A deal's a deal: Should pricing glitches be honored?
It took two tries, but United Air Lines got it right. For about an hour on Jan. 31, a foul-up on United's Web site (www.ual.com) created giveaway prices for tickets to Paris, Hong Kong and other international destinations. Example: San Francisco to Paris, $24.98. Before the problem was fixed, 142 people jumped on the almost-free fares. When United figured it out, the company decided not to honor the tickets.
But last week, United reversed course. To keep customers happy, the airline will honor those tickets, even though United believes it could legally back out of the deals.
Meanwhile, last weekend Staples.com was offering $39.99 briefcases for a penny. Yes, it was another pricing snafu -- one that had some customers ordering 50 briefcases or more. Some of the products shipped, but once Staples.com caught on, the company sent e-mails instead, informing customers that their orders had been canceled.
Staples.com won't say how much its unplanned 1-cent sale cost it. United is mum too, but 142 international tickets at, say, $700 each puts the price tag under $100,000.
That's not bad, considering that now United looks like an honest trader -- while Staples.com looks like a bait-and-switch artist.
OK, maybe that's an exaggeration. But there's one cardinal rule when it comes to customer trust: A deal's a deal. Forget the fine print, forget what the lawyers say. If you offer customers an insanely great bargain and they accept the offer, they expect you to be as good as your word.
If you're not, they'll think you're a liar.
Is that fair? Maybe not. But it's what customers believe. In the old-fashioned, bricks-and-mortar, face-to-face world, a deal is a deal, an advertised price is a promise and someone who backs out is a cheat.
And if your Web business can't live up to that expectation, customers will go someplace else -- someplace they can trust.
Which puts the IT people running Web businesses in a nasty bind. Pricing snafus happen. There used to be front-line employees and middlemen to catch those mistakes, providing real-time sanity checks on insanely low (or high) prices. But not on the Web.
You can - and should - build in more checks and double checks to catch those off-the-wall prices before they go online. But even with extra safeguards, mistakes will happen.
So when $25 airfares to Paris or 1-cent briefcases show up on your Web site, you'll need a plan. Of course you'll pull the plug on the bargain-basement prices immediately, but then what?
Who's going to figure out whether to eat the loss or bail out on the deal? Who's going to estimate the cost of almost-free goods and services vs. bad publicity, lost business and potential lawsuits? Who will make that decision?
You know this for sure: It shouldn't be anyone in IT. These are marketing issues, not technology questions.
The higher the potential costs, the higher in your organization the decision should be made. This is what CFOs and VPs get paid for. And the decision should be informed by the realities of Web business: how your reputation will fare, what customers expect, whether they'll trust you in the future.
United didn't have that process in place and almost fumbled the decision. Staples.com had a process in place -- but whether it will cost more in customers than in briefcases, only time will tell.
Make sure your company is ready for price snafus, too -- all the way to the top. Because when it's your reputation and your customers' trust on the line, you'll want to get it right the first time.