+Scott Watson

Monday, 19 April 2010

The Problem With Scarcity

As I write this post, the Icelandic volcano has paused from its spewing of volcanic ash. For now at least! The leaders of the 3 main political parties still all believe they are the best person to lead Britain out of recession and on to better times. And, as ever in these situations - there's a scam to be had and a victim to be found. How so? Let me explain in more detail.

When a resource is scarce, we human beings tend to place more value on it - in our own minds at least. Whether it's the TV shopping channels that do their best to sell their unsuspecting, no, gullible viewer to purchase something they don't need, and probably don't want - just because 'There's only seventeen left in stock and they're 'Selling out fast and won't be back in stock for 4 months at the very earliest.' No there isn't only seventeen left in stock and well they know it! There's probably hundreds, possibly thousands of the item left in stock. They're just using the scarcity trick to influence the viewer to believe there's hardly any stock left - and so 'I'd better buy one NOW before I LOSE OUT.'

How does this relate to Iceland and their mis-behaving volcano?

Before I answer that question, another example first. Due to the collapse of the Icelandic economy, and several banks and investment houses, each with a presence in the UK financial services industry, when the country and its banks went bust, no UK customer was permitted to withdraw any of their personal funds. Thankfully, the UK government introduced an investor/saver protection policy, basically providing a £50,000 insurance policy to protect UK investors from financial loss. This is even if they possessed more than £50,000. In basic terms, The Icelandic government owes British investors several billion pounds ($5 billion according to www.thisismoney.co.uk) in lost savings.

So, how does this relate to scarcity? Well, the scarcity rule doesn't only apply to products, services or money. It also relates to the scarcity of choice. Limiting the number of choices an individual, group or population can make. Try this one for size!

The Icelandic government allowed their population to vote on whether they should pay the debt to the British savers (who trusted the Icelandic banks with their funds). It was a straightforward 'Yes' or 'No' vote. Guess the result? A resounding 'NO'. Was it reasonable to expect a population to vote 'Yes' under the circumstances? Unlikely and perhaps the Icelandic governments public referendum was a ploy to absolve themselves of responsibility for making such a decision? After all 'They didn't say 'No'..the people did!'

Many trusting British savers now have scarcity of financial resources or reserves due to the actions of a government.

Sticking with Iceland, the volcano eruption has caused enormous disruption for travellers across Europe. Air travellers especially have suffered significant inconvenience due to aviation authorities cancelling all flights for fear of accidents occurring due to the volcanic ash. And for some serious entrepreneurs (or perhaps some would call them unethical business people at the very least), what do they do knowing that other people's suffering could make them a bundle of cash and profit?


Virtually every major news channel in the UK has reported that train companies, including Eurostar have increased the cost of their ticket prices - due to the increased demand. Hotels in regions affected by travellers not being able to depart - have increased their prices and food outlets (not the major chains), have increased their prices. Why? BECAUSE THEY KNOW THEY CAN! Of course, however reluctant the weary travellers may feel, they do need to eat and they do need to sleep. Catch 22.


Have you ever travelled abroad, or even to a new city, jumped in to a taxi and stated your destination, only to be asked by the driver, 'Is this your first visit?' Next time, please ignore the question or respond 'No' and leave the conversation there. Whilst some taxi drivers may ask in an effort to build some rapport and influence you to tip them well, others, I know from many personal experiences ask this seemingly innocent question to establish just one thing. And that is 'Can I scam you?'

Answering 'Yes' to the drivers question puts you, the trusting passenger, at an immediate and costly disadvantage. Why? Because the driver can take you wherever he or she wants, clock up the price on the meter, and you're none the wiser. When you reach your destination, you just pay up, possibly tip him or her (especially if they delay giving you change as it can feel somewhat awkward) and find out later in the bar you've paid way over the odds. Who's scarcity of local knowledge cost them dearly? You! I've had this dishonest trick played on me in Florida, Bahrain and Dubai. It's reached the point where I let the driver take me on a tour and only upon safe arrival at my destination (usually a good quality hotel), grab my bags and refuse to pay the fare. Not just the fare shown on the meter, but ANY fare. After all, when you've written down their licence number and contact telephone number for complaints, the driver is always happy to move on and find a more willing victim. I love Bahrain and the behaviour of some (not all) taxi drivers really dilutes my experience of the beautiful Kingdom.

Please Enjoy Your Stay - And Show Me The Money

The Radisson BLU hotel in Nice, France has cornered the market in pressuring paying guests to give them more money, by force rather than choice. How so? Easy, to enjoy the sunshine sat by or swimming in their hotel pool will cost each guest £20 per day. Imagine the cost of your enjoyment if you are a family of 2 adults and 2 children. Sure, you'd likely attempt to get the children to share a sunbed together - but that's against the rules apparently. Ok, you say, we'll go to the beach instead and save our money. No it won't. That too will cost you £20 per person per bed per day. And, as you pay in advance (remember you're a guest at the hotel), if it rains, there's no possibility of a refund. Selling on scarcity and the first hotel I've ever heard of which charges guests to use their pool.

Be very aware of how the scarcity rule is used against you. It could cost you dearly, not just in money but trust too. And when trust is lost, it's often very difficult to win recover.




Tuesday, 13 April 2010

The Customer Satisfaction Journey - Forget Customer Service

As a birthday gift for my wife I rather stupidly purchased tickets for her and a friend to enjoy a music concert. Well, 'enjoy' might not be the most appropriate term as the event was with Whitney Houston!

So, bearing in mind the health challenges she has experienced in the past, together with pretty awful concert reviews in Australia and 'fans' leaving the concert early as they viewed her performance as below par, I should have guessed that her UK gigs would be at least postponed if not completely cancelled.

24 hours prior to the scheduled concert, it was indeed announced that the concert was cancelled. Apparently, Whitney had a sore throat. No problem, apart from me having to come up with an unscheduled Plan B - how to fill the void left by the cancelled concert.

Aha, a nice meal in a nice restaurant in Leeds. I chose Gaucho, an Argentinian steak house. And, a rather good choice it was too if you look at the experience the company provided for my wife and myself, even before we arrived. Here's how it went.

I call to enquire about a reservation. But rather than delivering the usual 'So that's a table for two at 7.15pm tomorrow', I was on the receiving end of something pretty special. 'Are you visiting to celebrate any special occasion?' was the wonderful question Amy, the rather helpful and exceedingly professional employee asked me. 'Yes, it's my wife's birthday and as Whitney Houston isn't well, bringing her to Gaucho is my Plan B'.

Now, many restaurant staff would finish the call with a standard 'We look forward to seeing you tomorrow', but not Amy. Oh no, she led seamlessly into evolving the customer experience, and quite understandably, generating potential additional income for Gaucho too. And I'm absolutely ok with this if I'm enjoying the experience.

'So may I make a recommendation?' she asked. 'Of course' was my response. She then proceeded to recommend that upon our arrival we should enjoy a birthday cocktail in the bar as a surprise for my wife. She would think up something - after all, it was a pretty safe bet she would satisfy my wife's tastes as she asked me what kinds of drinks my wife enjoys most. Cool or what? 'And how about if you both have a dessert, I can arrange for a small lit candle to be placed in your wife's dessert as a birthday wish.' ABSOLUTELY!

And this is all prior to our visit. On the night, the cocktails did indeed arrive. Gorgeous they were too. And mine was alcohol free as I was driving. Aren't they two words which if you just change their order, the night takes a very different turn? 'Alcohol free' versus 'Free alcohol'!

At our table, the waiter introduced himself, gave us a few minutes to explore the menu and then - with a heavy wooden board in hand, and at least 8 pieces of meat on it, proceeded to explain in brief but fine detail, the different cuts and types of meat, their recommended cooking style and the different textures the meat had. And I thought up til then that meat - was meat!

The food was outstanding, the friendly, professional and subtle service was first-class. The wine that my wife enjoyed was refreshing, as was the small card she was given by Amy as we retreated to the bar for post-dinner drinks. The card contained details of the wine, a description 'acidic, aromatic, with hints of pineapple', the vintage 2008/9, the grape variety and altitude at which the grapes were grown as well as the region.

Now, neither you nor I would likely need or use this information. But, it was a little bonus which helped our evening be even more enjoyable. I never comply with restaurants which include 'for your convenience' at set gratuity, which is usually between 10% and 15% of the total bill value. My thoughts are 'If you've earned it, you're welcome to it'. But so many cafe's and restaurants just don't earn it. They rely on blind compliance from customers to just accept this fee as part of the transaction. Thankfully, there was the option to leave a gratuity either with the waiter who served us so well or on the total bill, which we did.

Have a think, do you focus on delivering customer service - what you think the customers want or indeed, what you want to deliver to customers. Or, do you focus on delivering customer satisfaction - making the whole experience something the customer will enjoy, value and talk about to others? The difference between customer service and customer satisfaction can have a significant impact on bottom line financial performance and your ability to retain existing and attract, new customers to your organisation. Perhaps now is a good time to take a lesson from Gaucho?

Thursday, 8 April 2010

How to curse effectively, part 2

I like fairy tales.

If you have read enough of them, you will know that very often there is an evil witch or a wicked stepmother who curses the poor, unfortunate hero or heroine.

It goes like this: "From now on, you are a frog (or beast, or sheep, or tea cup)!," and the hapless victim turns into that thing and is cursed to stay that way for all eternity - or until a prince comes along who can lift the curse.

And you know what? We curse ourselves on a regular basis!

Whenever we say to ourselves "I can't do this", we basically cut ourselves off from any chance of ever being able to do this thing - we cursed ourselves as effctively as any witch could do.

Think about it: we don't say that we might in future attempt it, we don't say that maybe we will succeed if we show enough persistence. No, we stopped ourselves from even attempting it.

"Can't" is the end of action.

The way to free ourselves (or others, who have put themselves in the same position) is to challenge this curse.

"I can't do it!"

"What would you do if you could?"
"You can't or you won't?"
"If there was a way to do it, what might it be?"

Same with ourselves: If we notice that we have stopped ourselves from taking action, we could ask empowering questions like "I wonder how somebody else might look at this?", "If I could do it, how would I?".

We have to be very careful with how we use language to empower and disempower ourselves.

Yes, we can!

Wednesday, 7 April 2010

How to curse effectively, part 1

Since I just watched a documentary on the curse of Tutankhamun, I thought I’d write a bit about how we often “curse” ourselves and others.

One of the easiest ways is to use a certain, magical word that instantly disempowers people.
Drum roll, please!

That word is "try".

Little smartassy proof: Try to click your left mouse button. No, don't click it - try to click it!

We either do things or we don't. As soon as we say that we will try something, we have this in-built excuse that we didn't really go for it, we just had a try...

Studies have actually shown that if you ask someone to lift as much weight as they can and then ask them to try to lift as much as they can, they tend to be about 25% weaker when somebody used the word "try" on them.

A friend of mine is a Karate Champion and he shared with me that he always talks to his opponents before a bout and tells them to try their best. Quite sneaky, and quite effective!

Force yourself to say "I will do it" and if you hear someone else say that they are going to give something a try, ask them nicely if they are going to do it, or not.