This one comes under the heading…

…what were they thinking?

As I was scrambling from one appointment to another I realized I hadn’t eaten so I stopped at a fast-food franchise that will remain nameless.  I wanted something quick – a burger and small shake.  Here’s the exchange that took place at the counter.

• “I’d like a cheeseburger and small chocolate shake.”
• “Sir, if you add fries to your order you’ll save money.”
• “I don’t want fries; I’m clogging enough arteries with the cheeseburger and shake.”
• “Sir, if you add fries you’ll save $1.70.  You don’t have to eat them, just order them.”

I couldn’t believe what I was hearing.  They were lowering their price to give me something I didn’t want and increasing their costs to boot.  Ouch!  Ouch!

Apparently it’s counter-intuitive, but driving up costs and reducing your price at the same time isn’t an effective business model.   Giving customers a discount to take something they don’t even want is even more ludicrous.  It would seem that the intent was to help their customers feel that they were getting more for their dollar.  Even that’s a questionable goal if you’re already providing good value, which they were.  I, frankly, couldn’t find a worthwhile reason for this “pricing strategy.”

If you’re going to give up some of your price to entice a customer to try something, make sure it’s something they want or something they might not normally try.  Otherwise you’re flushing profits down the drain.  Then limit the savings to only the first order.  Once they’ve sampled your wares and like them, let them pay full price.

You’re probably wondering whether or not I took the fries.  I did and I left them on the table as the counterperson suggested.  Was that the right thing to do?  Economically, for me, only in the short-run.  Here are some other considerations?

I trained them to continue inappropriate and ineffective behavior by taking their offer.  I wasted resources (the fries, oil, energy, equipment, packaging and labor that went into preparing them).  Not to mention the costs of removing my garbage, taking it to the dump and the impact on the environment.  When I add all this up, did my actions cost me more in the long run than that immediate savings?  Probably.  Would I do it again?

Absolutely not.  I was obviously part of the problem, not the solution.

I’m not into self-flagellation.  My point in highlighting my failing is threefold.  One is to let you know that no matter how adept we get at counter-intuitive thinking, our humanity will trip us up occasionally.  Second, there are long-term gains to be realized when we evaluate our contributions to really bizarre experiences.  Finally, I hope that you’ll learn from my mistakes and avoid some of the long-term costs we’re all incurring for very small, short-run savings.

The 7 Steps to Becoming INVALUABLE program is designed to help you see more effective ways of doing business – ways that dramatically improve your bottom line while making your life easier.  In today’s blog I used Step 7, Evaluate Opportunities, to show you how the absence of an effective approach to evaluating opportunities can lead to some ludicrous “pricing strategies.”  I also used Step 1, Contributory Negligence, to demonstrate my contribution to the problem – or at least it’s perpetuation.  Finally, I used Step 5, Contrarian Mindset, to help you see that short-term savings can be very expensive.  For more information on the 7 Steps to Becoming INVALUABLE visit www.furtwengler.com/7steps.htm.

If you’d like to receive a weekly email reminder with a link to The Invaluable Leader blog or if you’d like me to address specific topics, please send me an email at dale@furtwengler.com.  Please share your experience with our readers by posting a comment.

Good news – My latest book, Pricing for Profit, is going to be released 9.9.09 in the United States, Canada, U.K., Italy, France, Germany and the Netherlands.  Prepublication orders are being taken at amazon.com and barnesandnoble.com. Enjoy!

Dale is an internationally-acclaimed author whose work is recommended by the University of Glasgow, University of New South Wales and the Australian Institute of Management.