The Hard Sell

I have a coupon worth half off at any Starwood hotel property in the world. I would like to use it this summer, but it is rife with exceptions and asterisks, and I was required to call Starwood to find out where I could actually use it. They suggested to me that I put together a short list of destinations since August is a heavy travel time and the coupons are often blacked-out or sold-out at many hotels.

I did just that and called back. I sat on hold for ten minutes and then got transferred to a different department, luckily not in India. I then went through resort after resort, hotel after hotel, hearing “not available, blackout, not available.” Finally, at one of my lesser options, I heard, “that’s available, can I have your credit card number to hold your reservation?”

“Uh, there are a few others I’d like to check.”

“How many?”

“Is there some limit?”

“Uh, I can’t check like ten or anything. But I can hold the reservation for you until Friday without a credit card, if you’d like.”

“Look,” I said, “I sat through a ninety-minute time-share presentation to earn this coupon. I haven’t had a real trip alone with my wife in five years. The dollar is worthless overseas. I sat for ten minutes on hold, spent hours on your website, and you’re trying to talk me into buying the first hotel you can find a room at? Do you work on commission or something?”

Turns out these fine folks are compensated, in measure, by the number of reservations they “close.” Starwood believes that, coupon notwithstanding, if I get off the phone with Bob, I might just call Hyatt (which applies no such pressure tactics) and decide to stay with them. And even if I call back, Bob cares less if I stay with Starwood than that I book with him and not Susie in the cubicle down the corridor.

What an asinine way to run a business.

It reminded me of some window-shopping I was doing for a TV at Ultimate Electronics, flush with my holiday bonus. “Can I ask if you’re planning to take one home tonight?” asked the salesman.

“I’m not, no. I’m doing my research and comparing sets and retailers . . .”

“What if I told you we match all our competitors prices and have all the models they carry? Would you be ready to buy tonight?”

“Pal,” I said, “This is an $1,800 television set, not a $20 pair of headphones. I don’t drop two grand on impulse.” He walked away, not interested in making me a customer of one of his colleagues in a week or two.

It reminded me of the time I was at Carousel Audi test-driving a car a few years ago. It’s an upscale place, trust me. They’re not pulling folks off the street with bratwurst and popcorn.

“Are you planning on purchasing today?” the salesman asked me.

“No, I’m going to drive several different cars and then make a decision.”

“Is there anything I could do or say to you to get you to make a purchase commitment today?” he asked. I told him I didn’t make $35,000 impulse purchases.

Which reminded me of a recent meal I ate at a local steakhouse. I was researching for an article, and we had ordered a lot of food, borderline gross in fact. Salads, sides, main courses, sauces, etc., but no appetizers.

“Could I thrown in an order of calamari for the table, to start?” the server asked.

I looked at him and raised my eyebrow. “We’ve ordered more food than we can possibly eat; you have to know that. I’m sure people do the same thing all the time. Did you really believe we’d order a plate of calamari?”

“You’d be surprised.” He smiled, winked, and walked away.

The left-wing pundits wonder how hundreds of thousands of people took out mortgages they could not afford, without asking how they worked or thinking about various economic scenarios. It had to be fraud on a massive scale, they suggest.

Maybe so.

Or maybe the banker just asked.

Comments

[Bill Lindeke]

Starwood is terrible! I stayed in one of their many, many hotels for a wedding last summer, and they've been spamming my e-mailbox ever since, despite my multiple attempts to remove myself from their list. They make it almost impossible.

[Jim Leinfelder]

http://www.washingtonpost.com/wp-dyn/content/article/2008/03/21/AR2008032103817.html?wpisrc=newsletter

This is where the simple answer breaks down. So we turn to the more complicated answer: Blame our brains.

That's what Jason Zweig thinks. He's an investing guru and journalist, and as many people wonder how we all could have been so dim-witted these past few years, he provides one possible answer in a book called "Your Money and Your Brain: How the New Science of Neuroeconomics Can Help Make You Rich."

Zweig has studied several experiments examining people's brains when they make personal finance decisions. The results, he said, are surprising.

"You would expect logically that the borrowing and spending of money would be emotionally painful to people because having money is intrinsically a good thing, and having less money would have to be worse," he said. "Going from more money to less would be painful."

If only that were true.

"When people borrow and spend money, it's really the reward centers of the brain that become activated," Zweig said. "When you borrow money, you are thinking not about the long-term consequences but the short-term result: You have more cash in your pocket. The pain you are going to experience down the road of having to pay -- that's in the future, it's remote, it's abstract."

Now think about the housing boom, particularly about people borrowing way more than they could afford.