.
Yesterday, I picked up soup and a salad from a nearby vegan/gluten-free place, and same thing. Want bread with that? Pony up.
A Mexican restaurant we love and dine in often used to serve chips and salsa complimentarily, but then they halved the size of the basket for the chips and began charging for the second one
Looking over recent bank statements, I noticed that my bank — which calls itself "America's Most Convenient Bank" — is now charging $1 for a paper statement and $3 to use an ATM that is not one of theirs. Convenient? I think not.
Are we becoming the Nickel-and-Dime Nation?
It seems to have begun with the airlines, which stripped everything out of ticket prices to upsell or charge a la cart for whatever they can. Some hotels still charge for Wifi, which is about as smart as charging for electric or cable TV or running water in the room.
Now it seems banks and restaurants are getting in on the action. Are we about to face an onslaught of a la carte, petty pricing?
Nickel-and-diming customers is not a smart growth strategy. You may make a little dough on bread or tortilla chips, but you're annoying customers and undermining hospitality. Build the cost into the menu pricing strategy.
It's one thing to see this sort of niggly pricing from small business owners, but you'd think larger companies, like a bank that likes to think of itself as having cornered the market on convenience would know better. I'm sure the cost to run a bank these days, post-Great Recession and all the ensuing regulations, has increased. However, charging me $1 for a paper statement is not game-changing innovation.
Other companies do the same thing. I had an annual service contract from a company that increased the fee by 10 percent each year. After a few years, that adds up, with no additional value offered. Looked at your cable bill lately? Yikes! These little charges, which may be no big deal to each customer, multiplied by tens or hundreds of thousands of customers mean big dollars for them.
The problem with nickel-and-diming is that companies roll out these silly charges in sheepish, defensive, sneaky, or arrogant ways. They seem to know they're being annoying and to be too unimaginative to really figure out a pricing strategy that would delight customers.
Take a lesson from Virgin America
A few weeks ago, I flew to and from Los Angeles on Virgin America which monetizes everything. Of course you pay for cocktails, to check luggage, and for any food. They also charge for movies and internet access, bombard you with third-party and Virgin promotional messages, and they upsell you at every turn. But you know what? As customers, we don't mind. In fact we may actually like it.
Virgin delivers an experience of their brand and service that is young, hip, fresh, multi-cultural, and 21st century. The flight attendants are dressed in costuming right out of The Matrix. Climb aboard and hear contemporary music in a space filled with mod lighting. Each seat back has a screen that becomes your onboard computer.
Of course, you can watch a movie on this screen, but what you'll find when you turn on the movie is that you actually have choices. Lots of choices. No, they don't come free, but you don't mind paying when you have so much variety.
Want something to eat or drink? Simply place your order on the screen, and one of the Matrix Crew delivers it.
Need to speak to one of the other customers onboard? No need to get up; simply send them a seat-to-seat message via the screen. (I was tempted to send a message to the woman three seats behind me who couldn't stop talking loudly for six hours while I tried to sleep! I resisted.)
Virgin isn't sheepish at all. They have turned the realities of modern-day airline management, filled with ever increasing costs, into an opportunity to better serve customers. Instead of sneekily charging for movies, they've upgraded the whole movie watching interface with loads of services that make a long flight relaxing and comfortable.
If you're faced with the pressure of having to pass along a cost to customers, consider the best way of doing so before rolling out a nitpicky charge. How can you make the overall experience around this issue better and actually introduce an innovation? What do you want to communicate to existing customers who will be affected by this change?
Put yourself in your customers' shoes and make us want to pay that extra charge.
July 20, 2014
Gail Bower talks with Beth Brodovsky about how to use events to #DriveParticipationHave a listen, download to listen later, or read the transcript to find out more about how to leverage your events to engage donors, members, sponsors, and customers with your mission or purpose.