Two Ways of Framing a Surcharge
Have you ever found yourself in the immediate position of purchasing an item and noticed an add-on fee? The fee is your cost to have a bed or a sofa delivered to your address… or the prescription lens fitting fee my optometrist tacked onto my bill late last year (which made me see red).
Question: How do you expect customers feel about being stuck with add-on fees? Answer: Crap. You only have to get a parking fine in the Central Business District and you know exactly what add-on fees do to your relationship with the fee sticking organisation.
It might pay to think about two ways of framing an add-on fee based on a new sofa. The first framing adds a fee directly onto the unit price (the unsophisticated way most stores seem to use).
- Shop for sofa in several stores around your area
- Identify the price and product you wish to buy (eg. $500)
- Get stuck with a $50 delivery fee at the point of sale
In my opinion this is a shallow approach to managing the customer perception of that transaction. In the customer’s mind the psychological contract is made for the fee of $500 and the customer ends up paying $550 (10 per cent extra), which makes the customer feel unsatisfied.
Try the second way of framing that same transaction.
- Shop for sofa in several stores around your area
- Identify the price and product you wish to buy (eg. $550)
- At point of sale you are offered a $50 price reduction for self-delivery OR the store will deliver your new sofa for free
This is a superior way of framing the transaction in the customer’s mind because the true price of the sofa is honestly represented at $550. The customer no longer gets pushed over the final hurdle to spring an extra $50 at the checkout (where they feel most vulnerable).
Ask how much better you would feel at the point of sale if you are offered a $50 saving for self-delivery? Contrast the two ways of framing the customer conversation and tell me which one would make you, as a customer, feel better about your transaction with the store?
Nobody is saying stores do not have the right, or the business need, to charge for extra services. But how a business tells somebody about that surcharge is a large contributor to how the customer thinks about their post-purchase value. Which relates to repeat sales… which relates back to the bottom line.
March 11th, 2010 at 8:04 am
If there are any solid statistics out there to support the idea that surprising customers with an add on fee at the point of sale works in the long run – feel free to share.
Intuition tells me that life is a little simpler. Unhappy post-purchase consumers think twice about your value proposition the next time… and that’s serious.
My argument is the real business cost of sticking add-on fees to customers at the register is probably greater than the perceived business reward. How about fighting for relationship value with customers, rather than hit-and-run grabs at their collective wallet?