bradmook.com

Last night I lay awake at my parents’ house listening to the snowplow service unnecessarily clear half an inch of snow from their driveway, and it got me thinking about misalignment of incentives. The guy who drives the plow is trying to maximize his earnings, so he wants to get paid in frequency and magnitude. He’ll charge as much as he can get away with and he’ll come as often as he can, whether he’s needed or not. Instead of calling to see if they want it cleared, he’ll show up to clear half an inch after midnight when everyone’s in bed and not inclined to chase him away. He’s actually incentivized NOT to talk to his customers, because it’ll likely result in less work.

I have a similar issue with my lawn service, who will come and cut even if it’s a drought and the grass hasn’t grown. He cuts, he charges, I pay…until I push back. Eventually he may get fired, and replaced by the next guy who’s $10 cheaper and won’t push his luck until the next season.

I’m not sure how to align the incentives in this case, but I am convinced that better communication would produce happier customers and more profit in the long run. Any time the customer grows to resent the vendor it can’t be good for business. Something to keep in mind as you go about your own business…are your customers happy, or are you just capitalizing on the relationship until they inevitably move on?