Tuesday, April 25, 2017

Why Hawaiian Airlines Bid-to-Upgrade Auction Sucks

As it happens, we're leaving for Hawaii tomorrow for my wife's birthday. This is the trip that we've been planning for a while -- since our Napa trip fell through. It goes without saying that, we had a number of options for the flight -- I even considered using my United miles, but I could just imagine that unfolding into a very unpleasant birthday. However, on our previous trip to Hawaii, we flew on Hawaiian Airlines and we were reasonably amused by the experience. Besides, with Hawaiian Airlines, we could do direct from San Jose to Maui.

Booking the tickets on the Hawaiian Airlines web site was pretty straightforward -- it's one of those sites that shows you the fares for the different tiers of service. I like being able to see and compare the different fare tiers. For this trip, because the fare difference wasn't that significant -- and it was a special birthday trip -- I would up paying for first class on the return flight. Unfortunately, the outbound flight was about $700 more for a first class ticket, so that was out.

Then, about a week later, I received an email from Hawaiian Airlines, "Bid to Upgrade on Your Hawaiian Airlines Flight". If you are unfamiliar with this -- I was -- Hawaiian runs a system that allows you to bid on an upgrade to first class.

Initially, I liked the idea. From an economics standpoint, it makes a lot of sense. Rather than arbitrarily assigning upgrades or leaving some premium class seats unfilled, it offers a more democratic method for allocating those seats. Instead, you can reach your theoretical price-point. This seems like a great deal.

At least, that was my initial thought.

When I first presented the idea to my wife, she was intrigued. However, once we loaded the interface and discovered that the minimum bit was $205 per seat, the whole thing turned into an argument. Suddenly, her price and budget concerns kicked in and overwhelmed any sense of birthday pampering. And now I felt stupid for having even brought it up. Mahalo.

After half an hour or so of debate, she decided that she might have been a bit hasty in her response and decided to leave the upgrade decision to me. Now, with an enhanced feeling of my wife's cost-sensitivity, I decided to go with the minimum bid. Then, about a week ago, I received a second email from Hawaiian. This one was titled "We are reviewing your upgrade request!" The subtitle was "INCREASE YOUR CHANCES FOR A FIRST CLASS UPGRADE", and here's the content from that email.
Thank you for making an offer for a First Class Upgrade via Bid Up by Hawaiian Airlines. We are currently reviewing all offers for your flight xxxxx, departing on April 26, 2017 and upgrades will be awarded soon.

To increase your chances that your offer will be accepted, would you like to review your current offer?
That's all of the information -- other than a return to the bidding screen -- provided. Needless to say, I did not change our bid.

The program says that it will let you know within 48 hours if you got the upgrade and will notify you 26 hours before your flight that you didn't, so when you don't get an email prior to the 26 hours, you've got a pretty good idea that you didn't get the upgrade. So that's kind of annoying. But there were aspects of the whole experience that were even more annoying -- downright sucking even. Let's run through them in a list.
  1. I didn't get to buy an upgrade -- even though I was told there might be a chance I could get one. This kind of sucks. 
  2. There's no insight into what's happening in the auction -- it's basically blind. While that may seem like it makes aspects more exciting, like the unknown chance of winning, it's actually very frustrating. It means that when Hawaiian Airlines comes back to you and says, "would you like to increase your bid", you don't know whether you're already sitting on a winning bid. It could be that they only send those "increase your bid" emails to people who are low bidders, but at some point, you're potentially bidding against yourself -- which is really uncool.
  3. Reason 2 is what makes the whole experience suck. Because instead of seeming like an equitable way to allocate first class tickets, the whole thing felt like a bait-and-switch scam for constantly squeezing you for more money for small aspects of service. Imagine if it was baggage fees. For $10 you can check a small, carry-on sized bag. for $50, you can carry on a regular carry on bag, but if you go in for the $10, you can bid for an upgrade to the size of the bag you can bring -- then repeatedly asking if you wanted to increase your bid. Contrast this auction system with one where you had visibility of the high bid -- like eBay. Then you might consider upping your bid. Or what if the system worked like Google Adwords bidding system, where your high bid meant that you only bid like $.05 more than the other highest bid? Anything along this line would have made this whole process feel less like an aggressive grift for more cash.
  4. After the entire experience, part of me feels like I'm owed an upgrade. Having been through the process and, essentially, having tried to buy one, I feel like I've been screwed. Like one of those parents who went looking for the "must have" toy during the Christmas holiday, only to have had one yanked from my hands by some other customer. Mahalo. From a customer service experience, this is not what I would want to come from my upgrade program. Rather, wouldn't it be better if Hawaiian Airlines just randomly upgraded you, like winning the Lotto. While not everyone would win, those that did would certainly feel rewarded.
So, after all is said and done, I've walked away from the whole experience kind of pissed at Hawaiian Airlines. In psychological economic terms, I've been primed to be unhappy and unsatisfied with my experience. That seems like a poor approach to customer service. Definitely an unpleasant way to start a vacation. Mahalo.

Wednesday, April 19, 2017

SiriusXM's Lead Nurture Marketing Spam

Last year we bought a car with SiriusXM integrated into the audio system. As most new owners do, we activated the service for the trial period. While we were moderately amused, our usage was somewhat limited -- it's not like we're always driving long distances during the daily commute through Silicon Valley. For that reason, radio seemed adequate enough, so the cost of the SiriusXM service seemed excessive and unnecessary. By not signing up for the service, we got put into their lead nurture email system.

For the past 6 months, I've been receiving offers, but I've been a bit surprised by the frequency. For example, for their most recent series, I've received three emails over the past three days. Needless to say, the offer hasn't really changed materially. Essentially, their offer is a one-time teaser price of about $25-30 for six months, then you're charged full price until you unsubscribe. But wait, there's more -- they'll also let you have unlimited online streaming to your computer as part of the deal.

It strikes me as funny, because I really thought they might actually improve on their offer. Even funnier, juxtapose the email subject line with the reality that their offer doesn't really materially change. Here's a snapshot of some of their subject line teasers.
  • You Deserve this Amazing Deal! Enjoy this Great Offer and FREE STREAMING. See Details.
  • Congratulations you have been chosen to receive this terrific offer. We hope you enjoy it, it is tr…
  • You Deserve this Amazing Deal! Enjoy this Great Offer and FREE STREAMING. See Details.
  • FINAL Notice! Please Open for More Details
  • Urgent Notice! Please Open for More Details
  • Turn your SiriusXM back on with this great offer! | See details
Of course, FINAL Notice isn't really final either.

Today, after receiving the third email in three days, I had to unsubscribe. I know, that means I may miss "this Amazing Deal," but I guess we'll have to find a way to survive.

Tuesday, April 18, 2017

United's "Re-accommodate" and the "Customer" Lie in Airline Doublespeak

The Internet is abuzz with the story of the doctor on the United Airlines flight who was "asked" to give up his seat, then beaten and forcibly removed from the plane. If you haven't seen it, the Jimmy Kimmel show had a pretty good synopsis. As shocking as the video footage of the event is, perhaps what might be even more surprising was when United came out with the statement:
Flight 3411 from Chicago to Louisville was overbooked. After our team looked for volunteers, one customer refused to leave the aircraft voluntarily and law enforcement was asked to come to the gate. We apologize for the overbook situation.
I say shock, but I don't really mean shock, because in many respects while we're surprised that a business might say something like this, we're not surprised to see this kind of language and attitude from an airline. In that way, what I should probably say is that, while the footage and story is distressing, it's not really surprising.

The Grand Airline Lie: "Customer"
Most of us have expectations for "customer service". Inherent in that relationship is the principle that, as a customer, you have options and by choosing to spend your money with a vendor, part of your decision will be based on what you get for the service and how you are treated throughout the transactional experience. Or as you'd find on Wikipedia:
Customer service is the provision of service to customers before, during and after a purchase. The perception of success of such interactions is dependent on employees "who can adjust themselves to the personality of the guest". Customer service concerns the priority an organization assigns to customer service relative to components such as product innovation and pricing. In this sense, an organization that values good customer service may spend more money in training employees than the average organization or may proactively interview customers for feedback.
While you'll hear the airlines use the word "customer" a lot, for most travelers, there is little meaning beyond an exchange of money. Rather than being treated like customers, most airline passengers are treated more like cattle or sheep. We probably have more in common with the animals at factory farms than we do with the classic notion of a "customer".

And it's not just United Airlines. On CNN during the news cycle around the United story, the network ran a series of clips of people being thrown off the plane, all from different airlines. American, Delta, Spirit. They even lumped in a woman who was forced to buy pajama pants because JetBlue wouldn't let her on the plane wearing shorts that they didn't like.

Let's face it. They all suck. Some suck worse than others. People joke about it, but nothing gets better. Instead, things just deteriorate further.

So how did we get to this point? Here's a piece from Wired that does a good job of characterizing the problems with United. How United Turned the Friendly Skies into a Flying Hellscape is an interesting look at the recent history of the carrier and the impact of the merger with Continental. But in some sense, as noted, this issue transcends United.

The Inherent Tension of Flying
Traveling can be stressful. Some stresses are common -- we all struggle with time zone changes -- and some stresses are individual -- I may not be afraid of flying, but you might be. Time and schedules also ratchet up stress levels -- from concerns about making a flight or connecting flights to factors outside of the flight itself like business meetings, appointments or even vacation itineraries.

In the midst of this stressful environment for travelers, the airlines have been doing everything they can to ease traveler stresses (haha). Seriously though, rather than that, for the past 10 years or so, the airlines have increasingly pursued strategies of testing the limits of what passengers will tolerate, all with an eye towards increasing profitability. The Wired article talks about "Calculated Misery" and links to this New Yorker article, Why Airlines Want to Make You Suffer. The article talks about JetBlue being a hold-out on charging baggage fees and what drove them to change:
Wall Street analysts, however, accused JetBlue of being “overly brand-conscious and customer-focussed.”
In short, not only do airlines, as a business, not care about you, the "customer", they're business model is increasingly built on taking advantage of you. United Airlines profited to the tune of nearly $10 billion dollars over the past two years with that business strategy.

And the effect on "customers" is to put them on edge, forcing them into a combative, defensive mindset. It's not really difficult to see the equation, build systems that impose misery, tensions rise. Add in a good portion of unequal treatment -- like walking past the first class section and seeing spacious seating that is such a contrast to the cramped seating that you're being put in -- raises tensions higher. That's partly why we have more incidents of "air rage" taking place.

You Must Obey the Uniformed Flight Crew
Since we returned to flying following the 9-11 highjackings, we've all been chartered with paying special deference to the uniformed flight crew. It goes without saying that it's an essential rule for the safety and security of the flight. At the same time, there are flights that it seems like turn into something just short of the Stanford prison experiment. Whether it's a result of the "psychological effects of perceived power", or simply a flight attendant having a bad day, airline passengers have to be aware that something that starts as a simple customer service incident can easily escalate to an event that brings in law enforcement. After all, who could forget the guy in the "Princess Bride" shirt?

These incidents between passengers and airlines staff will keep coming up because that's the business model. To quote from the Wikipedia page on the Stanford prison experiment:
The experiment's results favor situational attribution of behavior over dispositional attribution (a result caused by internal characteristics). It seemed that the situation, rather than their individual personalities, caused the participants' behavior.
The "customer" environment created by the airlines, while endorsed by Wall Street, is toxic. These days, when you engage with an airline as a "customer", you have to devote an inordinate amount of energy to mitigating the stresses inherent in the experience. That's why "the friendly skies" is laughable. There is no joy in the base level experience. There isn't really much that an airline can do to "wow" you. And the hostile environment turns minor events into seeming random acts of cruelty.

Take the United Airlines incident as an example. When United decided to remove those people, was it clear who they chose and why? Were they flying on standby? Did they pick Dr. Dao because he's asian? Did he pay less for his ticket than other passengers? While news stories may relate different answers to this, that we can believe that it was a random act of cruelty speaks volumes to the toxic  customer environment.

But it isn't going to change. Because profits and "shareholders enthusiasm" for more profits. Despite the tremendous first day dip in United Airlines stock value, it's value is returning. And it's unlikely that you'll see any government regulation that makes it better. At least, anytime soon. So, until such time as there is something like governmental regulation that forces the airline industry to end their "calculated misery" approach, you need to recognize that when the airline industry uses the word "customer", they really mean something "transactional actor". Sure, they will do things that seem kind of like customer service -- like having people respond to your frustrated posts on Twitter -- but their ability to do much of anything beyond kind words is quite limited. In the end, their goal is not really to make you happy, it's to get you to stop squeaking.

Rep. Sensenbrenner: "Nobody has to use the Internet"

In another one of those world class, technologically disconnected statements that old Republicans find themselves making, Wisconsin Representative Jim Sensenbrenner made this statement at a town hall meeting with his constituents, "nobody has to use the Internet." This was his response to questions of why he voted to repeal the Broadband Consumer Privacy Rules passed by the FCC last October and to allow ISPs to sell Internet access information without the permission of their customers.

Sensenbrenner, who's been in congress since 1979, seems to envision the world of 1992 or 93, long before the Internet became an essential part of business, commerce, entertainment -- even government. Taken at face value, his statement seems downright delusional. Taken as an attempt to spin an unpopular position, it goes beyond clownishly ham-handed. Perhaps the only saving grace is that the basic phrase is so generic, it probably won't reach the level of "a series of tubes" meme.

Tuesday, April 11, 2017

Pro Mac Users: Your Negativity May be Working

I saw this the other day on Macrumors and I wanted to share. 'Constant Negativity' From Pro Users Led Apple to Develop Modular Mac Pro, Which May Not Ship Until 2019. Here's a snippet:
Apparently, the negative response to the MacBook Pro with Touch Bar, which many complained was not oriented towards pro users, was a major factor. Apple saw a surge of orders for older MacBook Pros instead of the new model, and that, combined with the reaction to the LG 5K display and the "constant negativity" from professional users, led Apple to "double down on professional users."

The decision to move ahead with a modular Mac Pro replacement was made "in recent months" with development starting "only a few weeks ago," suggesting it's going to be a long wait.
Of course, none of that really gets to other questionable aspects, like how many generations of USB-C will we have to see before it actually becomes something with an ecosystem, how long before they decide that the audio port must be removed from all of their other devices, or that classic, looking for MagSafe.

But let's not kid ourselves -- the idea that Apple "may" have a new Mac Pro system design in two years and that this represents a "recommitment" to pro users is laughable. First and foremost, at the heart of this issue is what is commonly referred to as a roadmap issue. That means that within management and planning, they now have a perception that they've sort of missed the mark. Not FAILed. No, it couldn't be that. So instead, their going to hedge their bets and try and promise something further down the road. But it's not like their designing something like an autonomous car that's never been done -- these are desktop and notebook computers and they have a pretty clear historical track. I mean think about that. Apple needs two years to design and bring to market a desktop computer? 

So, while I'm optimistic that Apple may actually start making Apple products again, this "rumor" seems a bit more like a Trump distraction tweet than actual insight into the roadmap at the Fruit.

Tuesday, April 4, 2017

British Airways Pricing Dynamics Deconstructed

Last month, I flew on British Airways to Brussels for a conference. It was a good flight as flights to Europe go and, as we're expecting to make several trips to Europe this year, it had me expecting that we would be flying British Airways frequently this year.

Here are a few of the reasons why I liked the flight:
  • It departed and returned to San Jose. It's hard to underestimate how awesome this is. Besides the smaller airport, saving on the hour drive on each end of the trip... priceless.
  • The flight was on a new 787. The 787 really is much nicer to fly on.
  • British Airways offered "Premium Economy" tickets for a lower price than "Economy". (Their "Premium Economy" class is essentially what Business Class was 15 years ago). 
Anyway, no complaints. Until we got ready to book another flight. Essentially, my wife has a business trip, I'm going to travel with her, and so we need to coordinate our flight while purchasing from two different systems -- her corporate purchasing and me directly. While it should be reasonably easy, you have to remember two important factors when considering a corporate travel portal.
  1. It's going to price compare and force you to take either the lowest price -- or something within say $100 of the lowest price it sees. Otherwise, it's out of policy.
  2. You may face other limitations and limited choices, so you may not be able to easily mix and match as you might do with a third party tool.
Naturally, the first place that I went to check pricing was the British Airways site. We were playing around with dates, because we still hadn't determined how long we'd stay or the parameters of what we'd do. For a simple search, I tried flying out on Sunday May 14 (for her to arrive in time for her meetings on Tuesday), and flying back on Saturday, May 20. This is what the results looked like:

$366 for Premium Economy?!? Sweet! This is looking promising. So then, I went to look at the return flight.

$2182 for Premium Economy on the return? That seems a bit steep, but it is cheaper than economy. At the same time, you can see in the date tab above that, returning on Sunday looks like it's only $746. So I decided to try changing the return date to Sunday. FYI, you'll notice the check box about changing outbound dates. I'm not exactly sure what functionality that's supposed to provide, but it had no effect on the pricing changes that happened.

When I selected the return date on Sunday, not only did the return date change, but the Outbound pricing changed. Here's the new outbound pricing.

What happened to my $366 Premium Economy seat outbound? Now my options are $366 for regular economy or $648 for Premium Economy? WTF? When I first saw this, I was enraged. Just so you know, here's the return on Sunday.

Now, the return in Economy is $765 and Premium Economy is $963. So, while the total cost of the fare on a Premium Economy seat is lower than it was, it's been undercut by the regular economy seat price. Of course, if you're purchasing through a business portal, you're probably not going to be about to get that lower priced Premium Economy seat because your pricing system will have been undercut by the economy seat.

Just to explore some more dates and pricing dynamics, I decided to try changing the outbound date to Saturday, May 13 (using the interface and keeping the return date on Sunday, the 21st).  Here's the outbound result of that.

And here's the return.

Note the outbound $391 and $698 the return $765 and $963 for economy and premium economy respectively. Now, for the final piece of the experiment with the British Airways interface, I changed the return date back to May 20 (while leaving the outbound date as the 14th). Here's that screen, first with the outbound.

And then with the return.

With these dates, the return on May the 20th is priced at $765 and $963. In other words, while the day you're traveling affect British Airways pricing partially, a more significant factor is how many days you're staying there. It's sort of like the old "Saturday Stay" rate, where if you stayed through Saturday, your fare would be lower. Except, in this case, if you stay long enough for British Airways to consider it not business, your fare may be lower, but you need to fly economy.

So what's the strategy behind this? Why do they price their economy seats artificially high if you choose a short set of dates? Why do they lead with a super-low price on the outbound Premium Economy seat on that business length stay fare? Since I don't work for British Airways marketing or pricing groups, I can't say. However, from our black box testing, I think we can put forth a few theories.
  1. Overall, they are anxious to win some business traveler flyers. By offering somewhat competitive rates for a Premium Economy seat versus say, an Economy seat on another international carrier, they hope to win some of those premium seats. As you can see, when you pick fly on their short schedule, you'll end up paying $937 more than what they value the seat for on either end of the extended date range. 
  2. Why lead with the $366? I think this works as a loss leader to entice you into the rest of their pricing web. If I had to guess, I'd expect that it's sort of like a prime to trick your brain into thinking, "this is not that expensive... and I get Premium Economy."

Based on running our numbers though, I don't think we're going to book on British Airways. Despite my overall positive experience on my previous flight, we can't escape the feeling of "Shenanigans". Besides, as noted, there's no way my wife could select Premium Economy in the her corporate business travel portal when the economy prices are lower. Instead, we're now looking for an airline with a more predictable pricing practice.

The French Laundry Follow-up

I just wanted to take a few minutes to follow up on my post about The French Laundry. They actually reached out to me last week, following my blog post, and I'm sorry that I've been neglectful in not posting a follow-up sooner.

Based on my conversations with them, it sounds like they were planning the transition for two years and that the transition project was complex. In addition to switching systems, they needed to load existing reservations into the system. It sounds like a big pain point was having people calling in constantly, being put on hold, and some other issues along those lines.

Another issue which they didn't explicitly say, but I imagine may have been an issue for them; if they pre-announced their switch to the TockTix system, Open Table may have reacted by dropping their existing service, leaving The French Laundry in a big reservation mess. While we like to imagine business relationships behaving professionally, the reality is that, even in business, these kinds of breaks aren't as clean and unemotional as we'd hope.

It goes without saying that switching a core business system like this is not a decision that the business makes lightly, but the team at The French Laundry clearly hopes that this will help streamline the reservation process and make the restaurant more accessible than it has been in the past.

A special thanks and a hat-tip to the team at The French Laundry for reaching out to us and responding. I do think that businesses that reach out to customers (or potential customers) like that deserve kudos.

On a personal note, we won't be going to The French Laundry for my wife's birthday. While we imagine the experience would would make for a very magical milestone, the memory of a lifetime; in the flurry of all of this, we opted to go to Hawaii. That being said, I'm confident that the guy behind us in line will be positively thrilled with the experience.