Painful Games Companies Play

Does your company play painful games with your customers? I’m not talking about physical pain, but brain pain. More specifically, what has been termed buying pain or the pain of paying. According to research conducted by George Loewenstein of CMU and others, this pain is triggered when we are presented with a product and price that seem like a bad deal. Now, if you sell luxury items, it’s quite possible that a pain response is part of every sale, but the buyers rationalize the premium price they are paying as the cost of buying the best. A recent business trip highlighted what I think are UNPRODUCTIVE invocations of buying pain.

We Try Harder… To Get Your Money

The first example occurred to me as I raced back to the airport in my rental car to catch my return flight. When I rented the car, I had chosen the option that said I would return the car full of gas when I brought it back. This meant that if I skipped the fill-up on the way to the airport, I’d be charged a ridiculous amount per gallon if Avis filled it up. The going rate seems to be over $7 per gallon, nearly three times the gas station price of about $2.50. (Fortunately, I spotted a station just before the airport and filled up, getting to my flight with time to spare.)

I analyzed what happened with my brief wrestle with the option of buying my own gas or paying through the nose for the car rental company to refill the tank, and wondered about the competing forces at work in my brain. On one hand, I hadn’t burned much gas on my short trip, and the cost of not stopping would have been under $20. That’s a sum I could afford, and it would likely be reimbursed by a third party anyway. What prevented me from zipping by the gas station and heading directly for the airport was that my brain was rebelling at the knowledge that someone would be paying three times the fair price (or what my brain judged was a fair price). Loewenstein’s fMRI studies showed pain centers being activated when prices were judged to be unfair, and I have no doubt that seven-dollar gas lit up mine. I’ve filled up rental cars even when I knew I had used so little gas the penalty would be minimal. Indeed, for me the price per gallon is the irritant, not the actual amount of the surcharge.

This practice is no doubt a nice profit booster for the rental companies – renters with a less entrepreneurial history than mine can probably separate the buying pain response occasioned by spending their employer’s money vs. their own. (For me, spending too much for something fires up my pain response, whether it’s coming out of my pocket or my client/employer’s.) No doubt many renters just let the extra $20 get buried in the overall rental bill and don’t think twice. But I’m sure there are plenty of customers who can’t bring themselves to pay extortionate gas prices and stop to fill up.

So why should the Avis, Hertz or any other rental company care if some frugal customers stop to fill their cars while many others acquiesce to the higher, hassle-free price? I think this approach affects the customer service experience in a negative way. For the frugal customers who refuse to pay the high price, it adds stress and uncertainty to the return process. It seems like the trip to the airport is always a tight schedule to begin with, and, if you don’t know the city and the route to the airport, you are never quite sure if and where you will find a convenient station. To add even more uncertainty and stress, one rental company I used recently displayed a sign that told customers they must fill up within 10 miles of the airport, and produce a receipt from the gas station. We’ve all seen aiports where the approach is a long highway devoid of conveniences like filling stations, and being given a specific, narrow target to hit makes the experience even worse.

I’m also sure that some of the renters who pony up the seven bucks per gallon DO feel a twinge of buying pain when they check in.

What Would Zappos Do?

Would a company truly trying to create a great rental experience subject their customers to the choice of being gouged for gas or having to try to hunt down a gas station while they rush to the airport to catch a flight home? Would Zappos, say, levy a triple surcharge on return shipping to cut down returns and boost their margins? No, and no.

Painful Game #2 – Baggage Fees

Now that most airlines (but not Southwest) are charging ever-higher amounts for baggage, as much as $25 for the first bag, just about every traveler seems to be packing as big a carry-on as the airline will allow. On the regional jets that seem to dominate air travel these days, these so-called carry-on suitcases are never actually put in the airplane’s cabin – rather, they are gate checked during the boarding process and retrieved in the jetway (or on the tarmac) upon arrival. On bigger jets, the overhead bins become stuffed quickly on full flights leading to delays in getting the passengers sorted out and seated.

In the past, even if I packed a carry-on, I often checked it on the flight home because the consequences of a delayed bag were minimal at that point. Not having to drag the bag into restaurants, etc., was a plus. My frugal brain rebels, though, at paying $25 for the modest convenience of a lighter load in connecting airports. So, I don’t check the carry-on.

Where the pain kicks in is realizing that the airline has saved no expense by making me carry my bag, wait on the freezing tarmac, etc. The plane’s fuel consumption will be the same. The labor savings are likely non-existent, particularly when gate-checking is involved. My brain interprets the bag fee not as a reasonable charge for extra service provided, but rather a means of transferring money from my wallet to the airline’s bottom line. Bad value = pain.

Yes, I could afford the $20 or $25 to check the bag on the way home. But my brain objects to the “markup” on the checked bag service, and I don’t. Instead, I grumble as I drag the bag everywhere I go in the airport and as I join the scrum of other passengers on the jetway trying to retrieve their own so-called carry-ons at the end of each flight.

How To Be Loved

Most companies would like to be loved by their customers, as is the aforementioned Zappos. If a company wants to be loved, it should look at every aspect of its service that causes its customers pain, whether it’s buying pain, stress, uncertainty, or anything else, and try to eliminate that. One example: the most succesful online marketers have boosted their sales by doing things like eliminating shipping (or shipping upgrade) charges, making returns easy and painless (even though returns are horribly costly and often involve dealing with damaged or shopworn products), and similar steps. Yes, these measures make each order a little less profitable. But, by putting short-term profit maximization concerns aside, these successful companies minimized their customer pain and ended up prospering in the long run.

Travel industry companies would do well to look at changing their philosophy – at the moment, they seem to be in a death spiral of reduced service, higher fees, and an increasingly unpleasant overall customer experience. Southwest Airlines has bucked this trend somewhat, and has been the most successful domestic airline. There should be a lesson there, but is anyone paying attention?

What Causes YOUR Brain Pain?

It’s Neuromarketing reader participation time – what fires up the pain center in YOUR brain when you are buying a product or service?