November 22, 2011

Why is Airport Food So Bad?

You pay top dollar for airport food, yet it's very rare to find good airport food; usually it's just terrible, and sometimes it's downright dangerous. I'm sure all of you travelers have experienced that. But this is really a blog entry about cloud computing ...

There are two kinds of customer relationships: transactional and service. Nearly all restaurants are a service. Their customers are local, and their reputation is local. A restaurant will live or die by the quality of food and service they provide, precisely because their business depends on customers coming back and telling their friends about their great experience. Even fast food restaurants are deeply involved in managing customer relationships so they can ensure repeat business. That's a long-term service relationship. 

A transaction, on the other hand, is a one-time event: no relationship, not much service, just money in exchange for satisfying an immediate need. The transactional vendor doesn't expect the customer to come back. Airport food fails because by all appearances, when we look at an airport concession we see a restaurant, and this causes us to expect a service relationship. But not the airport concession vendor: they see their business as a transaction. They will never see these customers again. Thanks for your money, now please move on. 

An airport food concession is only a viable business because of airplanes: they bring an inexhaustible supply of customers having very few choices. As described in the Freakonomics blog, "My demand is quite inelastic, and the near monopolist at this smaller airport is taking advantage of that."

The technology analogy to transactions and services is quite familiar to you. Most software sales have always been transactions. Are customers of Windows satisfied, happy, loyal, customers? How about Oracle, Siebel, or NetBackup? No matter. There seemed to be an inexhaustible supply of people buying PCs and companies buying servers, and these customers have very few choices. Thanks for your money, now please move on. Might you argue that these vendors maintain customer relationships because of support contracts? You might, and it would be nice if software vendors saw it that way. But they don't.

How about service technologies? Think facebook,, iTunes, or TurboTax. These indeed are long-term customer relationships and can only thrive because their customers loyally and willingly keep coming back for more product and their reputation precedes their growth. Willingly. Hmmm.

Perhaps the greatest danger to the future success of cloud computing might be if the old generation of software vendors gain dominance in the cloud, bringing with them their old transactional attitudes towards customers. The opposite outcome may prove to be the greatest benefit that cloud computing brings to the market - that customers are treated like restaurant patrons and not airplane zombies. Call me an optimist.

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