One Smidgen of Rant, Two Dollops of Can't, and a Cup of Alignment & Transparency, to Illuminate and Praise Peace and LUV

The Internet is filled with rants. There are sites devoted to nothing but. And many blogs, of the "this is my day" variety, have virtual reams of rants.

My guess is that most of those rants are for venting steam, pure-and-simple, and done out of self-interest only, rather than done for illuminating some grave injustice for all the world to see, but my guess is also that there is a certain entertainment value to a well-done rant if the rant is easy to relate to. So people are drawn, let's say, to well-drawn rants.

To the best of my memory, I haven't ranted in here before. But that changes now, at least a smidgen, as, purely for the purpose of illuminating a very important financial health concept having to do with pricing and the structure of commercial relationships, I'm going to talk about something that made my blood boil. Hopefully it will entertain as well as inform, because, believe you me, it is a common thing I am about to slightly rant about. And, if not, at least I got vented.

* * *

Years ago, in JFRQ Consulting's Backgrounder FAQ, I wrote this:

Our general belief is that a sound revenue model is one
that, among other things, minimizes conflicts of interests
between the client and the person providing services to
the client. Our further general belief is that the two most
important factors involved in accomplishing that goal
in the financial services arena are (a) alignment,
which means that compensation under the revenue
model closely tracks delivery of value to the client, and
(b) transparency, which means that the general
workings of the revenue model are well-known to the
client in the first place, and simple enough to be easily
understood.

I have since come to believe, with my heart of hearts, that this Alignment and Transparency framework can apply in far more settings than just the financial services arena. In fact, I see the framework applying to most relationships -- commercial, social and, yes, even spousal.

But there's no time to go into all that today. Instead, as a result of two interactions I had as a customer, I want to talk about that A&T framework from the customer's perspective.

From the customer's perspective, the two prongs of the A&T framework are: am I paying a price that corresponds with the value I am receiving (alignment), and do I understand what's going on with the transaction, including what I'm paying (transparency)?

* * *

United Airlines is a company that I have sworn off doing business with, over and over again, because I find the culture there to be among the worst commercial cultures with which I've ever interacted. But somehow we use them because they are huge at SFO and, yes, because they got their hooks into us with those non-transferable miles (note: there are plenty of agnostic mileage programs out there, where your miles work with many carriers; do not get hooked into a single-carrier if you can help it!).

Without reciting the whole sorry story of United's culture, I'll encapsulate the whole thing by saying that years ago United and its employees worked out a deal that looked like the proverbial win/win, in which the employees would have a big ownership stake in the success of the company. But, as it happened, the employees bought in BigTime at pretty much the WorstTime ever (note: never buy into any large position all at once!). One big humongous bankruptcy later, with the employees having taken it on the chin over and over and over and over again, the company is back on its feet making some money. But the people inside are very, very wounded.

Now, I can empathize with that story, and feel their pain. These employees saw so many of their hopes dashed, and so much of their financial health battered by a seemingly simple, but hugely transforming, career choice of "United" rather than, say, "Southwest" (Southwest is the success story in this field, with a ticker symbol of LUV (I kid you not), and a culture that is generally thought to be among the best in corporate America).

But, sorry folks, my empathy is not the sort of thing that knows no bounds. Financial health abuse aside, somewhere along the way the culture that is United became a culture that almost always ends interacting with me in a way that ends up with my blood in a boil.

* * *

So last night and this morning today I had a a classic non-aligned, non-transparent interaction with United. Thankfully, it was preceded by something of a much happier sort. First, though, it's on to the decidedly unhappy United interaction.

United's online purchasing system was broken last night, which meant that after probably a dozen attempts (Maybe I punched the number in wrong? Maybe I need to put "street" in my address? Maybe maybe maybe . . . ) I simply could not purchase the itinerary I had saved at United's site the day before. I kept getting error messages. And so did my wife when she tried to do her own rezzies, on a different computer with a different log-on and everything. So it definitely looked like United's online credit card purchasing system was on the fritz.

So I went to Orbitz, where I ended up paying a bit more. But we just wanted to get the damn thing done and out of our hair.

* * *

Then lo' and behold this morning I find an email telling me that , even though United's website indicated I hadn't made the purchase, it had in fact worked. So now I had two rezzies, one with Orbitz and one with United, for essentially the same travel.

I say "essentially" because there's a twist to the story: I had wanted to tweak the itinerary I had saved at United's website the day before, so that it better lined up with my wife's schedule. So as United's website had been acting up, one of the things I had tried to do was to see if I could buy the itinerary as-is rather than the tweaked schedule, or vice versa. But neither worked.

Seeing this surprise email this morning, I immediately looked to see which schedule had, in fact , mysteriously and arbitrarily worked -- the first one or the tweaked one?

Ah, but of course, mais d'accord, it was the first, non-tweaked version. It was not the one I needed. The luck of the draw . . .

* * *

So having spent an hour and a half last night dealing with United -- 100% unsuccessfully -- I found myself calling United this morning. My first attempt ended up in Asia somewhere, but I couldn't hear the other person very well at all. Can you speak louder? No, I'm sorry sir, this is as loud as I can speak. Can you reconnect me to see if we can get a better connection? No, I'm sorry sir, I cannot do that. You'll have to call back. But it took five minutes just to get through the phone tree! I am sorry sir. There is nothing I can do.

Now, I've had some great success with offshore customer service folks. In fact, I've had fairly many calls with offshore CS folks that were not only exemplary on the CS front, but that also made me feel the global community of peoplekind in a way that I have only rarely felt it. Bravo!

But if I have to do the equivalent of ear-squinting every time the CS person says something, well, that's just not gonna work, especially with a bit of a language barrier thrown into the mix.

So I hang up and try again by calling back. This time I have a better connection, and the person seems to have better language ability. But what he has to say to me, quite patiently and quite politely, puts me into a Kafkaian Catch-22-ian box, from which I can merely mime my way against the nonexistent, but quite insistent, walls.

My choices are that I can cancel the errant rezzie, or I can keep it, but I cannot do the tweak. If I want the tweak, it'll be a hundred bucks.

But, I say, I tried to buy both of these, and it just so happened that the non-tweaked one is the one that came through.

I'm sorry sir, our policy is that I cannot change the reservation once booked.

Do you understand how weird a result that is?

I am sorry sir. I cannot change the reservation once booked.

Do you all do anything other than say you're sorry when someone has wasted an hour and a half of time because your website isn't working?

I'm sorry sir. I cannot.

How about a . . .

I'm sorry sir. I cannot.

* * *

Now let's see now . . . how's the alignment on that one? OK, so it took . . . two hours of internetting and phone calls to end up paying more. Is that alignment? No. Not even close. If I go through that much effort, I should pay less. And if I go through a lot of effort because of their errors, I should pay considerably less.

And how about transparency? Well, the airlines have made their pricing harder and harder to follow over the years, haven't they? Come to think of it, is there any industry, perhaps not even the financial services industry, that makes its prices so hard to follow, so much a game? How much is the person next to you paying? Half of what you paid? Double? What loop did he or she jump through/what hole did he or she fall into?

Now, as a good ol' MBA, I am mostly OK with this pricing approach, which MBAs call "pricing discrimination" (the main exception being when poor people are forced to pay more than rich people). I am quite OK with a business figuring out which customers get more value from the business's services and charging those customers more than those who get less value from those services (notice how mass produced goods are less easy to price discriminate? That's the downside of assembly line business outputs . . . ).

But what I am not OK with is the arbitrary/game-like aspect of airline pricing. And the opacity. You can't see what's going on. It's like spinning the wheel and seeing what you get. Yes, I understand what they are up to, but mightn't there be a better way? Something that engenders customer loyalty (other than locked-in miles) with a carrot?

* * *

Two weeks ago I found myself having a similar interaction with another business, but this time the result was far different.

This is a business I use on a regular basis, nearly every day. Those who know me well know will know what business it is, but I am going to shove this story through the anonymizer because I do not want to post in a public place information about a private someone else. That t'ain't right, eh? Pity those who end up on the Internet against their will. It's different with public figures (thank you NYT v. Sullivan), but private is private, yes?

As a regular customer of this business, I pay a flat, "all you can eat" price for the business's service (no, this is not about food or eating, but that's a really understandable way to describe it, yes?). So all is well and good until early this year, when the business changed the way I use the service in a way that would impact how I use the service one day of the week.

But I thought I'd give the changed service a try on that particular now-mangled (from my perspective) one day of the week, to experience something new and take myself out of my comfort zone (always a good idea). So I did so and was glad that I did.

Then, three weeks into the changed service the proprietor mentioned that there was an extra charge for my using that service on that day, over and above what I had already paid. I was quite surprised to hear that, and was pretty sure that, had I known, I would not have used the service that day of the week, and not paid the charge. Taking one day a week off, you see, fit in quite nicely with a change in my schedule I had been contemplating.

Long story short, the proprietor realized that it wouldn't be right to charge me the extra fees for the past days. As for the future days? I will probably not use the service that day of the week.

* * *

So how's the A&T analysis look on that one? Well, in terms of alignment, I was being charged more for something which was of less value to me (the inferior schedule one day of the week), so that was not aligned. And in terms of transparency, I was totally unaware of the pricing, because no one had told me about it or otherwise posted something about it, so it was as opaque as could be. NA&NT.

Ah, but here's the divergence: did the proprietor have nothing to say to me when the issue came up other than a robotic I'm sorry sir. I cannot help you?

No. Not even close.

Instead, when I took my credit card out of my wallet to pay the charge, the proprietor, with a grin and a wink and a nice smile said, "What's that?" and then went on to explain the situation with the additional charges, and that going forward I'd pay the charge but that the past three weeks were on the house.

So, now that I know about the additional fee (transparency) I can understand what the additional fee is all about and make an informed decision about whether the service associated with the additional fee works for me (it is not aligned for me, and therefore I am opting out of it). YA&YT.

* * *

United, you are misaligned and opaque. United, I will get away from you. LUV, please start flying SFO (not a chance . . . ).

Proprietor, I am still with you.

* * *

So, in all relationships, look for someone who is willing to help you understand what it is that you are getting and giving (transparency) and who seems to be willing to go the extra mile to make sure that you feel like you're being treated fairly and well, and that you are getting what you pay for (alignment).

This is true in business, but also everywhere else as well, yes?

And think about it: how many opaque and misaligned relationships do you have with friends, family, businesses, etc., etc., etc.?

Perhaps for 2007 you might choose one or two important relationships in which you're going to endeavor for increased transparency and/or alignment? Today being 1/23, we are already 6.3% into the year.

Time's a wastin' . . .

* * *

Returning back to the business side of things, does all of this point in the direction of only doing business with small businesses? Well, there are some large and medium-sized businesses who are remarkably good at A&T, but, yes, as far as I can tell, A&T tends to be inversely related to size, i.e., the bigger the biz, the less A&T they have to offer up to you.

And to really take this to the end of the line, consider fostering commercial relationships in your life that allow you to (figuratively) look the other person in the eye and say, "Yes, I want to help this person and support this person's efforts to put food on his or her family's table."

And to stick with the food analogy (and my belief that the ethics of business are no more salient than within the context of the food business), do you want to support General Mills and McDonald's, or do you want to support the farmers who are growing healthy food and nurturing the land within a 100 mile radius of where you live (bodies of water excluded (mostly))?

If you're a normal person, with some quid-pro-quo calculator going on inside of you all the time, if you can mock up that sincere look in the eye and the wish-you-and-yours-well, then that's a great indication that that other person is thinking and feeling the same sort of benevolence towards you, but rather than measuring in dollars, he or she is measuring in terms of customer satisfaction and potential for repeat business. And that means mutual benefit all the way around.

* * *

That, then, is the real alignment and transparency. Humans interacting satisfactorily, in a way that makes each of them want to do it again.

Kinda sounds like the opposite of war, eh?




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