Digital Drums’ Steve Dunne says travel companies must be careful when increasing costs
I went for a haircut recently with my barber of 30 years. He knows me so well I don’t even need to give instructions. He cuts my hair just as I like it.
The only problem this time was that the price he charged for my trim was £40.
Before Covid, at the start of 2020, he charged just £15 – a snip, you might say – but since lockdown finished he has been gradually hiking his prices by £5 or more every other visit so that this week we arrived at a £40 charge.
I paid up, of course, and held back on airing any unhappiness, as I suspect most consumers would. Instead, I decided that after 30 years of being a loyal customer, I would now be looking for a new barber.
In marketing there is a phrase universally known as “the JND”. It stands for “just noticeable difference”. It’s the point where, after either gently or continually increasing your prices or subtly driving down costs by cutting back on elements of your product, the consumer notices, and when they do, they vote with their feet.
And the JND effect could soon be impacting the travel sector.
Costs on upward trajectory
A few weeks back I was in Disney World Florida with three very excited grandchildren. I paid $55 for preferred parking so we could get easy access to the parks. On top of this I paid for five adult tickets into The Magic Kingdom at $160 each. There weren’t five adults in our group, but because the three children were 10 and over, they were charged adult prices. We upgraded the tickets to take in Epcot on the same day and costs took another upward trajectory.
Inside the parks it was crowded and virtual queueing via the Disney App was in place for many rides. However, the times the app was giving made it difficult to get decent slots to experience them, so we paid an additional $15 each, per ride, for several rides, to use the ‘lightning lanes’ to speed things up.
We had paid at the gate and now we were paying for many of the rides inside the park.
The ‘happiest place on Earth’ was suddenly becoming the most expensive place on Earth, and the mood of the group was starting to darken. We had reached our JND point.
Suddenly we were questioning if this expenditure was worth it. Our verdict was no, it wasn’t worth it, and we wouldn’t be returning.
Service values
As a marketer I am of course aware of the law of supply and demand, but the JND effect is different altogether. The JND is where the consumer questions the value of what you provide and whether it is worth it or not.
The more closely I look at the travel sector the more I see the JND effect being approached for travel brands. At the same time, I see the stirrings of consciousness of the JND effect among travel consumers.
You only have to be a regular reader of cruise blogs or watch the videos of cruise vloggers to witness the growing topic of how cruise brands are cutting back on some of their traditional or standard product offerings.
The comments vary from how certain cruise brands used to clean your state room twice a day, now they don’t; how room service used to be free, now it isn’t; and how chocolates would once be left on your pillow in the evenings but now even that doesn’t happen. Perhaps the most common complaint is how cruise brands do not seem to have as many staff as they once did and how it impacts a once great service.
As I say, the JND effect is very different from supply and demand. When your customer questions the value of your service, they normally leave and don’t return, which is what my former barber will likely be experiencing quite a lot over the coming weeks. I just hope travel companies don’t suffer the same fate.