The Lost Customer: The true cost of ‘from’

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This is the second chapter in The Lost Customer, a series focused on the small but crucial mistakes made by businesses that ultimately cost them customers. The first in the series was on minimum EFTPOS transactions, which you can read here.

What is ‘from’?

From is a method of pricing products or services using the lowest possible cost to attract customers. For example, the house and land packages from $499,000, or concert tickets from $89.99. It is a very effective advertising strategy in making products more attractive to the consumer.

Pros and cons of pricing

Getting customers in the door (or on the site, as it were) is half the challenge, and any method businesses can use to make their products more appealing is worth exploring. They can draw in customers using an attractive price, then assess each customer’s individual requirements and provide the right solution, which may or may not be for the advertised price.

However, there is a trade off. For the consumer, charging higher than the price that drew them in is often viewed as unscrupulous or shady. The business is perceived to be trying to deliberately mislead them. Even though the intent may be pure, the net result of the consumer experience is negative. This is where moderate price transparency is key.

The complexities of honesty

Pricing products and services appropriately is both an art and a science. It requires a keen eye for the consumer experience and perceived value, tempered by business realities. A low initial price with conditions is frustrating for the customer, and a high initial price without conditions can price them out of the market.

The same can be said for the amount of transparency a business demonstrates to the customer regarding how they arrive at those prices. Too little, and they risk alienating themselves from their customer base. Too much, and their customers may start to question the validity of the final price. It is a delicate balance of expectations.

When ‘from’ goes wrong

I recently had a negative pricing experience with a popular holiday house rental website.

I was researching properties and found one listed as from $69 per night. Further inspection of the listing did not indicate any additional fees and charges, so I attempted to book the property. At booking stage however, the price was indicated to be $169 per night, well above the quoted price and also my budget. I could not find any justification for this increase detailed on the listing, so I cancelled the booking and took the matter up with customer service. Several days and email exchanges later, the final message from the company was that even though they weren’t declared, there were cleaning charges applied to every booking for that property by the property manager. As this rental website is just a facilitator of the transaction, they actually have little power to influence the owner of the property. I elected not to continue the booking.

Turn negatives to positives

There are several insights from this experience that can be applied when advertising prices and dealing with complaints.

  1. The ‘from $69 per night’ advertised price was misleading in multiple ways. Firstly, it didn’t take into account any fees or charges associated with the booking. Secondly, due to the fact that the cleaning charge was applied to every booking of the property, there was no possible way for a customer to only pay $69 per night. This is both inaccurate and, if done intentionally, unethical. A more ethical approach would be to average out the fees and charges across the booking period specified by the customer, then add them to the cost per night. This method both provides transparency and competitive pricing.
  2. The listing did not clearly display any additional fees and charges associated with the property, which prevented an accurate assessment of total cost vs value delivered. The listing display could be redesigned to make applicable fees and charges clear for the customer.
  3. In handling the complaint, the company sided with the property manager, which puts the consumer on the defensive. A small offer of compensation would have gone a long way to improving a rapidly deteriorating consumer experience.

With so many small details capable of completely derailing the journey to purchase, a smart company would do well to consider every aspect of their business. Especially ‘from’.