Thoughts From The Cake Scraps

All sorts of talking heads have been in the news recently discussing what the impact will be of the decision that Spirit Airlines to charge people up to $45 per carry on.  They talk about how other airlines will watch them to see how the program is received by the public.  Then of course there are the Southwest commercials that only talk about how they don’t have bag fees.  But all of these people, in particular Southwest, are missing the boat.

People  get upset when new fees are implemented.  Some fees, like for checked baggage, are just frustrating while others, like charging for bathroom use, are silly, and still others are illegal (like charging for handicap assistance).  But these fees only make people upset for the moment and then they pay.  I would argue it is in danger of becoming a confusopoly.

What makes it worse is that the pointless TSA rules force you to discard items (like beverages) and yet provide no oversight on the cost of the beverage on the other side of the gates.  Meanwhile they are spending $1 Billion on scanners that, by all accounts, don’t work, are able to transmit ‘nude’ photos (as specified in the requirements document in the original proposal), and could damage your DNA.  And of course this is tax dollars and additional security fees at work.

Whatever, the point is there are lots and lots of fees which brings me to the point of this post: all of the power is in the hands of Kayak and Priceline.

Think about it for a second.  Airlines are imposing these fees so that they can get the lowest far shown, which should drive business.  This clearly is based on the assumption that price is the most important thing to customers that are traveling.  And yet nothing is being done on these comparison sites to expose this.

Which brings me to my secondary point: Southwest is getting screwed.  If I ran Southwest starting tomorrow, the first thing I would do would be call up Priceline and Kayak.  I would get an estimate of what it would take to add “how many checked bags”, “how many carry-ons”, “how many in flight meals/snacks”, “how many in-flight bathroom uses”? and similar things to the site and I would pay to develop that functionality.  The prices people see now are simply no longer valid.  There are too many additional add on costs to just keep ignoring them.  And for an airline like Southwest, to not expose that more in a pricing engine is a HUGE miss.

While I like the lower costs, and I like the idea of only being charged what I use, I also think I like to feel like I got a deal, or at least am not being taken for every cent I have.  It is a very delicate balance, and probably depends on the point of the trip (business or fun).  This could get interesting.

What do  you think about the more a la carte structure (besides that cable companies should offer it)?

This has been a Thought From The Cake Scraps.

When looking at a web site process, such as registration, it doesn’t take much testing to figure out that the answer is always less.

What information should we collect?  Less.  What questions should we ask?  Less.  How many steps should there be in checkout?  Less.  Less.  Less.  You get the idea.  The reason is that each step or bit of information, or whatever is another obstacle that the visitor has to overcome to convert.  Why add things that actually prevent the visitor from taking the desired action?  Because you’re greedy.  That is the only answer.  If you do not have a guest checkout, you’re greedy.  If you force someone to put in their address when signing up for an account to access ‘premium website features’ you’re greedy.  You only need an address to ship.  Don’t be greedy.

I was looking over a Slim-Fast package and saw this box that lets you “customize your weight loss journey”.  It sounded interesting.  I’m not overly concerned about my current weight, but was curious anyway so when I had a chance I decided to check out the site.

This custom weight loss plan is on the homepage.  Like dead center on the homepage.  You can’t really miss the red “Register Now” button.

The Slim-Fast Homepage

At this point, for me personally, I was already a bit hesitant.  I’m thinking to myself, why are they calling it “register” and not “Get Your Plan Now” or at least something that doesn’t sound as impersonal as “register now”.

Anyway, because I was interested I click through anyway.  Point them.  But look at the ridiculous amount of information (click to enlarge) they demand from the visitor (in this case me):

So here I am, all interested is seeing what Slim-Fast can do for me and this is what they give me.  It is about the worst possible experience I could imagine.  But, I pressed on.  I really wanted to see what this “customized plan” was going to be.  So, like any person who has no interest in giving out tons of information for no reason, I filled in the stuff with a bunch of junk info.

Boy did they get me.  After I took the time to fill the whole long form out (albeit with bad info) they don’t even give me the plan.  They e-mail it to me.  Well, I didn’t put in an actual e-mail address so it when to some random person.  At that point I just lost interest.  I could not go on.

So with all of this in mind, what was Slim-Fast looking to gain with all of that information?  Would they mail me crap I didn’t want?  Just e-mail me the coupon.  What could they possible need all that information for?  Invasive marketing was my only thought and that is why I gave them bad information.  I don’t want to be invaded upon any more than I can help.  But the bigger miss here is what they lost.

Sure, they lost my interest but they lost something much more than that.  They lost my money.  Imagine, here is a customer all set to lose weight.  They not only want to lose weight, they want to lose it with Slim-Fast.  And beyond that, they not only want to lose it with Slim-Fast, but they want a diet plan from Slim-Fast that will – in all likelihood – contain a fair amount of Slim-Fast product.  From snack bars to meal bars to shake powder to a shake-in-a-can.  And then different flavors of all of those things.  This was a free pass for Slim-Fast to sell a lot of product to a customer that wanted to be sold to.

Instead of taking this easy money, instead of helping me toward my personal weight loss goal – and using Slim-Fast to do it, which I would certainly tell my friends about -, instead of any of that they got a visitor that was just pissed at them.  I wrote them a letter telling them how bad of a site they had and pointed out the huge opportunity they were missing out on.  After several weeks I have not got a response.  This is not how you build your brand.  I guess I shouldn’t be surprised.

Give information about your product freely.  Get a customer to engage with your product for free.  If you are a quality product they will be more than happy to give you the rest.

In fact, this is a perfect opportunity to quote the late founder of Lands’ End – Gary Comer (who was a billionaire – so yes, it works):

Take care of the customer.  Take care of the employees.  The rest will take care of itself.

Do you agree?

This has been a Thought From The Cake Scraps.

From my previous post on Swoopo I generated a small bit of confusion because Swoopo has several types of auctions.  Here they are directly from the Swoopo site (though I rearranged them a bit for my comments):

Fixed Price Auction
If you win a Fixed Price Auction, you only pay the price indicated in the heading of the auction (plus delivery costs), regardless of the level the bidding reaches.

100% off
Where an auction is marked “100% off”, the winning bidder does not have to pay the final price. That’s right: the price is zero! You just need to pay the delivery charges.

These are basically the same thing and makes this site seem a bit more sleazy.  Here’s why.  With a fixed price auction or a 100% off auction you don’t pay the value of the auction, just the fixed price or nothing, respectively.  That seems straight forward until you think about it.  If they already know what they are selling it for (or that they are giving it away free) the users are basically just giving them money.  They are literally proclaiming “Here is something free, what will you pay me for it.”  Can you really even call that an auction if the bidders are not actually impacting the price?

Penny Auction
In a penny auction, the price rises by just one cent with each bid placed (whereas in a normal auction, it rises by 15 cents).

Well this is nice of them.  In case you were able to hold off yourself from bidding when the price went up 15 cents with each bid they have auctions where it only goes up a single penny.  Thus, you look at the price and want to jump right in not realizing just how much money Swoopo is going to take you and other fools like you for.

NailBiter Auction
During a NailBiter Auction, BidButlers aren’t allowed. Users may only place single bids by manually clicking or calling. Don’t walk away or you miss the next incredible deal!

This would be interesting except that the time goes up with each bid (see below).  So instead of a “NailBiter” you have a sit around all freaking day bidding and waiting for the thing to end.  Good times I’m sure.  Too bad I’ll miss it.

Open Auction
Anyone can bid on an open auction, even if they have already reached their eight auction limit. Open auctions do not count towards your auction limit. See ‘How many auctions can I win a month?’ for more information.

Wait, I can only win so many auctions in a given time period.  Doesn’t this sound a lot like what a casino can do if they think you have a gambling problem?

20-Second Auction
All auctions start as 20-second auctions. The countdown increases by a maximum of 20 seconds each time that a bid is placed.

15-Second Auction
You guessed it – with these the countdown increases by a maximum of 15 seconds with each bid placed.

10-Second Auction
You guessed it – with these the countdown increases by a maximum of 10 seconds with each bid placed.

Wow.  What variety.  It is like the Jelly Belly of auction sites.  Really guys, do we need a different line for each you guessed it – X second auction type.

I hope that clears things up a bit for people.  In my original post I did have my math with the winner having to pay for the final price of the auction.  While this isn’t always the case, it often times is.  I’m not going to waste my time looking around for exact examples, but if you want to Swoopo does feature a list of completed auctions.  Please remember what Thomas Tusser said: “A fool and his money are soon parted.”

This post digresses a bit from web analytics but the business concept of Swoopo is so brilliant – but not endorsed by myself – that I had to post on it.  Before I get into this post I want to make one thing clear:

DO NOT USE SWOOPO!  YOU WILL LOSE MONEY USING THIS SITE!

Now that I have made my position clear I can get into how brilliant this site is for making money at the expense of others.  It is not customer service oriented and it is probably not going to have a ton of repeat customers.  What it will have is a huge pocket book as long as P.T. Barnum’s phrase holds true: There’s a sucker born every minute.

First I will lay out for you how the site works.  It is a ‘auction’ site…sort of.  Swoopo sells bids for $1.  Each time you use a bid on an item the price is increased by $0.15 for that item.  So here is an example:

Person A buys 5 bids from Swoopo for $5 total.  Person A sees an auction for $1000 and places the first bid.  The auction is now at $0.15.  Person A now has a sunk cost of $1 (the cost of the bid they used).  There is no way to get that dollar back, win or lose.  If Person A wins they must pay the $0.15.

Person B also purchased $5 of bids.  Person B sees the same auction and places the second bid.  The auction price is now $0.30 (because each bid increases the cost by exactly 15 cents).  Person B now has a sunk cost of $1.  If Person B wins they must pay the $0.30.  Swoopo now has $2 in the bank and the auction is at 30 cents.

This can happen with as many users as there are suckers to start accounts.  Why are they suckers?  Because everybody that does not have the top spot just loses the money they spent on bids.  *Poof* Gone.  If you think this sounds a little like gambling or a complete scam you are not alone.  People get swept up into the auction and don’t want to get nothing for the money they spent on bids.  I think you will understand it better if I show you an example of people getting ripped off on the site.

Please note that while the math in the laptop example assumes that the winner has to pay for the item, Swoopo has different types of auctions which are described in my post on types of Swoopo auctions.

An auction for a laptop that says on the auction page, and I quote, “Worth up to $1,399.99″  The winning bidder, as stated on the site, placed 2020 bids.  That is $2,020!!  And the auction page proclaims “Savings: 0%”  when it really should read negative!  So Swoopo made like $600.  BUT WAIT!  The auction started at $0.00 and finished at $3,353.85.  Now read that again.  They were already up $600 from the winners bids alone.  The winner sucker still had to pay $3,353.85 because that was the price of the auction.  Okay, so Swoopo walks away with a cool $4,000 pure profit.  (Like a bad TV commercial) BUT WITH THERE’S MORE!  Remember that bids are placed in 15 cent increments.  That means that if the auction finished for $3,353.85 you take that divided by $0.15 which equals $22,359 in bids!!!!  That brings total profit to $22,359 (bids) + $3,353.85 (auction) -$1,399.99 (retail cost of laptop, probably not their cost) = $24,312.86

This is not to say that there are no good deals on Swoopo.  The auction for $1000 finished at $568.20.  The winner of that auction placed 218 bids ($218 dollars worth) for a savings of 78%.  Why is it 78%?  because it is a 100% off auction  – see my post on types of Swoopo auctions– meaning that you don’t have to pay the final value of the auction (how sketchy is that).  In theory, if no one else would have bid, you or I could have spent $1 on one bid and won the auction.  If we would have won the other guys $218 would have been for nothing.  Now keep in mind that if this were not a 100% off auction that the winner would also pay $568.20 in addition to the $218 for bids.  Total investment: $786.20.  Is that really worth the risk of getting nothing?  I think not.

There are 2 kickers that I have to throw in yet.

1. Every time a bid is placed the length of the auction increases.  Therefore if a bunch of people “snipe” it at the end, the auction can go from 5 seconds left to 20 min.  Yeah.
2. And in case you were worried about the one who got away, Swoopo provides a “BidButler” that auto bids for you up to your set amount when someone out bids you.  If you are going to spend $1 a bid, please don’t let some BidButler do it for you.  After all they don’t call it “entertainment shopping” for nothing.

All said and done this seems like a little bit of a scam, praying on people that either don’t get it or are stupid.  If one were to use this site the only smart thing to do would be to research what auctions of stuff goes for and then place a single bid when it gets to that price and hope you are not out bid.  Anything else is just a waste of money.  That is, of course, if you ignore the fact that everybody else who has bid gets nothing.  It is a combination of eBay and gambling – more gambling (in that you must pay to bid but if you don’t win you don’t get anything).  Think of betting on red in roulette, you only get something if you win otherwise it is gone.  At least if you win there others can win as well.  If it were Swoopo roulette if you won everybody else would lose.

It is just amazing – and yet totally understandable once you get the mechanics – that this site made money selling $1000.  $3788(bids) – $1000 (cost of item) = $2788 profit.

Paraphrased Swoopo business plan in short: find 10 people to give us $10 each and one of them will get this $20 gift card.  Repeat.  Official Song: I Get Money

What do you think?  Scam?  Brilliance? Awesomeness? Just another web site?

10/6 UPDATE: Check out my new post on PennyCave, a Swoopo look-a-like!