Many businesses compete on cost. If you can deliver a similar product or service as other companies, but can charge less, you are can usually get a decent market share off that fact alone.
I’ve talked in the past about how email is better than talking on the phone, and my main argument is that it can be a more efficient form of communication. If you can deal with customers through email and instant messaging as opposed to having someone physically sit on the phone with them, you can often charge less for customer service and in turn charge less for your product or service.
Physical “brick and mortar” stores like Best Buy and Target are having trouble competing with online retailers like Amazon, and a big part of that is the costs of having a physical showroom. Granted many businesses are making moves to fight this, such as Target’s push towards having more exclusive brands in their stores.
I often think about how businesses can automate processes and in turn cut the cost of their products or services. Below are five ways you are either already paying a premium for human interaction or will pay more for human interaction in the future:
Check-Out Lanes
Self check-out lanes are becoming increasingly popular at various retailers. These offer companies protection against potential rises in minimum wage as well as cuts the cost of staffing stores. One person running a self check-out lanes can do the work of four people running individual lanes. While I have seen this concept progress slower than I would have expected, I do think we will see many more self check-out lanes as time progresses and as companies continue to try to cut prices lower and lower.
Order-Takers
Over the past few years we have seen a rise in the use of online order systems at many restaurants and I think we will see a bigger push for this in the future. Many pizza places are offering “online only” deals that push people to create accounts and order their food ahead of time online. This has many benefits for restaurants, since instead of standing on the phone workers can be helping get orders ready, and the risk of errors in translation from the person placing the order and the person taking down the order is eliminated. I think it’s only a matter of time before restaurants start testing out self-order stations in stores.
Checking in to stores, hotels, etc.
We’ve already seen automation in hotel check-ins, store check-ins (Xfinity comes to mind), joining wait lists at poker tables, and many other places that require people to “check in.” I think this is a great way to bring down costs since it eliminates the need for many workers managing the check-in process versus actually delivering the product or service provided. One way you can see people pay a premium for check-in service is at casinos. If you are a “high roller” i.e. someone who spends a lot of money on gambling, you get a VIP check-in with a person at a big oak desk in a private room. Some “whales” in Vegas even have casino hosts attend to them 24/7. This all costs money and the high-rollers are paying their premium for this service.
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In the future, for many businesses, anybody who wants to talk to a human instead of deal with a software interface will pay a premium. I’m sure entire companies in the future will advertise the fact that they have humans answering the phone, helping you check-in, etc. In my opinion, there’s nothing wrong with this trend and it should be welcomed. Any time we can bring down the cost of a service or product it becomes more affordable to everyone. If people want to pay premiums for human service, they are welcome to and I’m sure there will be a market for it.
What do you think about the concept of paying a premium for human interaction? Do you think we will see this to a higher degree in the future? Have you seen this in any other areas?
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Photo by Rusty Clark
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I’m pretty indifferent. As much as I hate outsourcing or replacing human jobs with machines, I do love self-check outs!
Holly at ClubThriftyThe ONLY time I don’t like self check-outs is when we have a stack of coupons…which happens quite often ;) I do think that even as we replace human jobs it will create more skilled jobs to actually run and monitor automated processes, so I think in the end we should be fine. People might have to go through more school or training, but that’s already how it is if you want a higher-paying job.
DC @ Young Adult Money Holly at ClubThrifty I feel the same way about self check-outs when I have coupons AND reduced priced produce AND price matching. Hopefully self-checkouts will cater to this in the near future. I hate always waiting for the attendant to apply the discount for the reduced priced produce. They really should have more than one when the self-checkout kiosks are busy.
I think we will see more of this in the future, but I think there is a tipping point in which some people will always want that human interaction and will not pay more for it. I love using the self check-out lanes as long as there is not someone with two carts full of crap in front of me.
FrugalRulesSupply and demand, I suppose. If people want to have humans instead of machines helping them I’m sure a ton of companies will be happy to market the fact that they provide that service…though it will inevitably cost more, even if it’s only a slight price increase.
For me it depends on what it is. Some things I love (like self-check out) but customer service…that’s another story. I go crazy when I can’t get to a human voice. I also don’t like the thought of less human interaction in this world. I think we already have too much of that. Basically, I’m kind of torn.
Beachbudget I like being able to call as well, but even more so I prefer online chat as you can multi-task while talking to the support person.
I like automated services, because humans can always go wrong. It reminds me of a guy who crossed the US without talking to another human being (automatic check in at hotels, supermarkets, gas pumps…), it could be a sad future though.
RFIndependence Wow that sounds like an interesting story about the guy who crossed the US without talking to another human being, but I’m really not surprised that he was able to do it.
I can see that concept of paying a premium for human customer service happening and I understand why, but it is unfortunate.
As well as the places you mentioned above, the first place I really noticed the switch was with banking.
When ING came online and said that they did not have any physical branches and you could only use their services if you accessed it online they were able to offer higher interest rates for savings accounts and no bank service fees because they had less staff then a traditional bank. At least that is what they said. But by doing that their customer base were only people that knew how to do online banking. While we might think that their audience would be huge, there are so many people out there that would have liked to earn the higher interest rate without paying any monthly banking fees but have never touched a computer in their life. As soon as ING merged with a traditional bank in Canada last year their interest rates on savings accounts dropped to the same as everyone else.
TacklingOurDebt What about when those who are in their 20s today reach their 80s? I think we’ll see a totally different world since practically everyone will know how to use technology. I actually didn’t know that about ING. Very interesting that they didn’t stick with their initial strategy, but I suppose they peaked in membership and businesses are always looking to grow.
I am a big fan of automation, as that is what I do at work. I do think we will have to pay for human interaction and that will be sad. There are times when I want to have the human interaction, but I surely don’t want to pay more for it.
DebtRoundUp I also do quite a bit of automation at work, though it is not my primary job. We already are paying for human interaction, though I pointed out the businesses that are ridding themselves of it for lower costs. If you go to an upscale restaurant, casino, etc. you will likely have better service and people will wait on you more if you tip better.
I love self-checkout lanes. I would be completely happy if that was all that existed in stores.
ayoungpro Same here, except when you have 20 coupons and the machine isn’t taking them properly…
This brings up an awesome point. I love having the self-checkout lanes. I will purposely go to Cub Foods instead of Target just because of them. I think our generation will adapt to these changes a lot faster than our parents’ generations will.
CommonCentsWealth Yeah it’s a generational thing, though I think it may take some time. At Target I do use the regular lanes because I usually have a stack of coupons (best place by far to save money).
I hav enot yet seen automated hotel check-in and probably wouldn’t use it. Ilike ot ask where my room is located (away from ice machines and elevator, please).
MD Kennedy Great idea! That also allows you to ask for a free upgrade if possible, as well ;)
I hate self checkout lanes. I can see how they’d be better for the company’s bottom line, but it is so frustrating to be waiting behind 2-3 people who can’t figure out how to scan in their box of tissues. :/
OutlierModel Haha I’ve had this happen to me a few times. I fly through the self check outs and only use it if I have less than say, 20 things. Otherwise I will go to the regular check out.