Transcription
So, I was booking a flight to Zorbier a couple of weeks ago, business class flight. And on the final screen, it asked me, you know, to choose my seats. So I did. I went in to choose my seats. And it wanted to charge me between 45 and £55 to choose my seat each way on a fare that was already costing almost £500. So I shut it down and I booked with Swiss Air instead.
The thing is though, it's not that4 or £55 or whatever it is. It's not the amount that was the problem. The problem was that it felt like a grift. Do you know what I do? You know what I mean? And it felt almost as if they were trying to squeeze just a little bit more money out of me. In fact, I'd even liken it to bait and switch. And the thing about pricing that turns up after you think you've finished paying for things is that you react to it differently. You react to the move, not the money.
So what the seat fee actually told me was that BA had stopped thinking of me as a customer they were trying to keep and started thinking of me as a customer they were trying to squeeze. Which, given that I was buying a business class ticket and have been flying with PA since I was old enough to fly on my own, I mean, it struck me as incredibly stupid. I, I think the, the thing that premium brands forget is that the price isn't only a price. It's a signal about how they see a relationship.
So the thing is, a budget airline, right, can charge you for a seat or they can charge you for a bag or they can charge you for the privilege of breathing or, as Michael has threatened, they can even charge you for going to the L because nobody flies Ryionaire expecting to be loved. You pay for what you get line by line and you know that it's not a surprise. But the minute a brand that positions itself on service, like BA or any of the airlines owned by AIG, Airingers, um, Iberia, all of them, the moment that they start behaving like a budget airline at the checkout, then the relationship changes.
There's, there, there's a particular failure of imagination in this kind of pricing, which, which is that the people who sign it off at corporate level or whatever. Yes, they can see the revenue from passengers who paid the fee, but they can't see the, the passengers who refused. So they can't see me sitting at my desk going, "Hell no." And in fact, I've actually had two clients in the last fortnight since I had that BA episode who were booking flights for me, one to Malaysia, one to Hong Kong. And on both occasions, I said to them, "Do not book BA." So that £45 or whatever it was, has cost them two long-haul business class fares worth about 10 grand. And they're going to lose more because I just won't fly with them again. Not if they're trying to fleece me like that.
And the thing is though, as well, luxury isn't immune to this either. Hotels are particularly fond of, of telling you that something is complimentary when you book an executive room or you book a suite. You know, the breakfast is complimentary, the lounge access is complimentary, the dry cleaning is complimentary. None of it is complimentary. It's included, but it's not complimentary. If it was free, the room rate would be the same as a standard room, which it's not. You know, the other one that, um, that I see quite often now is including the mini bar in the room rate. This is becoming quite popular, and I quite, I think it's a great idea in principle, but again, it's this measly penny-pinching that destroys any sort of goodwill.
So, I, I was staying in a hotel and the mini bar was included and, and they made this big song and dance about the mini bar being included in the, in the room rate. And on the second day of my stay, they, the mini bar hadn't been replenished. So, I went down to reception. I said, "Why hasn't my mini bar been restocked?" And I was told that it's included on check-in and it's not replenished after that. I said, "Fine. In that case, what I want you to do is I want you to check me out at 12:00 every day and check me back in at 3:00 every day so that I am a new check-in every single day." And you will then replenish my mini bar, right? Because you replenish the mini bar on check-in, don't you? I mean, it's bloody stupid. I don't actually drink alcohol. So, all they're losing is a few Pepsi Maxes and maybe the chocolate, but it's, it's, it's pennies there.
There is psychology for what's going on here actually in both of these situations. And it isn't about the money. It never is. It's actually called a relational contract. And it's the implicit set of rules that a customer thinks they're operating under when they buy from a brand that positions itself on service. The more you pay, the more the brand invests in you. That's what we think. Nobody itemizes every interaction. And there's a rough sense of mutual goodwill running underneath. Budget airlines, for example, or budget hotels or whatever, they run on transactional contracts, which is the opposite. So, every cup of tea is charged for, every bag you bring is charged for. You want a certain seat, then you have to pay for it. And you know what? There's nothing wrong with this model. This model is absolutely fantastic. You know exactly what you're getting because nothing is implied.
The damage from the BA seat debacle isn't actually the seat fee. It's that the contract was rewritten without anybody telling me. So I thought we were in one kind of relationship and actually it turns out that we were in another. In fact, we were in a toxic gold digger relationship actually, and now I'm reading every single interaction differently. So, it's left a bad taste in my mouth.
The other thing at play as well is price partitioning, which is what's going on when s charges appear at the end. Have you ever been in a restaurant where, um, you're handed a dinner's included, right? And you're handed a table dough menu, a set menu, and almost every item has a search odd. You want steak, search odd. You want this, search odd. You want this, whatever. So, you get totally pissed off by this because now you've got a bad taste in your mouth.
The thing is, your brain doesn't evaluate the, you know, the 90 for the seats, for example, against the total cost of getting to Zurich. It, it evaluates against the £500 fare that you'd already accepted. And suddenly, it's the same with this set menu. Suddenly, it's another 20% on top after you've mentally closed the deal, which feels quite reasonably, as I've said, like a grift.
The thing I suppose people signing off on these decisions miss is that high-spending customers are actually unusually sensitive to this kind of shift because they're paying for the category, not the product. So once a relational brand starts behaving transactionally, the customer doesn't downgrade their opinion slightly. They reclassify you. And once you've been reclassified as a budget brand with airs and graces, which is now what BA is in my opinion, there isn't a free structure in the world that gets you back.
So, if you're running a brand that sells itself on service rather than price, especially if you're a luxury or premium brand, the question before you add the charge or change the policy, isn't whether the numbers work on a spreadsheet. They always work on a spreadsheet. It's what the move is telling your best customers about how you now see them because that's what they're reading. So if you now start to nickel and dime and penny-pinch, the relationship that you had with your best customers suddenly becomes transactional rather than relational. That's not a good place to be. I'm not saying give away loads of stuff for free. I'm just saying include it all in the price. It's better that way rather than adding on options. Ryionaire adds on options. EA shouldn't. We'll do it with does now. Anyway, that's my run over for this week. I'll see you in the next one.