How Much Bad Profit Will You Face During Your Summer Holiday?
You will be facing quite a lot of bad profit during your summer holiday.
Sorry about the bad news. If you are travelling, you will most likely be massively exposed to the service industry, where bad profit is an integrated part. Is there such a thing as bad profit? Oh yes. If you intend to be in business for more than just the short term, there are lots of bad profit traps out there.
What is bad profit?
It is profit earned at the expense of customer relations. Let me give you an example. You arrive at your holiday hotel and the first thing you meet at the check-in counter is a sign proclaiming the prices for wi-fi. It is hard to imagine a hotel room without a bed and for some customer segments it is equally hard to imagine a week without wi-fi. Some customers would rather do without the bed than the wi-fi. Literally. We have had free wi-fi at Starbucks for ten years now, and still some hotel chains just don’t get it. Charging customers for wi-fi is bad profit because we expect it to be available everywhere and at no extra cost. Besides it costs the hotel close to nothing to provide it.
With enough bad profit in your system you can make sure that customers will never come back and that they will talk badly about you. Bad profit may look appealing in the short term, but it annoys your customers and is detrimental to the relationship. With enough bad profit in your system you can make sure that customers will not come back to you and that they will talk badly about you to others. Banks, telecom and airlines have excelled in this for years.
You must build great relations with your customers.
Make your customers feel special and welcome, create great experiences for them. Treat them so well, that they want to come back and at the same time recommend your business to friends, colleagues and relatives. When is the last time you felt treated like a friend at a hotel? At a restaurant? At a car rental?
Why not make your own holiday check on where you meet bad profit? And if you have a moment, please share it with the rest of us, we would love to hear about it.
Enjoy the summer.
P.S. If you would like to learn more about Bad profit and customer loyalty you should read “The Ultimate Question 2.0”, by Fred Reichheld. I can recommend it.