Thursday, July 31, 2014

Is "cramming" the new normal in American business?

I read with interest this article on how some small companies are using deception to get money for their "services" onto the cell phone bills that many Americans pay. Money that could be used for something more compelling, you know, like food. It is good to see that cell phone carriers are working hard to deal with these extraneous charges, but they are also tempted by the lucre, to the tune of 30-40% of millions of dollars. This is called "cramming".

This is hardly the finest example, and it turns out, cramming is a common practice in many service industries. In the article, "Why Business is Brain-Dead--and How to Wake Up", we are treated to a parade of accounting and billing statement line-items that are assumed to be true costs. Here, we see one example after another of deceitful ways to bill customers for "services" without adding any real value to the purchase.

Microsoft is infamous for its licensing costs for software. You might be familiar with Microsoft Office, the cash cow after Windows. How many versions of Microsoft Office are there? Why, there's even a chart to show you what is available. This is fine if you're just thinking of you and maybe your family.

But, say you're a business owner and you want to run your business on Microsoft software. That includes servers like Windows Server 2012 Standard, Enterprise and Galactica. Then there are application servers like Microsoft SQL Server, Microsoft Sharepoint, and Microsoft Exchange. There are many flavors of each of these application servers to choose from, each with different costs for licensing.

Guess what? There is an entire industry devoted to figuring out how to extract the most value for the buck when it comes to licensing Microsoft software. Here's just one company that you can pay real money for the service of shepherding you through Microsoft licensing. Microsoft makes money by keeping their licensing confusing.

I am familiar with the closing pitch after every sale: Would you like extended warranty protection with this purchase? Are extended warranties worth the money? If the seller expects to make a fat margin from the extended warranty, the answer is probably no.

Has it always been this way? I don't know. I do think that at some point in time, American business sort of lost it's way. We went from adding value to products to finding ways to subtract value after the purchase. We went from buying something to own it, to getting sucked into service agreements, leasing and licensing. Residual income is a big deal these days, probably because working for money really sucks if you think that there is a sucker born every minute.

For the rest of us, we must work to put food on the plates, maintain shelter and send our kids to college. We must add value to our existence in order to enjoy the way of life we've become accustomed to.

There are a few exceptions. I'm writing this blog on one of them right now: Blogger. I don't know how they do it, but Google has been adding value to their products from day one. They started out as just a search company. Then they added email. Then Blogger. Then Google Drive. Google Music. Movies. A wealth of programming tools. A free browser that is fast and secure and it runs on Linux.

They're out there, those exceptional companies that add value to your purchase, even when you don't ask for it. They want you to have the best experience and they want to answer any questions you might have about your statement in the mail. I look for those companies, you know, the people that want to earn the money I pay them? Yeah, I look for them, in earnest. When I find them, I have a hard time switching to some other provider. I guess I tend to be loyal when I see service done with commitment and passion.
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