As a resident here, it’s something I’ve done hundreds of times: Pull into valet parking at a Vegas casino, get a ticket, flip the valet attendant my keys, and head inside the hotel. Valet parking is just one of those things you always do in Vegas…and why not? It’s free!
- Or, at least, it WAS until lately.
MGM Resorts announced it was changing its parking policy and instituting a charge for valet service — even to the point of outsourcing their parking to a contract company. Wynn Hotels (including the Encore) have announced a similar policy — and Caesar’s has followed along, as well.
Understandably, some will suggest it is no big deal. If you’re going to a casino to gamble, why shouldn’t you also drop a few bucks to park?
However, the primary question is: why would any business eliminate a service to which their guests have become accustomed?
You already know the reason…
Next thing you know, they won’t comp your drinks while you’re playing slot machines! Oh wait…they’re already doing that.
According to the Las Vegas Sun, Caesar’s has now placed red and green lights on various slot machines to display whether you’re playing enough (or not) that you deserve a free drink. MGM Resorts is experimenting with a voucher system that will kick out a coupon for a drink after you’ve put a predetermined amount into your video poker machine.
Here’s the problem — and the first of the two business lessons:
- When you start separating each segment of your business into silos — then require every segment to become a profit center — you lose a vital aspect of your ability to create a cohesive customer experience.
Casinos have now taken their “Chief Officer of First Impressions” — the valet parking attendant — and entrusted that significant job with someone who doesn’t even work for their company! And, the parking attendant, cocktail server, bartender and more are finding themselves replaced by a system that appears to be solely focused on extricating the maximum amount of cash from customers at each transaction. (As if losing at the machines or tables isn’t enough!)
Sure, you can make a few bucks on parking and drinks — but, at what cost? The customer not gambling as much — or not becoming loyal to your property because they feel “nickel and dimed” to death?
In too many organizations, I see financial analysts devising studies on income optimization that have little reference concerning — or relevance to — the impact on the customer experience and its role in retention and referrals.
Next, United Airlines — which made announcements just a few months ago regarding its new and total commitment to the customer experience — has now proclaimed a new fare that will charge you for a carry-on bag.
(In other words, perhaps only a Kardashian marriage has the wafer-thin level of commitment as United has just displayed to its customers.)
It’s common sense — when you feel another party is trying to extract as much cash from you as humanly possible, it’s extraordinarily difficult for them to simultaneously build anything resembling a relationship.
- Why would a customer become loyal to any business that is trying to “stick it to them” in every transaction?
Yes, I realize that if you have a loyalty card of a higher level at a casino or at the airlines, these charges probably won’t apply to you. However, why would I move my loyalty from my current provider of gaming entertainment or air travel to a company that’s going to treat me as a mere opportunity for another “cash grab”?
How do you grow relationships when you’re making your corporate culture all about maximizing individual transactions?
Which leads us to the second of the two business lessons:
- The most underappreciated financial aspect of business economics is the value of loyal customers.
There is a local restaurant here in Vegas where we were spending about $1000 every month. It’s the place where I take clients in town, entertain prospects when discussing potential engagements, and where I take my wife for dinner about once a month on our weekly “date night,” as well. When the Five Friends Summit was here in Vegas, I asked about a private room for my speaker pals to join me for dinner and a night of planning before our event. I was treated by a manager there like my request was irrelevant — to the point that I felt insulted. I haven’t returned.
How much will that restaurant have to spend to find another $12K customer — how much will the servers miss 20% of that in tips — as opposed to what it would have taken simply to keep a loyal customer (who was already at one of their tables) happy?
- They’ll measure food costs — and make certain that bartenders aren’t pouring too much bourbon in the drinks. Yet, $12,000 walks out the door…and nothing is done about it.
Does that make sense to you?
If it doesn’t — then take a look at the two lessons in this post…and make certain that you and your organization aren’t unconsciously making the same mistakes.
Companies with transactional cultures will find it practically impossible to create distinction.