Bad profits

Image from Sevenblock (Flickr)
Image from Sevenblock (Flickr)
The Gillette Sensor Excel not only comes with a dummy blade, it also only comes with two out of five possible blade slots filled. Images from Sevenblock on Flickr.

The razor-blade model in general is something of an old chestnut as far as architectures of control go, and we’ve covered it in a number of different contexts on this site over the past couple of years. But it’s always interesting to see it in action with razors themselves, especially if the strategy has become even less consumer-friendly. Via the This Is Broken pool on Flickr, in which ‘Sevenblock‘ talks about Gillette’s use of a dummy blade and dummy slots on the Sensor Excel packaging, I learned of Fred Reichheld’s concept of ‘bad profits’:

…there is something disappointing with the set-up of buying a new razor. This razor reminded me of Fred Reichheld.

The blade which arrives pre-attached to the razor is fake. Is it dangerous to use a real one? Perhaps.

No, it is a set-up to dupe customers into grabbing a new razor and heading to the mirror only to realize that they are holding a plastic faux blade. Then, turn over the packaging, and two razors are held in a spot for five. Another subtle sigh from the customer.

Why not surprise the customer in the other direction? “Wow, five blades! For less than 20 dollars.” Because that’s what happens when you go to refill. BJs and Costco have good deals on bulk blades.

Reichheld’s idea is, effectively, that a company’s strategies can centre on creating ‘good profits’ or ‘bad profits’:

Whenever a customer feels misled, mistreated, ignored, or coerced, then profits from that customer are bad. Bad profits come from unfair or misleading pricing. Bad profits arise when companies save money by delivering a lousy customer experience. Bad profits are about extracting value from customers, not creating value.

If bad profits are earned at the expense of customers, good profits are earned with customers’ enthusiastic cooperation. A company earns good profits when it so delights its customers that they willingly come back for more—and not only that, they tell their friends and colleagues to do business with the company.

What is the question that can tell good profits from bad? Simplicity itself: How likely is it that you would recommend this company to a friend or colleague?

The full article is well worth a read, as, I expect, Reichheld’s book The Ultimate Question is too (though one reviewer on Amazon also offers some succinctly persuasive criticism).

The basic concept, that the ‘ultimate question’ of whether or not a customer would recommend a company is the key to growth is a good way of articulating, from a business perspective, the message of consumer advocacy that so many from Ralph Nader and Vance Packard to Consumerist and Seth Godin have promulgated over the years, though of course the ‘Why?’ and ‘Why not?’ are crucial. But Reichheld’s simple identification of ‘good profit’ and ‘bad profit’ seems to be a very clever way of looking at the issue: the ‘good’ and ‘bad’ labels refer to the effect on the company itself as well as on the customer, since a company reliant on bad profits will, one would assume, ultimately, lose its customer base (unless there are no alternatives – Brand Autopsy has an interesting piece on this in relation to car rental firms).

Most commercially driven architectures of control, then (as opposed to politically driven ones) would seem to be designed to extract value from customers (unwilling or ignorant), and thus might be described as bad profit-seeking, by Reichheld’s definition. To paraphrase Cory Doctorow on DRM, it’s unlikely that any customers wake up and say, “Damn, I wish there was a way to have my actions deliberately constrained for commercial gain by the products and services I use.” Hence, it’s unlikely that customers will evangelise or even recommend products and systems which give them a lousy experience. They may accept them grudgingly, as most of us do with many commercial (and political) interactions every day, but once a ‘good profit’ alternative becomes available and widely known about, they won’t hesitate to switch. I hope.

Maybe ‘good profits’ and ‘bad profits’ are too simplistic as terminologies, much like Jakob Nielsen’s ‘Evil design’ comments, but even a continuum between ‘good’ and ‘bad’ profit intentions is a useful way of thinking about the merits or otherwise of corporate strategies, particularly with customer service, products, pricing, rent-seeking, gouging, lock-in and so on.

7 thoughts on “Bad profits”

  1. I always feel a slight pang of “eco-guilt” when buying yet-another razor from ASDA (UK Walmart variant) to replace the perfectly good one(s) I have at home.

    I don’t remember the exact prices but the refills (pack of 6 blades) are about twice as costly as the razor, which comes with a blank and 4 blades on the back. The whole package is very similar to the Gillette one shown above[*] with the exception that the ASDA knock-offs go blunt in about two thirds the time. As they’re about half the price of Gillette equivalent the deal is still a good one.

    ASDA seem to have random week-to-week and store-to-store pricing variations so your mileage may vary.

    Final razor comment: In reality the “Sensor Excel” is probably about as good as any competent daily shaver needs. The “Fusion Power” product needs to be put on a plinth with some witty explanatory card reminding viewers that no one ever lost money from underestimating the intelligence of the general public.

    [*] Geeks will want to know that the generic ASDA razors have a Sensor Excell type of look and feel (and blade mounting style) but have a Mach3 style triple blade with lube strip arrangement. I don’t know who they get to make them but superficially it doesn’t look like Wilkinson Sword or Gillette. They’re clearly not as good as “the leading brands” in terms of performance but have a nice price to performance ratio.

  2. Interesting about the price difference – there’s a reason why razor blades are some of the most shoplifted items and why so many of the expensive ones are now locked up in many supermarkets. Strange, the ones at the car boot sale seem cheaper than the ones in store…

    As you say, the overkill with Fusion Power is fairly ridiculous. I remember a group of us laughing at this story on The Onion as design students, before seeing this just a year later.

    I’m telling them to stick two more blades in there. I don’t care how. Make the blades so thin they’re invisible. Put some on the handle. I don’t care if they have to cram the fifth blade in perpendicular to the other four, just do it!

    You’re taking the “safety” part of “safety razor” too literally, grandma. Cut the strings and soar. Let’s hit it. Let’s roll. This is our chance to make razor history. Let’s dream big. All you have to do is say that five blades can happen, and it will happen.

    Nevertheless, Gillette hooked me into using the Mach 3 as a teenager by sending me a free one (not sure where they got my address from – electoral roll?), and they do the same with the Fusion (I’ve got a couple of them free by filling in subtly different address variants on their website). Yeah, they’re good, but a cheap yellow Bic seems almost as good, and it’s a lot cheaper.

  3. Thanks for the post. The official Net Promoter website has a “Good and Bad Profits” discussion forum for people to post their experiences. Perhaps some of your readers would like to do so. Here is the link:

    http://netpromoter.groupee.net/eve/forums/a/cfrm/f/9631073251

    Earlier today, another blogger referenced a bad profit story in a blog entitled “How much money DO I have to have on deposit?” Here is that link:

    http://loyaltyeconomics.blogspot.com/2007/07/how-much-money-do-i-have-to-have-on.html

  4. Thanks for that, Amy. I’ll register and have a look at the forum in due course.

    Seth Godin today, in discussing store layouts, comments that:

    Many retailers believe that they still have the power to inconvenience shoppers as a way of increasing revenue

    which is, I would have thought, central to the thinking behind much ‘bad profit’ strategies, not just in retailing but in customer service in general, as well as design.

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