Thomas Hudson

Is that on the MBA final at Strayer?

bartendress

That's all you got? Really?

StayingHomeIsBetter

And if Party A, who had never ridden the train before, was only there because his preferred train was sold out, and never comes back again...

while Party B, who consistently rode the train x-times at x-amount in the past decides its time to look elsewhere...

then the party train, with a few more unfilled seats, might not be the same rollicking fun place in the future.

Too bad, so sad!

Zomba

If that is the way my suppliers treated my company's business, they would be former suppliers! Our company uses volume at our key logistics depots to get prices that are far below what our competitors pay. If they started repairing our competitors' equipment for the same price or lower than our price, they would lose 100% or our business. The question for them is: do I value customer X's business more or do I value the slightly higher rates that others are willing to pay more?

glbetrotter

Well, at the rate it is going, there won't be either A or B to ride the train in a very near future.

That would really be too bad and soooo sad for the train operator!

bartendress

Too bad, so sad...

And the operator of the party train then decides to re-calibrate or die.

I can assure you that the overall lack of bodies will override the amount of bodies who feel entitled because they paid to ride last time but are now offended because the train doesn't find they are special the second time around.

The party train survives as long as there are folks willing to pay for the gas and the booze. It will not persist if all the riders are waiting on someone else to bring the gas and the booze.

Thomas Hudson

Too close to home?

glbetrotter

You might be in a circular argument mode (I might be getting old and senile, of course, too). Read your message several times but still could not figure out who would be partying and why ... and the operator is dead now too.

bartendress

And I can assure you that, in the end, your company is on the short end of the stick.

Do you really think that 'high-maintenance' customers don't pay a premium???

If I know that you're going to make me suffer this dog-and-pony-show annual "cost down" game... If I know that you're going to subject me to that 'inflation be damned, discount me!' thingy every year... do you really think I'm not going to leverage my profits in the early years?

Your suppliers know that you are going to treat them like s#!t... and you will be charged accordingly.

You think you're paying less than your competitors, but your vendors know how you play the game... and off-set it via an '...-hat' penalty...

Trust.

MSPDeltaDude

I'm going to start taking the Party Bus!

bartendress

Bring it! I mix a mean martini.

ssung

I have seen Y being way more expensive than the cheapest first class in many routes. I believe this is because the Y fare is completely flexible and refundable where the cheapest first class may be changeable, but may NOT be refundable.

Thomas Hudson

Most good bartenders I know take care of their regulars. Whether it is calling them by name, giving their drinks a little boost, remembering their drink of choice, giving them another drink right before the old one becomes empty. Sure, they try to do this for all customers, but they certainly pay extra attention to their best customers and are typcially rewarded for it...

Zomba

We have a very good relationship with all of our key suppliers. If my company spends several million dollars a year in a depot (or tens/hundreds of millions at a manufacturer), and we literally are the customer that ensures that the supplier stays profitable year after year, then it is silly for our customers to expect a 'premium' from us. Once they start down the path of treating all customers equally, then they lose our business--plain and simple. Likewise, at locations where we are a small customer, I cannot expect to receive the best price/service.

Premium customers on the airlines expect better treatment in IROPS, 'free' spirits, and other concessions on account of our high volume. Obviously LUTE flyers are worth less than F/J flyers overall, but to what extent only DL knows for certain. It is of no effect to me if they continually rip kettles off for fees on checked bags or other items that don't effect the service that elite flyers receive. Once they start taking away the benefits that FFers receive and sell them for low price to casual flyers, then 'elites' have lost the incentive to deliver all of their volume to Delta. Using me as an example: I paid $300-$500 more per trip to the US last year just so that I could fly Delta. If I don't get any benefits for flying DL that I couldn't get elsewhere, I would just fly the cheapest between AA, DL, AC, and *cringe* UA.

dcline414

I think we've got two different economic paradigms being confused here.

With a commoditized product there will be economies of scale, increased efficiencies through learning, continuous process improvement, and constant cost DECREASES. But a supplier's margin will never improve if the product is commoditized. The price has to constantly be lowered or a competitor will undercut your price and steal all of your customers.

If you find your product being commoditized, you must realize that competition will eventually eat away your profit margin. To escape this cycle, you must find a way to differentiate your product so that your customer is willing to pay more. This is what SkyMiles was accomplishing for Delta.

By devaluing their loyalty program, Delta is essentially cutting their cost by reducing their product into a commodity. They are presently enjoying the residual loyalty of longstanding customers, but only for the moment. They are enjoying high volumes and a high profit margin for an inferior product.

But you are crazy if you think you can strip down your product to a cheap commodity and continue to sell it at a premium. At some point Delta is either going to lose volume or they will have to cut prices to match their service cuts.

Either way, their current profitability is not sustainable unless they can continually find ways to innovate and improve the experience of their frequent fliers (the opposite of what they are doing today).