The MBA Experience

Thursday, April 10, 2008

Round and round

I was one of the 100,00 people stranded by the MD-80 debacle at American Airlines Tuesday. It was going to be a nice, easy trip to Boston for an important practice meeting to discuss how to grow a key client that I had been working with for months.

Having made it to Chicago on a pretty flimsy 757, I noted that my flight to Boston had been canceled. There was rain at O' Hare but not enough to account for all the cancellations on the American board.

The agents tried to help, but it was pretty obvious that this way beyond anything that American was prepared to handle. Long lines to talk to agents, lengthy waits on the 1800 numbers and I even got hung up on at the platinum AAdvantage line which has never happened before.

I was put on a standby list for a 6AM flight the next day, but the agent was good enough to let me know that the flight would also likely be canceled as it was another MD-80. Given the choice to take a flight at 2PM to try to get to a 9AM meeting, I decided to ask for a return ticket to Los Angeles instead.

Fortunately, one of my fraternity brothers lived twenty minutes from O' Hare so I crashed at his place rather than trust myself to the Sheraton that American's voucher would have sent me to. After seeing cabbies turn down taxi vouchers, I think I made the right call. I paid my cabbie in cash and offerred him the voucher as a freebie and he rejected it!

I was smart enough to check the flight status of my return leg to LA before heading to the airport and sure enough - CANCELED. I tried a general search on my company's travel site and found a United flight that left at noon... at $380 one-way, it seemed like a bargain.

I realize this is due to the FAA coming down extra hard on the airlines due to the pressure on them by the pols, but still - American has a lot to answer for. The whole experience is making me rethink my singled minded American focus... maybe spreading my eggs into another basket (e.g. United) might be worthwhile after all. I'll see what American offers by way of apologies... an upgrade to first on our BabyMoon trip to the Caymans would do nicely.

Monday, February 04, 2008

Bad Travel Day

Today sucked lemons...

I arrived 30 minutes before my flight to Reno and the kiosk check in was disabled because the gate agent had closed the flight. I had this happen to me once before and I was able to get a standby boarding pass from a ticketing agent, run up to the gate and got on the flight with 10 minutes to spare. This time, a new ticketing agent insisted on reaching a gate agent before issuing me a standby boarding pass. After 10 minutes of trying to reach the gate, he spent 5 more minutes to get me a standby boarding pass on the next flight - four hours later. I made it through security and went to my original gate to see the plane pull away. 5 - 10 minutes would have made the difference and avoided four wasted hours. It's partially my fault... I could have woken up a bit earlier, but what is the worst that could have happened by sending me up without reaching a gate agent? I get turned away? I'm in the same boat I was in before.

Now, some of you are thinking I should check in at home, right? It's okay... I won't take it personally. I thought of it too, but I'm forced to use a travel service that doesn't register on the Southwest site and my tickets on Alaska are code shared with American which doesn't let you check in online for a code shared flight.

I set up shop at a Starbucks and rescheduled my morning meetings for the late afternoon.

I arrived in Reno four hours late and breezed up to the Hertz Gold counter. Normally, this is the best thing since sliced bread. You walk up, tell them your last name, show your ID and walk away with the keys. No paperwork, no need to sign anything, no questions about the insurance... nice and easy. But beware that you need to call them to reschedule your reservation if you miss a flight or they'll cancel your reservation and give your car away. I had a 30 minute wait till they cleaned a Prius for me. I would have been happy with any of the 16 cars that were parked in their lot, but those were allocated for other people. 30 minutes later, 10 of those cars were still there. I'm sure any reasonable person would have traded their Nissan Versa (one of the 10) for a Prius.

I made it through the day... and got back to my home away from home - the Courtyard Marriott and they had no internet service in my room. After dealing with the tech support for a half hour, they wrote the connection off and entered a ticket for a field engineer. I ended up leaching a wireless connection from someone who brought a mini-access point for their room. They're close enough to get a good connection - it's slow but it works.

But there is more to this post than listening to my complain about my hard day in a desperate quest for sympathy. I already did that with Rachel and she duly supportive. The point is that when served lemons, demand that they turn it into lemonade for you!

  • American is sending me a $25 voucher for my troubles.
  • After a bit of mild flirting, the receptionist at the Courtyard slipped me two Heinekens.
  • Hertz hasn't done anything yet... but I that's because I haven't asked them to do anything yet. I'll definitely hit them up on my way out.

Remember - you don't get what you deserve; you get what you negotiate.

Update: Kudos to Marriott for giving me a bonus 10,000 points for the snafu with internet access. It's great to see a company offer an unsolicited benefit when a cusotmer has a problem.

Wednesday, January 23, 2008

Customer acquisition costs and customer retention

Customer Acquisiton Cost is the term marketers use to describe the number they calculate by dividing all the money they spend to get new customers by the number of new customers they picked up. It's impossible to translate expenses directly to the acquisition of any given customer because they include a certain percentage of fixed costs (e.g. the cost of leasing the office for the Chief Marketing Officer), but it is a useful metric to understand the value of reducing churn by retaining customers.

Someone was counting up the cost of all those mailers I shred every week. According to the Fortune, credit card companies have a customer acquisition cost of $50 - $75. So what? This means that it costs those same companies $50 - $75 to replace you if you leave them. The exact dollar amount will vary from company to company but the fact remains that they have to pay to replace your business. This coupled with the value you bring to them through the fees they charge merchants - average of 1.7% according to WSJ (subsctiption required).

Unfortunately, not all credit card companies are smart enough to understand these costs well enough to implement processes to benefit from or at least avoid getting hurt by them. Two case studies:

Discover - I typically run about $150 worth of charges through Discover every month so they make a middling $30.60 off our transactions every year based on the 1.7% rate above. I was a week late with a payment because they screwed up the electronic bills I get through my bank. I was traveling and tired so I missed the paper statement. I had a finance charge of $7.50. I called to see if they would waive the fee. The customer service rep (CSR) was a bit rude and said he couldn't do anything. I said fine... then I'd like to cancel my card. I was transferred to another CSR in a different state who looked at my account and asked why I was leaving. I related the same story and he waived the fee. I was happy and they kept a customer.

Chase United Mileage Plus - Rachel would typically spend $1500 per month on this card making Chase a very respectable $306 per year. After having done my homework on the AAdvantage card, I called Chase and asked them to waive the annual fee ($60). Not only did they refuse, but the CSR actually told me that I would have to cancel the card to get the recently charged fee reimbursed. That made an easy decision even easier. Two weeks later, Rachel got a preapproval letter for a Chase United Mileage Plus card. You just can't make this stuff up.

I can understand one bad CSR not having a grasp on the intricacies of marketing and customer satisfaction, but shouldn't the senior managers at Chase have enough sense to initiate a process for cancellation that makes at least makes an attempt to convert an unhappy customer? For the $60 annual fee and the 5 minutes it would have taken with a senior CSR, they could have avoided the need to replace a customer ($50 - $75) and kept the annual revenues ($306) they were getting from our account.

Tuesday, January 22, 2008

Valuing Mileage Credit Card Offers

After years of bombardment by offers for the AAdvantage Mileage card by Citibank, I finally succumbed to their latest offer - 40K miles. Yeah, there's a catch...

20,000 miles - make $750 in purchases within 4 months
10,000 miles - make $10,000 in purchases during your 1st year
10,000 miles - make $10,000 in purchases during your 2nd year

But how do you put a value on those miles? Since Rachel and I usually travel to Boston to visit her family, I used a weekend trip to Boston as a guide. I picked three random weekends in the next year and fares averaged $388. American charges 25,000 miles for a similar economy ticket to Boston. That gives us a value of 1.55 cents per mile.

The AAdvantage card gives 1 mile per dollar spent so the total mileage you get if you make $20,000 in purchases on your card in the first two years is 60,000 miles (40K bonus miles + 20K earned miles). Those 60,000 miles have a value of $931.20 using the 1.55 cents per mile value above. On a spending base of $20K, that equates to very nice 4.7% cashback award.

There is the catch of the annual fee, but Citibank waives it for the first year. I expect them to waive it going forward based on a comment from a customer service rep I spoke with. If I get too much flack from Citibank when I call up to get the fee waived next year, I simply cancel the card and pocket the 40,000 miles for the $10K I spend on the card in the first year. Still a good deal with a return of 6.2% (the second year with a return of 3.1% dilutes the first year return).

The deal is pretty good on it's own merits but how does it compare to other cards? My other favorite card is my Costco True Earnings card from American Express. Costco offers 3% for dining out, 2% for travel (great for consultants) and 1% for everyday purchases. Not everyone takes American Express so the AAdvantage card which is offered as Amex or Mastercard offers the extra benefit of giving you a card accepted in most places that don't take Amex.

Given all that, how do I use my cards?

  • I use my Costco Amex card for all travel (3%) & dining (2%) expenses.
  • I use my AAdvantage card for all other expenses until I hit that $10K spending mark.
  • I then switch back to the Costco card for every other expense. While the AAdvantage card provides a higher return (1.55%) for those charges, I get plenty of miles from my travel now and so I'm not sure that I'll be traveling enough to use too many miles while I can never get enough to cover what I spend at Costco.

Thompson Out!

Fred Thompson quit today. I liked Fred's economic issues and loved him as Arthur Branch in Law & Order so I was hoping his campaign would gain some traction. Of course, that didn't work out for various reasons and there are plenty of analysis out there on why not, but I think the best thing he did for the GOP was to split the evangelical vote in South Carolina which deprived Huckabee of a crucial victory there. Without the media push that he would have gotten from winning SC, I think Huckabee is going to be an also-ran after Super Tuesday.

Monday, October 15, 2007

Points, Points, Points

I'm starting my fifth week of travel since I started at company A and the points are racking up. I belong to the following points programs:

Air Travel
  • American Airlines - my favorite carrier. They gave everyone in the Anderson class of 2007 instant Gold Status (Tier 1) and their program has been easy to understand and follow. I'm taking my first free trip this Thanksgiving when Rachel & I go to Boston.
  • Delta - they would have edged out American as my first choice this year, but they didn't count my miles on my trip to Thailand towards elite status so I stuck with American where I got bonus miles for being a Gold member.
  • United - Rachel likes United so I got an account with them as well.
  • Southwest / Continental - memberships, but no real mileage accrual
  • USAirways - dead last on my choice of airlines. Why? At the same time that American was giving me complimentary gold status, USAir expired 35K miles that I had racked up in previous years. I couldn't stomach the thought of paying a fee for one of their credit cards in order to get them reinstated. Did I make a mistake? If so, I take solace in that I will rack up 100K-200K miles per year from now on on USAir's competitors...

Hotels

  • Marriott - The courtyards have served me well. Free internet and you get to rack up points. Their first elite tier starts at 10 nights so it's fairly easy to get there. If you stay fifty nights in a year, you get free breakfast and room upgrades.
  • Hilton - A good alternative to Marriott. Their Hampton Inns also have free internet and throw in free breakfast to boot. When the Courtyards are booked up, I'll stay here.

Car Rentals

  • Hertz - Company A has a corporate deal with Hertz so all consultants get #1 Club Gold service. Hertz usually charges for this, but I get it for free. The gold service is nice - walk up and show them your license and your car is ready and waiting. No forms, no signatures... I can be out of the Reno airport (gate to freeway) in five minutes. They do have elite status, but the first tier requires ten unique rentals. Not ten days... ten rentals. Yeah... goat balls.

How to Work the System

I'm still trying to figure out how to work the hotel / car rental memberships (tips appreciated), but I've got some good advice on the frequent flyer programs. The best time to start is when you know you expect to take 2-3 cross country trips in three months. Call American and ask if you can take the platinum challenge. If you can accumulate 10,000 points in 90 days, you get the status. The trick is that not all trips are treated equally. You get extra points for flying first / business / full-fare economy, half points for deeply discounted economy and straight points for discount economy tickets. One discount trip to Boston and one deeply discounted trip to London and I'll have Platinum status by mid-November.

Not a good sign

High on the list of things you don't want to hear when you fly - "Ladies and gentlemen, we need two volunteers from the first two rows to move to the back of the plane to help balance the weight." If a 380 pound shift in weight (the average weight for an adult man is 190 lbs) can make a difference in the safe takeoff of a plane, then I'm not sure I want to fly on a CRJ200 anymore.

Tuesday, October 09, 2007

14 Month Summary

When we last saw our courageous hero, he had fixed his computer, been the guest of honor at an awesome bachelor party, and started work on his GAP project. What could have happened in a mere 14 months?
  • Got married... big success even though the groom showed up an hour and a half late. Not my fault - have you ever tried to round up the women in an Indian family for a big ceremony? How about when two of them have small children?
  • Honeymooned in Jamaica at Sandals in Ocho Rios... good time, but I wouldn't do an all-inclusive again... you eat too much.
  • Completed GAP! The company loved the work and are implementing the plans.
  • Interviewed with numerous companies during the formal recruitment period at Anderson.
  • Got a promotion at Company X to program manager... it was a small raise but I was the youngest program manager in the Division.
  • Graduated from UCLA Anderson.
  • Rachel got a promotion to corporate controller at her small public company.
  • Gave notice at Company X after getting an offer from the IT practice of a management consulting firm (Company A).
  • Made an offer on my first home.
  • Took two weeks to revisit Thailand and hit all the beaches I missed on the last trip - loved Ko Samet and would recommend it to everyone. Do it right and stay at the five star places.
  • Rachel closed on the house while I was on vacation! Yes it was a lot of work. In my defense, her commute is now ten minutes while mine is an hour when I'm not traveling.
  • Started at Company A and got shipped off to Reno for the rest of the year running solo on my first assignment!
  • Revisited my blog and was shamed into restarting my posting by a comment from Manik.

I'll expound on some of these a bit more and post some photos from the wedding, Thailand, etc over time.

He Lives!

Has it really been 14 months since my last post??? Wow... I suck. But I did tell you that the FEMBA program was a tough one.

I took a look at my blog after seeing a post by Director Mitch (DM) celebrating his fourth year anniversary. He's averaged about a post a day... me not so much. First things first - congratulations DM!

Friday, August 04, 2006

The Power of the Internet

My desktop froze on me today. Actually it was worse. It crashed as it was checking NVRAM. No response, no chance to enter boot, nothing. I typed in a couple of keywords in Google and came upon this post:

K7S5A Boot Problem

A friend has a K7S5A pro motherboard that hangs during a boot afterdisplaying "Checking NVRAM" on the monitor. The memory test thatnormally follows this did not display anything.I have a K7S5A and took out my memory to see if I would get the sameerror. The BIOS did not output anything at all to the monitor.Therefore I don't think that it's bad memory.Any ideas what would cause the BIOS to hang here?

One of the responses said it could be a USB device issue and to try to fiddle with them. I thought it was bullshit but figured it was worth a shot before I started tweaking the motherboard. I unplugged all my USB devices and it worked! A five minute fix... thank you Internet!