Reply To: Response from Virgin re Points Redemption

[paul-uk]

NorthernLass wrote:

My assumption is that they either saw this coming and just braced themselves for impact and negative publicity re families who’ve saved points for years for a dream trip to Orlando, or they’re really too thick to be running a large business 🤷‍♀️😂

I reminded them that previously people would rush to book the few available redemption seats available – but now there is no incentive. In fact, there is no incentive for anyone to book in advance at all.

Where you have a product with a limited shelf life (eg you cannot sell an airline seat once the plane has taken off) the aim is to sell enough to cover your costs and as quickly as you can – then, you can play with raising/lowering prices at your whim based upon demand. Let’s call it Dynamic Pricing !!

However, Virgin seem to think you can start by dynamically ripping people off for that product with the limited “shelf-life” – and it CANNOT work.

What happens when prices (or points) are too high and you’ve shouted that from now on prices will fluctuate is that customers wait and wait, only opening their wallets when THEY feel the price is right for them.

When you get to the stage where too many people are waiting and waiting, your products “sell by” date gets closer and much harder to sell.

You then have to dump the price to fill seats or you fly half-empty – neither of which makes for a healthy business.

But what also happens is that your customers delay their purchase even longer in the hope of those last-minute bargains and you’re in a downward spiral to bankruptcy.

Virgin need to get a grip and return to basic business economics and get bums on seats as quickly as possible, cover their costs AND THEN offer Dynamic Pricing to those prepared to pay.