Tuesday, August 12, 2008

Nickel & Dime

"We can believe that we know where the world should go. But unless we're in touch with our customers, our model of the world can diverge from reality. There's no substitute for innovation, of course, but innovation is no substitute for being in touch, either." -Steven Balmer

United Airlines is soaring with promotion at this summer's Olympic Games. The brand's creative primetime commercials highlight the airline's new international first and business class, but is the company in touch with reality?

Earlier this summer, United followed American Airlines and started charging passengers $15 a bag for the first piece of checked luggage, $25 for the next piece and $125 for the third. They also charge $5 for snacks and $2 for non-alcoholic beverages. What's next? Inserting a token slot on the bathroom door?

Yes, the price of oil has skyrocketed, but is this a legitimate excuse to jeopardize the customer's experience? The added fee only encourages more passengers to jam their carry ons into the overhead compartments. Why not simply raise the ticket price by $15, instead of charging consumers a last minute fee at the terminal? Does a last minute add on develop a brand for the long term?

United should focus on creating a positive flying experience for ALL passengers, instead of promoting their exclusive first class service with expensive primetime Olympic commercials. Imagine if the company did not charge for checked baggage, reversed the strategy and awarded $50 flight vouchers as a simple thank you for flying with United. Wouldn't that help improve the company's image? $50 does not cover an entire flight, but it does entice and motive consumers to fly United again. ...more than a creative commercial and last minute nickel and diming.

Lets say, the average Olympic commercial costs $2 million USD for 30 seconds of airtime. If United skipped one Olympic commercial spot, they could avoid the $15 checked baggage fee and award $50 flight vouchers to over 30,000 passengers. Now, wouldn't that help improve a customer's experience, increase loyalty and generate positive buzz for the brand?

New customer acquisition is often the focus of business development, but companies should also focus on retaining current consumers to ensure longevity in the marketplace and not "diverge from reality."

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