Disrupt is one of the buzzwords of the technology world. It’s all about finding a legacy business and using technology to render it obsolete by providing a better, cheaper or more convenient product or service. It’s what digital music files did to the CD business. It’s what Netflix did to Blockbuster. It’s what Uber is doing to the taxi industry. And it won’t stop there.
So I would like to suggest some industries that we should focus our attention on disrupting. Industries dominated by massive corporations that have been ripping us off and underserving us for years. These are industries where the few dominant players have followed the same strategy for enhancing profitability: swallow up competitors through merger or acquisition and then, once achieving a dominant market position, drop the hammer on the customers by cutting quality, reducing service and jacking up the cost.
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Banking
(image by geralt)
Bankers are really the leaders in the rapid growth of service inequality. If you’ve got $10k in the bank, you might get some attention. If you’ve got a million you get treated like a valued customer. Many, many businesses have gone in that direction and all of us can understand the philosophy of providing the best service for your best customers. But while it is insulting that your bank relegates you to steerage, it is even worse that these money-suckers hammer the folks who can least afford it with fees at every turn. Let’s take Bank of America for example. Without a $1500 balance you will be charged a $12 a month “maintenance” fee on your checking account. That is, unless you have interest checking. That will enable you to earn pennies in interest but pay a $25 a month fee if your balance dips below $10k. It’s beyond me what “maintenance” they perform on a savings account, but that will cost you a fiver a month. So if you put a modest amount of moeny in a savings account, the intrest won’t cover the monthly fee, so you balance goes down every month until BofA as stolen the whole thing. Better shove it under the mattress. Losing an ATM card will cost you $5, unless you want it replaced right away, then it’s $15. Another $5 if you want a copy of a statement and if you have the audacity to prefer the human touch of a teller, there’s a $5-$10 fee for that.
While we’ve become accustomed to it, every time you take your own money out of your own account through an ATM and the bank steals 2 or 3 bucks as part of the transaction you should be pissed off. Are you paying for the convenience of the technology? Or are you contributing to improving the bank profitability by enabling them to save salary and real estate costs by laying off tellers and shuttering branches.
I think there is already a good focus in Silicon Valley in how to knock off this ‘screw the 99%ers’ industry. Bitcoin reduces the role of banks to pretty much nothing. A number of online lenders offer small loans without the wait time or the bank fees. There are a number of other bank alternatives, like state owned banks, local currency and employer credit unions that become more attractive as the big banks become more and more customer unfriendly. So let’s get to it techies and drive these guys out.
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Airlines
In many areas of business if you give them a call and order a product, especially one that costs a significant amount of money, they thank you, handle your order enthusiastically and encourage you to call again. Not these robber barons. They charge you extra for ordering by phone!
Nowhere has service deterioration set in more dramatically that in the formerly-friendly skies. It all really started going downhill when fuel prices eroded their profitability. Not content to just pump the prices, they started to charge for baggage, for a pre-packaged box of shitty food, for a couple extra inches of legroom, for an unaccompanied child, some even charge for a blanket or pillow! So then fuel prices dropped even faster than they rose. Did prices come down? Were these nuisance fees eliminated? Nope. And it is obvious that there is collusion among the UnitedDeltaAmerican triumvirate to assure that they don’t.
I’m certain that the folks who run these massive U.S airlines that bought out the competition and divvied the country up to maintain route monopolies are committed free market capitalists. But in fact they could only exist as they do because of government regulation. Open domestic routes to Virgin, to Emirates, to Lufthansa and see what happens. Will American jobs be lost? I doubt it. These overseas airlines would hire the same people to the same U.S. airport jobs. And the greedy triumvirate has been outsourcing customer service to whatever country they could find where they can pay fruit-picker wages for years anyway.
Personally I try to fly Southwest whenever possible. They don’t charge for bags, or for changing flights and the staff doesn’t seem to have been beaten into a state of total demoralization. But maybe the techies have a better idea. Surely there can be little customer loyalty left for these airlines, except for maybe the few customers who get treated royally because they’ve racked up a gazillion miles.
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Cable TV
(image by Geralt)
When 24/7 Wall Street teamed with Zogby Analytics to survey consumers and identify the “Customer Service Hall of Shame,” who do you think they found to have the worst customer service? Comcast. Another research organization, the Temkin Group, ranked 233 organizations for the quality of their customer service. Comcast Cable was dead last at #232, tied with Comcast Internet. Time Warner Cable was #230, Charter Communications was #228 and Cablevision was #221. When Ranker.com rated the companies with the worst customer service, Time Warner and Comcast were in the top 5 (our friends from Bank of America were as well).
You get the picture. No matter how much you spend as a corporation on eliminating competition and avoiding regulation, when you treat your customers as disdainfully as this industry has, it is eventually going to catch up with you. And folks, I can see the light at the end of the tunnel. Maybe aging boomers like me are used to paying for 500 cable stations even though that includes about 450 that we will never watch in our lifetime. But younger people aren’t. And when you look at the burgeoning range of alternatives, the Netflix type services, Hulu, YouTube, the low cost devices like Apple TV and Google Chromecast, the sports leagues that are live streaming their own telecasts, it is really just a matter of time before the downward spiral of the cable TV industry picks up momentum and really starts to escalate.
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Event ticketing
This is really about one greedy, service deficient corporation, Ticketmaster. A couple months ago I decided at the last minute to attend a college basketball game at the Prudential Center in Newark. I didn’t want to have to queue up to buy a ticket so I went online before leaving the house. I chose a $21 ticket on Ticketmaster and as I started to check out I fortunately was attentive enough to notice that TM had tacked on fees that raised the price to $34. I clicked off Ticketmaster, went to the Prudential Center and bought my ticket at the gate. Guess how much? $21
So these greedy thieves at Ticketmaster were raising the cost of tickets almost 40%. Not a penny of that goes to the performers, or in this case the colleges, or to the venue. If you paid that price, 40% of your money would go to the ticket seller. Why should the cost of attending sports events, concerts, plays or other performances be subject to a 40% Ticketmaster tax and what does this escalation in the price of tickets do to the ability of these performers to draw an audience? Ticketmaster of course is the company that at one time had the audacity to charge its customers $2.50 per to print their own tickets. So in return for eliminating the need for them to print tickets, package them and pay postage, they charged you even more. This proved to be too audacious for even Ticketmaster to maintain although I’m sure they bundled that tithe into their other fees.
I am not a start-up entrepreneurial kind of thinker but I can see how this fraud can be disrupted in a fairly straightforward manner. Build an app that makes it simple for venues and performers to sell their own tickets without needing much staff intervention, then build a consumer facing app that consolidates all the shows and events that are selling. Charge what the venue and the performers need to make money and cut out the parasites. In doing so consumers will get better value for their entertainment dollars and maybe Ticketmaster can ‘pivot’ into the bail bond or check cashing business.
off the leash 
BANKS make me very angry.
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I remember Blockbusters! It was rather fun going into a shop and searching up and down the shelves for videos/DVD’S. You then selcted your snacks from the counter. Flicking through channels with the remote control does not come close.
We do need to shop around in order to avoid being overcharged. I cannot stand overpaying for anything.
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Super post, Ken! You’ve nailed it on all accounts. The banks have got to be the biggest bullies on the planet, but the others you’ve listed aren’t far behind them.
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Getting ready for a transatlantic flight, your segment about the airlines got me riled up. You nailed it, prices went up, service and quality of flying (not safety–I am good if the plane goes up/down properly. Thank you pilots!) as an experience went down. I was cringing on these tickets because we wound up in cattle-car seats, oh wait, I mean coach. My sister and I are both under 5’2″ and these seats are awful. Luckily my husband upgraded us to economy. Which seats off a whole other rant, so I’ll stop now.
Change is sorely needed!
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Have a good trip Rose. I just did a transatlantic flight and comfort is not one of the first words that come to mind.
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Ken, I know all about banks – I used to work in one and guess what my job was? Going through all the accounts and figuring out how to charge the customer more fees – I believe the proper term is gouging. Yes, that was actually a staff position – it was a job I hated and I didn’t stay there long, figuring out how to rip of people doesn’t leave you with a good feeling.
As far as planes and ticket master go – The last time I flew was in 1964 when service was wonderful and if I do go to an event, I buy my ticket at the door.
One business you forgot to mention – Health Insurance Companies – where more claims are denied than paid.
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Haha. So they laid off the customer service people and replaced them with gougers.
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Ken, This is so great! You picked everyone I would have mentioned. Cable is the biggest one for us. Why do we need to pay for cable box rentals? Crazy. Thanks for sharing.
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Yes. They charge you a monthly rental for every little piece of equipment you need for the privilege of being overcharged for a zillion TV stations you’ll never watch.
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Ken ,very interesting. Thanks for sharing.
Indeed, I agree that disruption should happen everywhere. Banks are undoubtedly one of the spheres.
Also, I am working in a healthcare, and I can say for sure that there is still so much potential for disruption here as well. Lets hope it will happen over next years
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I think for millennials, Ticketmaster charges just seem like an accepted part of life. They grew up paying them for the most part. And so many people want convenience, even if they gripe about the extra cost. And that is how they get away with it, even if it is wrong.
When I tried to disconnect my cable when I last moved, it was such a hassle. They didn’t make it easy to reach the cancellation department and every time they tried to transfer me, I would get disconnected. I was so irritated by the time I reached a live person.
I do think it is crazy about all those airline surcharges. I remember them saying that they were added specifically because of high gas prices. But consumers just become used to it, and once all airlines were doing it, what motivation did they have for bringing the prices down?
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Good customer relations?
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Back in 2006 or so Chase took over my local bank. Chase also charges a monthly $12 checking account maintenance fee; adding insult to injury, a visit to the very useful Bankrate.com revealed that Chase offered the lowest interest rates on savings accounts and certificates of deposit in my area. In due course I switched to another local bank that charges a monthly $4 checking account fee – less bad, but still bad.
Banks should definitely be required to divulge
(a) how much money they make in maintenance fees and
(b) where exactly that money goes.
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I agree with others here, you’ve nailed the biggest offenders. At the moment my attention is on the cable companies. TWC does appear to be trying to improve customer service, but I hate having to rely on them (or any ground wire) to function so I’m learning about options for becoming more independent. In some respects living in the Islands is like living in backwoods USA in terms of available services, but I’m hoping to be able to cut the cord this year. Banking is up next. 🙂
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I agree with you totally.
I also know when there is a lot of money involved, as long as politicians and regulators are getting some of it, or worked in that field before, you will never see any change.
The only time something gets regulated or changed is when it looks like a political issue. Think of the banks several years ago, they get bailed out, threats of regulations, but in the end nothing is ever done.
Thanks for sharing this with us.
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I love to pay for almost everything online, but when I visit a website and they have a convenience fee for making a payment I just cringe and then get out the checkbook and write a check and stick it in an envelope and slap a stamp on it. Some convenience fees strike me as being quite high. I haven’t had satellite or cable TV for over a year now, and I don’t miss it at all with the ability to watch my favorite shows online.
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Rant on, Ken! Loved everything you said. Now if you are a Canadian, you can get screwed even more on merchandise from the USA and on services routed through the USA. If I want to order something through amazon.com, for instance, I have to take into account not only the exchange rate and extra shipping costs, but also a fee charged by the credit card company for the great privilege of their calculating the exchange. Pretty soon the thing that sounded like a great deal might cost me double or triple the price.
This one is a complaint about the system (banking), not about the USA, okay? A few months ago I went to Tanzania and needed to prepay some things in USD, that of course could only be processed through some central place in NY, I believe. First the whopping exchange to pay from CAD to USD then another hunky fee to exchange from USD to Tanzanian shillings. Administration fees all over the place from my Canadian bank and from the US “central place” (don’t know what the darn place is called.)
Anyway, I just added a wee bit to your rant. I’m sure there are a lot more gripes that other Canadians can add.
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When it comes to currency exchanges there is no limit to the exorbitance of the fees bankers will charge for services of little or no value.
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Terrific idea!
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I’m all for disrupting things. I haven’t had an account with a big bank in years. Credit Unions are the way to go.
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Great Read! I am sold, lets get rid of the norms and start using our money the smarter way. Technology is awesome, gets interesting what you can replace with very little $$.
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