WOULD YOU NICKEL-AND-DIME A FRIEND?

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WOULD YOU NICKEL-AND-DIME A FRIEND?

May 21st, 2008

Your neighborhood video store. Your cell phone carrier. The dealer who sold you your last car. The airline you flew last week. Your bank. What do all these companies have in common?

Two things, really. One is that these categories generally score quite low on customer satisfaction surveys. The other is, all these categories have become infamous for nickel-and-diming customers.

It’s not much of a stretch to imagine that these two facts are related. After all, a lot of companies would agree with the notion that it is important for consumers to think of your brand as a “friend.” But is this nickel-and-diming something a friend would do?

What ever happened to the days when things cost what companies told you they would cost, without the incidental overages that have become almost expected in most transactions. The days before “plus shipping and handling” became code for “it’s gonna cost more than you think.”

Consumers these days are getting nickel-and-dimed everywhere you look, and it’s only getting worse. When we shop for clothes, we get hit with state sales tax. When we pay our utility bill, we get hit with a franchise fee. When we ask our server to substitute soup for French fries, we get dinged an extra buck. When we travel for business, we get nailed with destination fees, hotel taxes, additional baggage and ticket change fees.

And as consumers, we’ve had it up to here.

In all the research we do with consumers, when the issue of pricing comes up, inevitably the conversation turns to the practice of “nickel-and-diming,” and how consumers almost universally hate that much more than they dislike overpaying for a product.

What would motivate companies to cling to “non-transparent pricing?” A few possible rationales come to mind. One, of course, is that since most companies do this, it’s expected by the consumer, so it won’t be held against you. Another could be the fear that once they give their customers “something for nothing,” customers will take advantage of the company’s generosity and cost the company a fortune. Another more frightening possibility is that, deep down, some companies may not believe their products/services are worth what it really costs the consumer in the end.

Now, here’s an example of transparent pricing that left a positive feeling. My wife and I recently had some extensive electrical work done on our house, and part of the project was to add some new lighting fixtures and move some outlets. While in the midst of the job, our electrician noted that our living room, much like the living rooms of other 105-year-old houses, had only one plug outlet for the whole room. He took it upon himself to not only update that outlet, but also added two others to make it easier for us to place lamps, plug in vacuums, etc. And rather than charge us extra for that work, he folded it in to his quote. So while he would have been more than justified in itemizing the additional work and getting an extra $100 or so out of us, he determined that he was making enough on the job to throw that in as an extra. As a customer, I really appreciated that. It made me feel special and important. And guess who I am going to call next time I need an electrician?

In conclusion, if creating a positive customer experience is important to you, a great place to look is your pricing structure. Is your pricing transparent? Can you use it to pleasantly surprise customers rather than irk them?

Posted by Mickey