Quick Thought

nomorebagfeesAre you risking long-term growth for a short-term gain?

Companies are taking different approaches to bolstering revenue in these tight economic times: some are providing deep discounts and in turn hurting their profits and brands, while others are charging more to help offset a loss in customers.

The question becomes – what is the long-term effect of these strategies?

Some recent examples:

All major airlines – Delta, American, United, and others – are charging for checked luggage on top of fuel surcharges to make up for years of mismanagement, high fuel costs and a deep recession.

Bank of America recently announced plans to charge annual fees for credit card holders who pay off their balances every month, essentially asking their fiscally responsible customers to pay for the losses from those less so.

Unlike past recessions, the Economist has stated this recession will permanently change our consumption habits. What will be the long-term cost to companies like Bank of America or Delta when they start to lose customers because of their short-term greed?

Before you think of adding an extra fee, think about the true return on investment and whether it’s truly worth it.

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1 Comment

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One response to “Quick Thought

  1. ap

    What a great topic: It’s making me think about my business and how when at the beginning of the recession, I had to rethink my business strategy. I couldn’t give the deep discounts all the time and could not take on some projects since it simply wasn’t profitable for me.

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