Profits over People

I miss Andy Rooney.

I rent a car a few times a year. Since I like to travel cheaply, I’ve paid attention to the prices the companies charge. Years ago, I would find a company’s rate I liked, then search other company’s prices and compare. But, as time went by, I noticed that while searching the Internet, when I went back to the first and cheapest rental website to make the buy, the rate had risen. The first time or two that happened, I figured the rates rose throughout the day or more cars had been rented by then, reducing supply and thereby increasing price. But, later, I concluded my computer was being tracked, since I found I could get the cheaper, original rate using a different computer. Frustrating. So, I tried joining the car rental club. While earning points for renting from the same company, I did eventually earn a discount for my loyalty, but I found that the rates I paid as a club member were higher than the rates I could get without signing in. Disturbing. I also had to look at the rental rates offered by AAA, which provided a discount if the car was ordered through its website. I’d end up spending a few hours to get the lowest rate, even though the savings weren’t huge. I kept searching because I just hated the idea of being beaten by the system.

You’d think things became simpler when search engines that provided rate comparisons came along, but instead, things became more complicated. There are multiple sites that let you shop for rental cars, hotels, and air fare. Consider the options: you can order direct, join frequent flyers clubs, try bargain sites, make reservations without knowing exactly which hotel you will be staying at, and try to negotiate your own price. The net result is that the price you pay for travel may end up being substantially different from the price I pay. It’s like buying a used car.

I recently booked a car for two days for $8 a day. Quite a bargain. When you add in taxes and so forth it comes out to $50 total, which is still pretty good even for a Flintstone-sized car. The rental company won’t make much money at that rate, but it hopes I’ll buy insurance, get the “no need to fill up option,” or rent a GPS, none of which I will do. At the same airport, through the same company, when I booked in advance about the same number of days for an earlier trip, I paid five times that amount. Is it just supply and demand? Is it fluctuations in competition or is the market making price adjustments? No, I don’t think so.

Companies collect massive amounts of data about their products, services, and customers’ buying habits. Take the airline industry. Prices used to be higher than they are today, but everyone paid the same amount for the same kind of seat and the meals were not peanuts. People dressed up to fly, since flying was special. Times changed. There used to be a best day of the week to buy when seat capacity was apparently reevaluated (Tuesdays). There was also a best time frame for buying tickets. Not too far out but not at the last minute either. But, I am not so sure those Consumer Reports kinds of strategies apply anymore.

The airline industry had some tough times. They suffered when the cost of fuel went up. They had sold seats figuring in lower costs and when they raised prices to compensate for higher costs, people traveled less. The solutions for the industry were to charge fees for things like baggage, to squeeze in more seats, and to make people pay for a bit of leg room. They added an extensive menu of options to purchase as well, including Wi-fi, sky clubs, hotel and car rentals, vacation package deals, frequent flyer points, and even boarding privileges. You have to be careful to turn down all the options you don’t want.

One powerful impact on air fares came from more sophisticated analyzes of travel patterns. The airlines cut back on flights that weren’t getting filled. I used to fly to Dayton to visit my parents, which is about an hour away from Columbus, Ohio, where they live, because the flight from Atlanta to Dayton was often half the cost of the flight from Atlanta to Columbus. But, no more. There are now fewer, but more expensive flights to Dayton. And those flights are all full. If you wonder why travel to Europe on the major US airlines is so expensive even though fuel costs are low, it’s because the airlines reduced the number of flights they were offering to keep the flights full and expensive. In a way, all this makes sense from a business standpoint. The airlines are trying to maximize profits. But, the consumer often ends up paying a hefty price. Consider the baggage fees which Congress recently put in the news. One suggestion for speeding up the slow security lines was to end fees for baggage. This would reduce the number of people who carry on bags to save money on the checked bag fee. When the airlines added the baggage fees, flying became more of a pain. Not only did it take longer for people to get through the TSA security lines, it made people rush to board so they could get overhead bin space. After Congress suggested eliminating the fees, the airlines refused because those $50 fees per bag added up to lots of money. Congress was partially responsible for the TSA lines, since it diverted some funding from TSA, which left it short-staffed. But, the airlines aren’t going to help clean up the mess Congress made. Not when millions of dollars are at stake.

Isn’t there something unfair about people paying far more for the same service someone else is getting? When the difference was a factor under the consumers’ control, the inequity was not so troubling. If you buy a flight early, you get a lower rate than you would typically get at the last minute. That seems okay. If you want to pay for first class, okay. You are still just getting from point A to B, but if you don’t mind paying for the perks (or having your company pay), that’s fair. When someone is a frequent flyer and the person gets some perks, I will not scream “unjust.” The problem is that the companies are taking the choices out of the consumers’ hands. The companies are doing everything they can to maximize profits and lower costs. This is a problem when the shift toward greater profits costs the consumers in term of money, convenience, time, and safety. If you get stuck in that TSA line caused by carry on baggage and miss your flight, it will cost you $50 to change flights. You should have been there two hours earlier. Or, you should have paid to be one of those TSA pre-checked passengers who are permitted to go through the faster lanes. The industries take advantage of the consumers and then blame them when things go wrong.

Think about how we not only pay higher prices, but also how companies hold government hostage so they can make more money. Wal-Mart will build and create jobs in your city, if the government pays for street and sewer improvements. In Atlanta, we have two new stadiums being built. The Braves are moving away from a pretty good stadium, the Ted, in downtown, and are getting millions of dollars from taxpayers. If you don’t want to play ball, then the Braves will go somewhere else. Think of the lost jobs, tax money, and revenue for local businesses. The Falcons are also getting a new stadium. The Georgia Dome was not all that old, but this stadium did not maximize profits as well as the new place will. Computer models determine how to design seating to maximize profits. The new seats will be premium seats for the wealthy or for big businesses that use the loges for business entertainment, not for families. Too bad.

This is part of a larger trend of data collection and using that data to maximize profits. Amazon remembers what I was searching for and targets ads at me. Not just when I am on the Amazon site. They want me to write reviews of their products. No way. Facebook wants me to share that I bought some underwear with my friends. TMI. When I make a donation, my contact information is sold, and I get calls from similar organizations. I get about five phone calls a day, all dialed by robots, so they do not mind calling me repeatedly, day after day. If you call my home number, I no longer answer. Leave a message. My credit card information is housed everywhere. Public records, like marriage licenses, real estate transactions, party registrations, births, court cases, etc. are fairly easy to obtain and share. Of course, we often choose to share information with the world when we post to Facebook or Instagram, but that’s our choice.

What does this vast amount of data have to do with interpersonal communication? We are being bombarded by persuasive communication messages. Marketing has become as important as the quality of the product or service, and at times, the consumers’ interests are lost in the drive to maximize profits. We get frustrated communicating in this kind of environment because we are at a disadvantage when faced with sales strategies that use our own personal data against us. We become jaded when we encounter so many deceptive practices and unrelenting pitches. This environment makes us less trusting of everyone because we become desensitized to dishonesty and selfish interests. We come to expect people to try to use us. Trust is harder to come by. Relationships are now more difficult to get off the ground, when we feel we have to critically evaluate every message and react defensively as a matter of course. We feel less powerful. Our communication begins to feel like a game we are playing. If you have cable, you know you have to threaten to switch companies to get a lower, reasonable rate. When we do so, we know we’ll get switched to a customer service specialist who will try to keep us enrolled with a cheaper, but ultimately more expensive plan once the introductory rate is over. I have eaten at restaurants where there is always a coupon available. It’s not a bargain when the bargain is offered every day; it’s simply a way of getting more money from the unsuspecting.

Our environment shapes us. In an environment where we have to be on guard and try to figure out the tricks that are used against us, we’ll be less likely to be open in our communication. We’ll be more likely to perceive friendships as a means to an end rather than as an end unto itself. We’ll worry more about someone using us in romantic relationships and maybe we’ll be more likely to use others. No one likes being naïve, but without some degree of trust, relationships can’t form.

We need to try to keep the business relationships separated in our mind from the personal relationships. We also need to encourage the businesses we work for to think about the consumers as much as they think about marketing and pursuing short-term profits. Consumers really aren’t stupid. A trick may increase profits for a while, but in the long run, being fair to the customers and developing trusting relationships with them will lead to success for the consumers, the workers, and the owners of the business.

Thanks, Andy. I feel better.

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