And or Or?

A dozen years or so I managed a project where we were replacing a 3-year-old telephone banking system.  Why were we replacing it after only 3 years?  The customers loved the system and flocked to it, we were running out of capacity ... but the manufacturer - Unysis - had rather rudely stopped selling the hardware. 

Did I mention that the customers loved the telephone banking system?  The bank loved it too because it got customers self-serving themselves ... and they didn't have to employ so many branch staff. 

It was free.  But it paid for itself many, many times over. 

Our competitors, on the other hand, charged their customers a (relatively small) fee to use their telephone banking system ... so most of their customers continued to do their time-consuming but low-value transactions in the branches.  People are funny like that. 

Those other banks had "sub-optimised" their profitability by making the Telephone Banking system a profit centre. 

Now skip forward 12 years ...

Greg Fraley, Author of Jack's Notebook, writes about how Cineworld did refund the cost of a movie he couldn't see (due to a fire at the cinema) but wouldn't refund the transaction fee (which he had to pay because he booked online):

I would have to call the corporate help line for that.  I didn't make a fuss, I took the partial refund ...  Later, while eating sushi, I realize that I now hate Cineworld for not giving me a full refund. 

Greg went on to suggest several ways that Cineworld could have turned the unfortunate incident into a positive experience for their customers.

I'm on Greg's side ... and I too hate Cineworld. 

They're my local cinema and if I go to a movie which might be popular I always have this little debate with myself - should I pay their miserable little "transaction fee" so that when I get to the cinema I can get my ticket quickly from the queue-free ticket issuing machine OR should I save myself a tiny bit of money, go to the cinema and wait in their long, long queues? 

Oh what a dilemma - and all because I resent having to pay a miserable little fee to book online.  I think the fee might be 25p.  The ticket issuing machine never, never, never has anyone else using it when I get there so Cineworld must regret ever setting up their online  system.

How many more people would buy online (cheap for Cineworld) if there was no transaction fee? 

How much money could Cineworld save if people bought on line and they didn't need to employ so many staff to sell tickets in their cinema? 

I wonder how much happier their customers would be. 

I wonder how much more money they would make.

It's not a profit centre if it makes you lose money as a whole.

Comments

[David Peterson]

A great blog entry. It's so true. Systems-thinking gets harder the bigger you get.

One bank I worked at was so large that internally it was intensely competitive - not just cost centres, but real cut-throat competition that even "The Apprentice" candidates would have shuddered at. If traders from Paris liked what you'd produced, they might agree to fund your project on the condition that you didn't allow traders in New York or Hong Kong to use it. Absolute madness. They were all supposed to be working for the same company.

[Gregg Fraley]

Just saw your post that cited my Cineworld blogstory. And I thought this would be one of those blogs nobody notices! I got a kick out of your additional thinking post.

You make an interesting and bigger picture OR point -- why not make it free? They get improved cash flow from online purchase, why not encourage it? If more people purchased online they could also do interesting things like, allocate concessions just-in-time, schedule just the right number of employees, and schedule extra shows for very popular movies, all adding to their bottom line.

I was willing to pay the transaction fee for the convenience. I hate lines, and I hate being turned away. A small price to pay IF I get the value. What surprises me is that Cineworld wouldn't take responsibility for making me whole when I made that choice and did Not get the value due to the fire. It was actually for three tickets, and the fee amounted to 1.65 --just enough to make me angry!

They really do need to think bigger! Maybe we should pitch them on an ideation session!

Gregg Fraley, author of Jack's Notebook
www.greggfraley.com

[Bruce]

Such a 'true' story. Had the same thing happen -fire at the cinema for the second Harry Potter - but we got there between seattings, so they just gave it to us late. Still, I do seem to remember that all those machines at cineworld, and odeon are done by 'third parties' and not the cinemas themselves. So, this must be how the 'third party' make their money. However, you're right, the cinema surely could work out an agreement with the booking company to do this, and make those of use who do use the system unhappy, because now more people will use it, and as you say, there is usually no queue at them. Ho hum.

This is just the third-parties messing up the works until someone works out that they can do it differently, so it should be smoothed over, the same way that the odeon eventually made its web site compatible with firefox after three or four years of complaints, and maybe some legislation about accessibility, so maybe there's still some hope for us.