Posts Tagged ‘fees’

Add value, not fees

Tuesday, September 29th, 2009

crowded airportAccording to this article, all major U.S. carriers, aside from Continental and Southwest, have added a $10 surcharge to most of their fares for travel on three busy days around the Thanksgiving and New Year’s holidays: Nov. 29, the Sunday after Thanksgiving, as well as Jan. 2 and 3.

Rick Seaney, CEO of FareCompare.com, said the airlines likely added the charge because it was a quick, targeted way to charge more on peak travel days. The Sunday after Thanksgiving is one of the busiest travel days of the year, while the two dates in January are popular with holiday travelers as well.

So the airlines are charging passengers a $10 surcharge for the privilege of enduring congested airport traffic, fewer parking options, longer lines at the terminal and security, packed gates and airplanes, and the inevitable delayed flights and mishandled bags that result from seasonal volume.

Revenue-focused companies are really good at identifying and creatively labeling fees and surcharges and the asterisk keys on the keyboards of their legal departments are commonly worn from excessive use. If these companies would channel the same energy and ingenuity into customer satisfaction that they use to identify and apply extra fees and surcharges, they would more than recover the revenues gained from this irritating practice.

Customer-focused companies deal with seasonal spikes in business by adding value, not fees. When Disney is extra busy over the holidays or during spring break, it doesn’t charge its guests fees or surcharges to offset its increased costs. Instead Disney adds value by offering packages that bundle airfare, lodging, and theme park admissions. Disney also adds staff to minimize delays and provides additional entertainment by its characters to amuse children as they wait in line to enjoy another ride. That’s how a customer-focused company deals with volume—not by charging extra for it.

Anytime making money becomes more important than properly serving customers, the business ultimately suffers. When the bottom line drives a company, it will resort to added fees and surcharges while cutting back on service and quality in order to improve its near-term operating statement at the expense of long-term customer goodwill and loyalty.

There should be a litmus test for any such charge. If a board of directors would vote for it unanimously while a group of customers would oppose it unanimously, get rid of it. Instead, make your money the old fashioned way: Earn it by providing value to customers by delivering exceptional product and service quality that justifies the price you’re charging.

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