Sunday, October 21, 2007

The DL on BBV (shh.. they might throttle my JOB)

I was interested to read about online marketing ploys and the terminology used by their corporations . It brought to mind the popular practice of "throttling" by online dvd rental services. Essentially, high-use customers (ones renting multiple movies at a time with unlimited plans) started causing corporations to lose money, because their movie turn-around time requires these corporations to spend more on shipping movies to the customer than they make from the monthly subscription fee. The answer is to delay the shipment (days or weeks after the product's availability) to high-use customers, so that the corporation can spend less on shipping, still making a profit from subscription fees--throttling. Consequently, priority is given to more profitable customers (new customers or those who rent less) to receive titles before the non-profitable high volume customers.

Netfilx has already admitted to this practice as it is ambiguously referenced in their terms of use, but they refer to it as "allocation"stating "We reserve the right to process orders and otherwise allocate and ship DVDs among our subscribers in any manner that we, in our sole and absolute discretion, determine." The other leading company (which I will refer to as BBV on the off chance that some corporate online investigator finds one of their employee's name on a blog referencing this shady practice) has never admitted to throttling. But it is very clear from high volume customer observation and complaint that they are not the priority on the shipping list. This same company having lost billions of dollars in the past several years, in both their retail stores and online, have recently upped the price on all online subscription packets and have limited the free rentals received in-store (a bonus of the online subscription.)

I guess my question to these companies, and those discussed in the readings, would be "should you really depreciate customer service so much by adopting shady practices and betraying loyal customers in order to gain a buck?" ...Their marketing research says yes.

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