How to Profit from Your Customers’ Gratitude
BY Nitasha Tiku
Insurers revoke policies to avoid paying high costs. A few days before a scheduled mastectomy, Robin Beaton's insurance company cancelled her policy for not informing them of her history of acne and a rapid heartbeat, which she assumed were irrelevant to her current state of health, in a questionnaire that she filled out when she applied for the policy. The act of retroactively canceling policies is called rescission. It can happen to individuals who may not be insured through their employer and apply for a policy on their own. When policyholders are diagnosed with illnesses that require expensive procedures, like cancer, the insurer looks back at the original questionnaire. If any pre-existing conditions aren't mentioned, says NPR, even ones the applicant may not be aware of, the policy may be revoked. A new report by congressional investigators found a total of 19,776 rescissions from three large insurers over five years, which saved the insurers $300 million.
How to profit from your customers' gratitude. If you're staying at the Hyatt in the coming days, you might be the beneficiary of the hotel chain's new policy of "random acts of generosity," Rob Walker reports in his latest column. Hyatt CEO Mark Hoplamazian thinks unexpected gifts--like picking your hotel bar tab--will leave customers pleased, but more importantly grateful, which is a potentially profitable emotion. An upcoming paper in the Journal Marketing argues that "customers that are made to feel grateful become enduringly loyal as a result," says Walker. That loyalty can translate to increasing purchase intentions and grow a company's sales. Loyalty or rewards programs, however rarely inspire gratitude. Miles or points racked up are seen more as something consumers earn. So what's the psychology behind it? Humans feel pleased from reciprocating out of gratitude, and guilt when they don't--an emotion that businesses can leverage.
The Jack Welch online degree. It's been an interesting few months for online universities. Two online college operators, Grand Canyon Education and Bridgepoint Education, have gone public recently. And management guru Ken Blanchard, the author of The One Minute Manager and The One Minute Entrepreneur (see our Q&A with him here, has attached his name to a business program at Grand Canyon University. Now, Jack Welch, the former General Electric CEO, has invested $2 million in Cleveland-based Chancellor University System, earning him a 12 percent stake in the online college operator and his name on a new Master of Business Administration program called the Jack Welch Institute, The Wall Street Journal reports. Though the partnership is a way for Welch to keep his name in the public consciousness, it's a curious move for a man who has taught at MIT's Sloan School of Management. Chancellor, formerly Myers University, is currently on probation for student turnover, resource allocation, and reputation; MBA applicants will not need to take the GMATs to be accepted.
Fighting fire with fire. The latest sector to open up to entrepreneurs? Fighting forest fires. Backed by stimulus cash from the Recovery Act, the state of Oregon has recruited small businesses like PatRick Environmental to torch some of Oregon's wooded areas. This controlled-burning project is one of many across the country utilizing stimulus money to both shore up infrastructure and generate local business dollars. PatRick scored the federal contract by keeping a close eye on FedBizOpps.gov and started bidding as soon as listings for local forestry opportunities appeared.
Fido goes first-class. Business travelers may be tightening their belts and downgrading their hotel rooms, but many are surprisingly unwilling to ask the family pet to make similar sacrifices. The Chicago Tribune has the unlikely story of an entrepreneur who opened a luxury pet hotel in the heart of the recession and somehow has managed to thrive. Dubbed Paradise 4 Paws, the 25,000 square-foot pet-hotel has a splashing pool, indoor grassy play area, private rooms, and even Webcam access in case the owner wants to check in on their favorite pooch. It may sound crazy, but spending on pets hit an astounding $43.2 billion in 2008 and is expected to increase about five percent to $45.4 billion this year.
Can big brother play the innovation game?. Although innovation policy--the study of how innovation happens and how to foster it--has been a much more popular field outside of the United States, the Obama administration has shown signs of interest by advancing research on the role of innovation in the economy. At a recent invitation-only, international innovation conference earlier this month in northern California, attendees were all in support of government participation in an arena historically dominated by start-ups and small companies, The New York Times reports. One foreign official says the goal is not to "pick winners and losers," but instead that "government can create the conditions so that new industries can rise more easily."
Reporter NITASHA TIKU covers technology, finance, green business, and social entrepreneurship for Inc. magazine and contributes to the staff’s daily links blog. Her work has appeared in New York magazine, The Villager, Chelsea Now, and on nymag.com. She lives in Brooklyn, New York. @nitashatiku