I read an interesting article about Applebee’s last week. Personally, I don’t like Applebee’s or its numerous imitators – not eating burgers, chicken tenders, or something they call “riblets” kind of limits the menu of the average Americana-themed restaurant for me – but I enjoyed the analysis of how these kinds of places are trying to survive in an economically challenging environment.
My favorite part was when the CEO was asked why Applebee’s and IHOP (also owned by the company) don’t have healthier choices on their menu. People are more health-conscious than ever, right?
“What people want and what they say they want are different,” she said, and as much as I wanted to disagree, I couldn’t.
This idea, my friends, is especially true with business-to-consumer relationships. In the example of restaurants, people may say they want healthy choices, but (many of them) actually want to go and eat food that is bad for them.
If Applebee’s replaced the mozzarella sticks (531 calories) with a large order of carrot sticks (120 calories), they might win some good press, but their average diner wouldn’t start eating more carrots. He or she would go down the street to the T.G.I. Friday’s or wherever else offered the food they really, really wanted – not the food they said they wanted.
Even though it doesn’t attract customers like me, Applebee’s seems to understand what their typical diner wants. But in other cases, companies fail to see the disconnect between what people want and what they say they want…. or they may even manipulate the feedback to reinforce what they wanted to do in the first place.
For example, people may say they want the lowest-priced airline without any concern for comfort, but that’s not usually true.
Most of us know how stressful travel can be, and we don’t appreciate it when airlines cut out the little things that can make the experience slightly better. We know it’s not going to be great, but we really do want the pillows, soft drinks, and advance seat assignments that the airlines have been cutting out. It doesn’t take much to provide them, but when you take them away, we’re not happy.
The solution to this problem is not to take even more away, like United Airlines did recently.
United recently announced an all-new series of steps to cut out service on its flights. To begin with, United will no longer offer meals to Economy Class passengers traveling to Europe from Washington, D.C. Instead, they’ll receive the same service provided on their flights throughout the U.S., where you can purchase a sandwich for $11. United is also taking away the free pretzels (really), reducing staffing even further, and discontinuing the lunch service for Business Class passengers on domestic flights.
That’s right, no pretzels, fewer flight attendants, and if you fly to Europe from D.C., you won’t even get a meal. People used to joke about airline cuts – “One day they’ll charge us for seats after we’ve already boarded the plane.” Ha ha.
But wait – one guy who flew JetBlue was forced to sit in the lavatory for 3 hours earlier this year because he was on a discounted ticket. I wish it were a joke this time, but JetBlue has no comment.
Back to United – as several travel bloggers have been pointing out (see here and here, for example), the latest cutbacks represent a new low for the already-low U.S. airlines. It’s a race to the bottom, and those of us who travel frequently are starting to wonder when we’ll finally hit it.
Isn’t it just the cost of fuel?
The airlines say that fuel cost is the main reason for these kinds of cutbacks, but no one really believes that. Oil was at $145 a few weeks ago. Now it’s back to $118, but the same fuel surcharges are still there. Do you think they just forgot to reset them? And how do other worldwide airlines manage to be profitable even with the price of oil being so high?
The funny thing is that United claims to have made these latest changes based on “customer feedback.” I find that claim to be even more disingenuous. Does United expect us to believe that passengers said they no longer want to eat on the flight? Oh, and go ahead and take away the free pretzels while you’re at it?
I’d like to say to United, “You know, go ahead and do this. It will harm your shareholder value in the long-term, since business travelers have even less of an incentive to travel now. But please, don’t lie to us about it. Just say you don’t want to give away pretzels anymore.”
Why Competing on Price Is a Losing Prospect
Choosing to compete on price alone is almost always a mistake. Unless you can be the next Wal-Mart, it’s not worth trying.
It’s usually better to give customers what they really want – quality, value, an experience worth talking about – and not the lowest price and lowest service that they may say they want.
Even in the airline industry, some airlines manage to do this. Emirates does, as does Virgin Atlantic most of the time, and even the budget Kingfisher Airlines in India. When flying from Hyderabad to Calcutta in March, I got a full meal and a soft drink – no extra charge. There were no pretzels, but the lentils were quite nice.
If you’re in business for yourself, what do you think about commodity pricing and cutbacks? Are you in a race for the bottom, or are you trying to provide good products and services for a fair price?
And everyone else, what do you really want from a business like United Airlines or Applebee’s?
Image by SummerTX