Have you notice something extra on your restaurant tab? Rather than raise menu prices, many restaurants are using new fees and surcharges to cover for rising inflations and putting it into the fine print. Add-on fees are certainly not new to many industries. We all have seen and experienced this with auto service and tire repair shops with additional charges for “disposal of waste” fees on oil changes or “tire disposal fees” when replacing tires.
How do you feel when you are given a quote for a particular product or service only to discover that there are additional charges added to the ticket making the final cost more than your expected?
Additional fees and charges are also notable in the hotels and resorts industry. It is common to see resorts charge for the use of the resort amenities or gratuities even though you may have not even used any of those services. Internet charges, baggage fees, phone access charges, parking fees, early check-in, additional people in the room, use of the health club, business center computers, extra towels, soaps or shampoo and the list goes on and on.
During the pandemic, many hotels, resorts, retail shops, and even dentists were charging, some are still doing this, “protective equipment” or “sterile cleaning” charges to cover those extra costs. Now as gas prices are rising, it is more common to see “fuel surcharges” on your bill.
As the costs of doing business have changed, I have seen more merchants use this strategy to off-set costs. The practice is similar to what many are calling “shrinkflation”, which is popular in grocery stores and restaurants where they reduce the size of packaging or portions to make it harder to spot a price increase. These fees are effective in part because unless people are paying close attention, many fail to notice them.
I get it. I certainly realize and feel for the small business owner who is just trying to keep their heads above water and not raise prices on the service or products that they offer in hopes that your customer won’t notice.
Many of my coaching clients ask me for my advice on whether they should add these extra add-on charges. Actually, I don’t love it and I’m not a big fan of that practice. And neither should you. If you’re running a small business, like I do, here’s some advice: Don’t adopt this practice.
I’m sure you’ve got extra things you’d like to bill to your customers, just like the hotels. Maybe you’d like to tack on an overhead charge, or a shipping and handling fee. Maybe you want to bill extra for administrative time. It all sounds reasonable but is it?
In my opinion, as well as other experts in customer loyalty, believe that indiscriminately charging extra fees is a bad model. Why? Because it makes people angry! Your customers get told a price is one thing and then it winds up being something higher. In some cases a LOT higher. What is even more frustrating to your customer is that they only find out after they have already purchased your product or utilize your services. Your customer is not a happy camper and now they have to be confrontational to you or your staff. Something very few people enjoy doing.
What can be worst, is that perhaps your customer may not let you know, but will go away unhappy and won’t think twice about telling others about their bad experience, particularly on social media. Now your small business gets a bad reputation that you might find it difficult to recover from.
I’m not sure why hotels, airlines, auto service repair shops, hair salons, rental equipment businesses, catering companies and a whole slew of others still insist on layering on a bunch of extra fees on top of their normal fee. I don’t even understand why some small businesses are also doing this. Some people think that listing out all of their fees demonstrates transparency. What they don’t realize is that customers don’t really care about the details. They just care about what they’re ultimately paying. And what they’re told upfront is what they expect to pay. When that number changes because a business is being “transparent” as they indiscriminately add extra fees it only causes confusion and anger. Rather than being open and honest, the practice actually comes across as a bit unethical.
The bottom line for your business is this: Don’t do it. Figure out all of your costs and charge a single price. Period. Don’t tack on extra fees unless a customer has requested additional services or products. And even then, tread carefully. People don’t like to feel like they’re being taken advantage of. You and I certainly don’t want to feel that way and neither does your customer.
If you want to be competitive in the new “inflation” and “shrinkflation” world, focus on the human element of your customer experience. Nothing touches a person’s wallet or their heart as much as another human who demonstrates that they care and take action to do so.
If you want to thrive, you and your staff need to stop being antisocial and encourage building a connection with every person who walks into your store. Relationships matter! Creating a unique and memorable customer experience is your ammunition to tackle inflation. Research will tell us that 86% of people will pay more for a better customer experience.
So think twice before you try to nickel and dime your customers with extra fees and add-ons just to cover the costs of inflation. Rather, gather and rally your team around your business to come up with ways to build lasting relationships, provide more value, make each touch point exceptional and wow your customers with unexpected little extras. This is your best bet to attract and keep more customers today. Now that will be “Magical”!
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John Formica, The ”Ex-Disney Guy” is one of the world’s Disney Philosophy expert, and leading authority on customer experience and loyalty, keynote speaker, trainer, coach, and top selling business author. For information, contact (704) 965-4090 or email@example.com. For information on Customer Experience Evaluations, Team Training, Customer Experience, Service, Leadership, Hiring, Relationships or Sales Training Programs, go to www.JohnFormica.com