Archive for October 28th, 2011
Last month, I went on holiday to China. It was a good holiday. It was a great holiday. But I was puzzled about the flights to and from China.
I flew with British Airways both ways, and noticed that the plane was 25% empty. Economy was packed – not a free seat to be had, but premium, business and first class were practically empty. Not surprising I guess, seeing we are teetering on the brink of another recession and people are cutting back.
But what surprised me was this – why were BA not upgrading passengers? By moving people up one or two grades, they could get more people in the plane and therefore could make more money from the flight.
What is the cost of the Upgrade?
Ok, so maybe I am being optimistic. After all, upgrading somebody from economy to business is just throwing money away. Isn’t it?
But hang on – what is the real cost. The fuel used is the same. The cost of handling the passenger and their bags are the same. They still have to have the same number of stewards. The plane is going there anyway. So what are we really talking in terms of cost to BA? A better meal?
And what about the advantages? They can fit more people on the plane, the flight is greener (more people equals better fuel ratio per flight/person), the stewards in upper class are not so bored.
But the real advantage is that people who only ever travel economy may find what they are missing from travelling premium or business. They may like it so much that they may decide to travel in that class in the future. In a nutshell, it’s a great sale at minimum cost.
Can you give a free upgrade?
So with things being as hard as they are, is it worth thinking about whether you can give a free upgrade to your own customers? If things are fine and you are over busy, then that’s all well and good. But if you have spare time on your hands, is there something else you could offer as a free upgrade?
What about the rights to the source code, or designs, or web content? What about the test data you produced, or access to the specifications, or some after sales support?
Of course, the customer has to know they are being upgraded for it to be worthwhile and seen as good value. Just handing it over is not enough. But saying, “here is the agreed delivery, and as a special treat for your business in these difficult times and as a way of saying thank you, please accept (whatever you are giving them)”.
Point out this is provided as an upgraded for this time only, and that you normally provide this service/feature/benefit as part of your premium service.
You never know, your customers may like it up there in the expensive seats and decided to fly your premium service from now on.