Can’t we think of anything more creative than the freebie?
The last 100 yards of my walk to the office is along a busy retail thoroughfare. Today, as usual, I walked past the local Tesco and Boots and, as usual, their lorries were outside replenishing their stock, and the traffic warden was putting a ticket on each windscreen.
“Morning John,” the warden says to the Tesco driver, “Morning Bob,” the Boots driver shouts back. This ritual happens every morning with the same traffic warden and the same lorries.
Now, in my book, a parking fine is meant to be a deterrent, not an extra form of income for the local council.
Early in my career, I worked on the current account product team for a retail bank. My role included pricing and forecasting revenues from our core product. Then, as now, banks offered “free banking”, which meant we had to recoup the costs of running those accounts via ancillary fees. The biggest was the “unauthorised borrowing fee”, in other words going overdrawn “without permission” – an interesting concept for a brand intent on winning new customers. As a mere junior, I found it immoral to rely on people’s indiscretions in order to make my numbers each month.
The airline business is no different: how many people have been able to buy a flight for the ridiculously low price that is initially claimed, once the cost of paying for the ticket, printing it, and, God forbid, any luggage has been added?
What about vouchers and promotions? Every product manager builds in a very low redemption rate, on the assumption that few customers will bother to cash in their gift voucher or hand over their coupon.
Every time I’ve tried to do something about this I’ve been told “it’s marketing’s fault. You’ve trained the customer to expect something for nothing – we have to pay for this somehow.” This may be true but is our industry that uncreative? Can no-one offer a genuine proposition in a form that customers are willing to pay for? Alas, history suggests this not to be the case. In the same way that the council has built the revenue from its tickets into its business plan, Boots and Tesco have built the cost of fines into their delivery charges. But somewhere, we have all got this wrong…
