Short-term, transactional thinking in a social media world

$7.60 bottle of water

$7.60 bottle of water

I woke up this morning to find a bill under my door for a $7.60 bottle of water, courtesy of the Palace Hotel in San Francisco.

Apparently the bottle of water next to the bathroom sink wasn’t free. There wasn’t any sign near the bottle that indicated that there was a charge.

I travel a lot and as an elite member in Starwood’s loyalty program. I often get free bottles of water, fruit, wine and other goodies. When water has a charge, there’s usually a hang tag on the bottle.

It turns out that there was a sign – but it was next to the TV. It said, “As a luxury service, Voss bottled water is available in your room. A seven dollar charge ($7) for each bottle consumed will appear on your guest folio.”

This tells me two things: 1) At some point they swapped out the higher end Voss bottled water for some generic stuff and this “luxury” hotel couldn’t be bothered to update the signage. 2) They don’t feel the need to be upfront about their pricing.

I don’t mean to pick on Starwood here. This happens at a lot of hotels. I sometimes don’t notice this stuff until I get my credit card statement. It’s usually not worth the trouble to call and complain and get a refund. But it does eat at me and annoy me. The last thing I’ll remember about your hotel is that you screwed me out of $8. Is that really worth it? Is that the impression you want to leave for someone who spent hundreds of dollars at your hotel?

Airlines are some of the most transactional companies out there. I’ve flown United (and Continental) extensively since 1999. A major reason that I’ve stuck with United for the last six years is that elite members have free access to Economy Plus seating with more legroom. Starting next year, lower tier elite members won’t be able to reserve the seats until check in. Someone at United decided that they could make more money selling the Economy Plus seats and only offering the ones that they can’t sell to lower tier elite members.

Instead of rewarding loyalty, they decided to generate short-term revenue. My response: I will shift as much of my flying to Virgin America as possible. I’d rather have an overall higher quality experience flying Virgin than take a chance stuck in some tiny seat on United flights. Not only will United not get any money from me for the better seat, they won’t get any fare revenue either.

Transactional thinking is all around us. This includes things like roaming charges on cell phone bills which can lead to bills for thousands of dollars, bank fees, rental car charges and Groupons where you get to the hotel and find out you owe an extra $100 because tax wasn’t included in the price you paid.

Transactional thinking also applies to people. Recruiters are a case in point. Many recruiters in Silicon Valley are transactional. I get a lot of calls from recruiters and many of them are solely focused on the current placement. I have talked to many who clearly don’t understand my skills and interests and push me to apply for roles that I’d be ill-suited for. This might help them earn a placement fee in the short term, but it isn’t good for me or the company.

Two of my favorite recruiters in Silicon Valley are Sara Huth and Stuart Liroff. Neither has ever placed me. But we have ongoing conversations. They take the time to know my interests and capabilities. We follow each other on Twitter and Facebook. They’re happy to refer me to others in their network, even though they don’t immediately benefit from it. And I’ll happily refer great people I know to them.

One of my new favorite people in Silicon Valley is Semil Shah. Every time I see him, he asks “How can I help?” And unlike many people, he genuinely means it.

Transactional thinking becomes even more dangerous in a world of social media, where consumers suddenly have a megaphone. Instead of just telling their immediate friends, they can tell the whole world. Social media can aggregate, amplify and empower. A single person who doesn’t like what your company is doing can use social media to significantly affect it.

At a grander scale, we’re seeing that play out with Bank of America’s $5 debit card fee. That fee was one of the catalysts for the Occupy Wall Street movement.

It’s easy to model the short-term revenue impact of new fees and other customer-unfriendly policies. But the power of pissed off customers is hard to put into a spreadsheet.

Update: When I went to check out, it turned out there were two bottles of water charged to my room. I only drank one. It turns out there were supposed to be both Voss water bottles ($7 each) and generic water bottles (free). But I never saw any Voss bottles and was charged for two. So in a best case scenario, there are different types of water and one is free and the other is not. How confusing is that? In the end, they removed the charges.


About Rakesh Agrawal

Rakesh Agrawal is Senior Director of product at Amazon (Audible). Previously, he launched local and mobile products for Microsoft and AOL. He tweets at @rakeshlobster.
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2 Responses to Short-term, transactional thinking in a social media world

  1. Semil Shah says:

    One hotel move I simply don’t get is when they use “sensors” to see if you even touched or moved the food on the desks. It’s pretty ridiculous. Or the hotels that don’t let you move around sodas/beers in the fridge so that you can chill one bottle of water. This is the type of crap that will kill our economy.

  2. Pingback: Short-term, transactional thinking in a social media world | Today In The Sky

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