The New Cs of Customer Choice


Susan and I were traveling recently and found some really cheap airfares.

However, as we soon found out, these seats came along with some limitations.  For example, we were not able to choose our seats (until everyone who paid the high price exercised their choices).  The seats also came with less legroom.  Forget about using my multi-million miler status to upgrade … but who cares anyway when the number of people with even more miles than I have is enormous now.   And, by accepting this lower fare, we forfeited the right to catch an earlier flight even if we were willing to stand by for it.

Perhaps there is something to be learned here for our industry.  Maybe, just maybe, the historical basis for rates and rate design needs to consider something far different from what our founding fathers conceived.  Maybe Edison was right, his concern that no one would ever want to buy electricity because people had no idea what it was … he suggested selling light and heat.  Doing that would make it intrinsically attractive to the providers to use cost-effective efficiency measures.

If customers really want low prices, perhaps they should have to compromise choice, comfort, convenience, and control.  Lots of Cs at work here.  But maybe this set of attributes permits us to truly rethink the electricity industry.  After all, if you want comfort, you probably want to keep your home cool in the summer and warm in the winter.  If you want the lowest price, perhaps you have to give up some or even all of that.

Maybe the costs of service concepts needs to be designed to reflect the value of service.  If you value convenience, you should be willing to pay more for it.


Just trying to help …


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