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First, it's a honor and a treat to get to do some guest-blogging at Sir Tom's site!
I came across a paper today from May 2003—ages ago!—called An Analysis of Netflix's DVD Allocation System that explains the way Netflix figures out who gets a DVD when there are more requests than copies. Summary: "... new and low cost customers can 'cut in line' ahead of other customers."
Not shocking. When people pay $18/month to rent as many DVDs as they want for as long as they want—although you can't have more than 3 out at a time—you have to have some way of deciding who gets the first copies. But line cutting is so unfair! Worse, manuelsweb puts it in terms of Netflix punishing those who get more than 9 DVDs in a month.
It is a fact that some customers are more valuable than others. It just irks us—well, me anyway—to see that fact acknowledged. "Lucky bastards in first class! What did they do to deserve it?" And, yes, when I get to upgrade and the Coach Folks file by to cubic footage so meagre that veal cows have more leg room, I do feel awkward. Don't you?
(Thanks to Ramit Sethi at Captology for the link.)
Before blogging became all the rage, Tom was posting book reviews and Observations (essentially early blog posts) to this site. You can find the archives below.
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Comments
LUCK shouldn't be underestimated. Those who lead an affluent lifestyle are lucky with DVD's - homes - cars - partners - business opportunities, et. al.
Posted by John at March 25, 2005 7:53 PM
Dave, welcome aboard. its a pleasure having you post within the Tom Peter Community !! One request please dont cross post the same content on your blog !! :)-
Yes, Dave the digital divide and descrimination /allocations are unfair practices in imho. Is my $$ worse then your $$$ value ?? The "throttleing" of such practices will evenutally be analyzied in detail as digital services resonate the world over.
Posted by /pd at March 25, 2005 8:05 PM
John, agree with you wholeheartedly, especially about the 'partners'. Think of Warren Buffett and Charlie Munger, Bill Gates and Steve Ballmer (and many, many others). Countless more I can't even list for the sake of brevity. Luck in choosing partners is often THE key to their success.
Here's an interesting aside to think about regarding loyalty programs, rewards, and upgrades. Who pays for them??? Them and everyone else! Think of Saks First, Neiman's In Circle, and all the others. Think about frequent flier, renter, and other programs in the travel industry. Retailers and all other companies are far from altruistic. The costs are mutually shared by all, especially all of us who don't 'belong' to this group or that. WE ALL PAY.
pd, some customers ARE worth considerably more than others. They're the ones that challenge you to delight them over and over, and make YOU better over time, regardless of your line of business. On the other hand, there are customers who constantly cause Excedrin Headaches and Maalox Moments. They range from demanding, rude and obnoxious, all the way to blatantly dishonest. They cost you personally and professionally more then they could ever be worth.
Even world renowned Nordstrom fires these types of customers. So, yes, let's reward the great ones, they deserve it. No need for them to feel guilty, or the rest of us to be envious. However, let's be honest and up front about who pays for all this largesse.
Posted by lem at March 25, 2005 8:51 PM
I feel comfort in the fact that those who paid for the privilege probably paid 10 times more than I did and yet, can't afford a private jet. (It's never enough is it?)
I also feel compassion that they are most likely in first class because, like someone else we know, they probably log a billion miles per year. Not comfortable in any class. And they earned the privilege.
I think Lem is on the right track. Yankelovich is out there preaching that reciprocity (reward) is a central pillar of the new marketing model. In other words, it's not only about the haves and have nots, or pricing and promotion, it's about rewarding someone for buying your product. The reward perks aren't just expected. In today's world, we demand them.
PS - An idea for a future Southwest campaign. The "classless airline."
Posted by Paul Davidson at March 25, 2005 11:29 PM
It’s quite a paradox. By the way, there’s a very interesting study from The Center for Hospitality Research at Cornell University that compares the perceived fairness of seating approaches in restaurants, that shift demand and violate the first-come, first served expectation.
This is the link: http://www.hotelschool.cornell.edu/chr/research/abstract/mcguirekimestopost.pdf
Gabriel S.
Posted by Gabriel Salcido at March 25, 2005 11:34 PM
No. I do my time in cattle-car coach. No guilt here.
Posted by Mike at March 28, 2005 8:18 AM
Reminds me of a post several months ago about special customer service phone lines for special customers.
I don't know how I feel about this one. In some cases, a separate brand would be more reasonable than to have customers feeling outclassed. But is that always practical?
Posted by Jason Kerr at March 30, 2005 8:23 PM