$325 Equals $210? The Math of Customer Hostile Policies

So I bought a plane ticket. It cost me $325. My plans changed and I now had a credit with one of the major air carriers. No problem. I know I'll have to pay a change fee at a later date (usually $100) but not a huge deal. "At least I'll be able to use the credit" I thought to myself.

I had occasion to travel again so I called said airline and told them I wanted to book my flight to Chicago for my presentation at the Leadership Excellence 2008 Conference. The new ticket was going to be $210. "Cool! I can use my full credit and even simply pay the change fee out of what I already paid" I naively mused. Then the ugly spectre of customer-hostile policies reared its head. It went a little something like this:

"Yes sir. The flight is $210 round trip."

"Great. I'd like to use a credit I have with you folks. The old confirmation number is RIPOFF325."

"Yes sir. I have that credit here. How would you like to pay the balance due today?"

"Huh? Balance due?"

"Yes sir. There's a $100 change fee for using the old ticket."

"Yeah. I know. Just use the credit for the $325 ticket toward the $210 ticket plus the $100 change fee and I should still have a credit of $15 with you guys, right?" I mean, I did pass arithmetic in 2nd grade. Here's where things start going south...

"I'm sorry sir. You cannot use credit from another ticket to pay for the change fee." Ummm, okay. So apparently a dollar isn't a dollar to said airline. Even though they already have $325 of my cash, I can only apply it to certain things and not others? Seems like these folks need a lesson in currency mechanics.

"Fine. Whatever. I'll pay the change fee. Here's my credit card number... again."

"Thank you. You're all set now."

"What about the $115 credit from the ticket transfer? Do I need a new confirmation number for the next time I book to use that credit?"

"What credit sir?" Here's where it goes so south it's Antarctica south...

"So here's some basic math... I had a credit for $325. I just bought a ticket for $210. I should have $115 left over in credit, right?"

"No sir. It's an even exchange. If the new ticket is equal to or less than the cost of the previous one, we consider it an even exchange and there is no credit issued for the old ticket." I started to feel that little artery in my temple pulse at this point.

"How is that an even exchange? So if I had a $210 credit from an old ticket and went to buy a $325 new ticket, would that be an even exchange too?"

"No sir. You would have to pay the ticket differential of $115." I feel like I've fallen into Wonderland and my customer service rep is the Mad Hatter. We're clearly in Bizarro World where the laws of mathematics are reversed.

"That's horse puckey. It's a completely customer-hostile policy. Fine. I'll just save the credit until I have a ticket that costs more than $325 and use it then so you people don't hose me." I interrupt this call for a special personal responsibility bulletin... Now don't get me wrong - I absolutely should have read the fine print. This was absolutely my fault (seriously) for not reading and understanding the terms and conditions. What I'm arguing here is that no one has taken a look at the customer impact of said terms and conditions nor have they properly trained their associates to disclose these terms clearly and in a customer-friendly manner. Now back to our call...

"That sounds like a good idea sir." Okay clown boy... and you were going to suggest it to me when? Had I not asked for clarification on the policy, I'm pretty sure he was going to simply let me forfeit the $115 of credit plus juice me for the $100 change fee. Talk about preying on a customer not having fully read the fine print or being familiar with chapter and verse of obscure ticket policies.

So here's the trade off these folks are explicitly making: they're juicing customers for an extra $115 in these scenarios which is a nice short term profit improvement instead of building long-time customer goodwill and retention which is worth infinitely more in long-term profits. This is an inherently flawed strategy.

The worst part is, I've been a loyal customer of said airline for many years. They've generated a ton of profits from my travel as well as from my recommendation of their airline to others. Now they've sullied that relationship over a measly $115. Will I fly them again? Yes. Three more times. Once for my trip to Chicago, once more to burn up my $325 credit, and once to burn through the airline miles I still have with them. After that, I believe our relationship is at an end. And all over the paltry sum of $115 and a customer service rep who was not proactive in trying to protect my money (and instead came across as cagey and deceitful).

Take a look at your customer policies. Are they in the best interest of your customer or in the interest of your short-term bottom line? Are they designed to strengthen and lengthen relationships or to exploit them? Are your agents trained to look out for the interests of your customers even though it might cost you in the short term or are they trained to maximize profit per call regardless of downstream costs?

Evaluate these questions and your business practices. You might be surprised by what you find. Remember - a customer for life is infinitely more valuable than a customer for a day.

- Mike Figliuolo at thoughtLEADERS, LLC