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The Solution To Everything: Charge More

Thu, 01/28/2010 - 7:41am
by David Mantey, Editor, PD&D

The current slugfest between Verizon and AT&T has made for moderate entertainment if you’re one of the few who still watch — or lack the capacity to skip — commercials.

Every time I see the other Wilson brother (Luke) wobbling around with a missing head or flinging postcards, it helps remind me that competition can still work in the consumer’s favor. Watch any half hour of primetime. If Verizon isn’t calling out AT&T for inferior service, the company is blindsiding the industry by cutting a third off its package prices. Hey AT&T, why should we pay for the enterprise package when there are only two places where you can reliably connect to the internet in Wisconsin: Madison and Milwaukee?

If you’ve been lucky enough to witness the thrown-together hack job AT&T is airing to match the price, you’ve joined me in the mild amusement brought on by professional abandonment and an American pastime — crude mudsling bordering on a 10-pace duel to the death. Who knew Luke could lose his charm? Luke, forget the mandarin orange landscape and stick with Wes Anderson, maybe a spin-off on a depression-gripped ex-tennis pro with daddy issues and love for his adopted sister.

As a recent interviewee recently proclaimed, “I apologize, but I seem to have digressed beyond all salvation. Where was I?” Sir, I asked for your name, title and company, and we wound up talking romanticism.  

Fox stood up to Time Warner over a dollar per subscriber. Hulu is pondering $5 fees (one of the many companies looking how to spin a free service into a new iTunes).

Every airline but JetBlue and Southwest is driving away droves of passengers with baggage fees astronomical enough to sandbag a moderate vacation planned for a family of four. This should be the rebirth of the road trip. What is gas money when everyone has to check two bags? Eight bags may cramp the Yaris, but have you sat in back of a plane recently? It’s a greasy, sweaty dog pile full of hangovers and mouth breathers who each need to use the bathroom immediately after the beverage service. As a former flight attendant once told me, “Airplanes are like buses that hold more people and get cleaned less often.”   

My distaste for the airline industry aside, some companies seem to have quit trying to find a new model or improve an old one. Companies are willing to ride increasing fees into the bankruptcy sunset across the scorched customer service plains.

While AT&T and Verizon are fighting for customers, airlines seem to have banded together in an effort to push potential passengers away and suck the lifeblood out of business travelers — those who wish they looked half as good as George Clooney in an airport bar. Cleveland Airport’s Bar & Grill had a mirror behind the bar; I miss, especially after a week under the Las Vegas sun.

If you have a reliable legacy product, shut down R&D and raise prices 180 percent over a six week period. It’s a gamble. Maybe you need a gentleman’s agreement with your competitors to shut it down for an indefinite amount of time in order to properly gouge.

The same goes for services and a repeat customer base. Instead of investing in new processes and technologies, take what you have and start out with a few miniscule service fees. It’s like ordering a pizza for $10 and reaching for a twenty to cover delivery, sauce, taxes, and tip even though the pizza was neither sliced or delivered in a timely manner. Granted, you can’t skate taxes, but somehow you still feel obligated to tip even though you’re covering the deliver charge as well.

Poke and prod. Nickel and dime. The possibilities are endless. You’ve heard of a death by 1,000 cut? Stop at 999 and you should be fine. I have a scoreboard in my office. AT&T: 57 cuts. NBC: 785 (with the whole Conan/Jay debacle). Delta Airlines: 1,001.

I gave Delta a chance after the Northwest Airlines deal, as a WorldPerks miles collector it was in my best interest. After a night on the floor in Austin and an additional $23 for the first bag, I’m out. Delta’s slicing and dicing has paid off, sort of — baggage fee revenues are up over $75 million. Delta still posted a $25 million loss in the fourth quarter of 2009. Medicine tasted? Nah, now carriers are planning to sell early boarding privileges to allow fliers without elite status to board early and find overhead space to stow bags.  

If the tone has yet to seep off of the page, no, this is not the way to go. In fact, I think it’s the shortest route to fire sales and public auctions.

Many believe that we are experiencing a perfect time to innovate, cherry pick talent, invest in new technology and remain actively competitive; others think it’s a time to be a cheap indiscrete cheat. Who will we see on the other end? Let me know what you think. That is, in the event, that there is an end in the next 20 years.

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