You are surrounded!

I’m sure there is some executive at Apple who’s bonus is based on how many spare power adaptors they sell. The damn things are about as reliable as an American car back when Ralph Nader wrote “Unsafe at any Speed.” These things have a half life of about 4 months and they cost a bit under a $100 each to replace. What a scam.

Once you have a loyal customer the devil is always tempting you to insist that he buy some add-ons, spare parts, etc. The more captive he is the more you can pile on this kind of abuse.

The hotel I checked into at the end of a long day recently had a “manditory resort fee.” No, it’s not a tax from the local municipality it’s just an extra charge they throw onto everybodies bill. Now isn’t that hospitible of them? Of course the room had trays of food layed out with a prices list next to them. The lobby had a booth, just in case you wanted to buy one of their beds.

At the dentist’s office yesterday they attempted to sell me a hundred dollar electric tooth brush. Three extra brushs for $30 dollars. This was urged on me by the dental hygienist as something they strongly recomend. It’s not like I can do my own dentistry. So I go and place myself into the hands of a proffesional. Having handed the responsiblity over to this professional his agent then attempts to upsell me some accessories. I wonder if dental hygienist school now includes additional training on how to upsell the customer.

How long before all the professionals do this? Doctors could sell bedpads. Surely we can find something for lawyers to sell you that will help with your day to day legal hygiene! What’s wrong with my plumber, he hasn’t even tried to sell me a powder that I must sprinkle into my drains once a week. I do love my pipes!

Shifting gears, a bit, these customer loyality/lock-in senarios are very similar to the variation on a public good; the club-good. Club goods are a scheme for addressing some of the failure modes of public-goods; for example overcrowding or freeriding. Your public swimming pool might become over crowded; so you create a club and use that to both limit access and to assure all the users are paid-up club members. In a sense what your buying when you purchase a hotel room is a shortterm membership in the hotel-club. Once inside the club the facilities behave just like a public-good – abundant and collegial.

The fence around the club helps to assure that we avoid the organizational problems of the public-goods – freeriding and overcrowding for example. But, if we are running the club – and we are feeling a bit evil – we can use that same fence to hold the members hostage and abuse them. Substituting the appearance of abundance for the reality, subtituting the collegial for the salesman’s bonhomie.

On the plane they charged $2 for a headset to watch the movie, and then called upon our solidarity with our our fellow members of the flight club to draw down the shades. They packed us in like cattle. So much for using the club idea to resolve the overcrowding problem.

I should probably mention that I had managed to get that hotel room mentioned above for about 30% of list price. Which only brings us around to taking note that one of the things the club owner can do if he manages the fence to his advantage is discrimitory pricing.

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