Profits - happy or crappy?

Nov 15 2006 by Andy Hanselman Print This Article

Rather than destroying relationships with customers by trying to extract every penny from them, real competitive advantage comes from providing extra services that customers actually value.

I have just picked a friend up from a local airport after her holiday in Portugal. As I entered the pick up / drop off car park, I noticed that they've significantly reduced the amount of 'free' time allowed to 10 minutes.

It used to be 20 or 30 minutes – just enough time to allow you to help your relatives get their baggage to the check in and enough leeway to allow for late flights or delays at immigration or baggage collection.

I'm all for businesses making a profit, but this just strikes me as being just another cynical ploy to extract more money out of users of the airport. Your free 10 minutes is actually likely to cost you £1.50.

I can afford £1.50, but that's not the point. I feel that they're treating me with contempt, underestimating my intelligence, or exploiting me – possibly all three.

They're treating me with contempt, underestimating my intelligence, or exploiting me
This is a classic example of 'crappy profit' – something that might make money but also hinders, reduces, or in some cases, ends a relationship. It usually results in the customer feeling negatively towards the supplier.

'Happy profit' on the other hand comes from providing people with something extra or a superior product or service they are happy to pay for.

Going back to the airport (only if I have to!), I'm sure that on paper the numbers add up. Imagine the airport operator's glee when it calculated how much extra revenue it would make they'd get by reducing the allowed time.

In fact, I imagine that they had probably calculated that the average turn around time was 15 minutes, so 10 minutes would be the optimum revenue generator. Crappy profits get you thinking like that!

But it isn't just the money. With all the drivers in a rush to get through in 10 minutes, there was increased tension at the exit barriers. One driver in front of me just missed the 10 minute deadline, but couldn't reverse to go and validate his ticket because of the queues backing up behind which were full of other drivers already on the nine minute thirty second limit!

The result? Irritated, annoyed people driving away with a bitter taste in their mouths.

There are lots of examples of crappy profits. A local hotel that charges to use its car park even if you're using their services. A shop that won't give you change unless you buy something. Customer service lines that charge premium rates. Over high commissions paid to financial advisors rather than fees. Huge bank charges for going overdrawn for a few quid.

A real bug bear of mine is the extortionate charges some hotels make for WiFi. It seems that they're exploiting my situation – the need to get online to simply to do my job. Why not make happy profits by providing it free?

A recent survey shows that free Wi-Fi increases sales and builds customer loyalty. It's no surprise really. The added value of free Wi-Fi makes me feel that someone recognises my needs and care about me while I'm away from the office.

And I'm not the only one who thinks like this. In a recent survey, more than eight out of 10 people said that they are happy to spend more with businesses that offer free Wi-Fi service and more than nine out of 10 would return again.

What a simple example of the benefit of building relationships with customers rather than trying to make a quick buck.

I'm not saying that companies should give things away for free and I'm all for charging a premium price for a superior product or service, but when customers feel that they have been ripped off, or exploited, even if it is only for £1.50, then the perception is that the balance between profits and customer service is wrong…. And as we all know, perception is reality.

Creating competitive advantage by providing extra services that customers actually value rather than trying to extract every penny from them seems a simple strategy. It's amazing so many organisations don't get it.

The choice is yours. Which would you rather be: happy or crappy?

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About The Author

Andy Hanselman
Andy Hanselman

Andy Hanselman helps businesses and their people think in 3D. That means being Dramatically and Demonstrably Different. An expert on business competitiveness, he has spent well over 20 years researching, working with, and learning from, successful fast growth businesses. His latest book, The 7 Characteristics of 3D Businesses, reveals how businesses can get ahead, and stay ahead of their competitors.