There’s been a buzz recently about IKEA UK’s umbrella promotion – amplified by social media and, yes, by generative AI. The stories go like this:
It rains a lot in the UK and people often end up getting wet.
Ikea UK decided to run a promotion whereby their large ‘golfing’ umbrellas were priced at £5. But, if it rains, club members can buy one for only £2.50.
This, apparently, is shocking because it goes against the current – often algorithmic – logic of demand-based pricing. That logic dictates that because customers need the umbrella more, they’ll be willing to pay more, and therefore the price should go up.
This is the same logic airlines and train operators use to justify huge, last-minute price rises: when you need it most, you pay the most. It’s what’s behind Uber’s ‘surge’ pricing, and it’s used to justify charging inflated prices for convenience (refreshments in cinemas being the obvious example).
But from the customer perspective this strategy is infuriating. They hate it. It doesn’t seem fair. In fact it seems predatory and untrustworthy – it reduces a brand from quality provider to revenue extractor.
The effects of this type of pricing are twofold.
It increases short-term revenue – all too tempting in a sector starved of cash.
Long-term revenue and brand value are destroyed, because it undermines trust. The loss of brand value and the long-lasting effects of customer alienation will cost the business far more in the long-term and are indelible.
The effect is indelible because it affects customers at an emotional level. In their hour of need, they remember that instead of helping, you tried to exploit them. That’s how you lose customers for life.
IKEA VALUES RECURRING REVENUES OVER QUICK UPLIFTS
The Ikea promotion turns this exploitative business logic on its head to great effect. It says to the customer – ‘you have a problem and we want to help you fix it’.
For £2.50 in foregone margin, IKEA incentivises customers to join its loyalty scheme while signalling that the brand is friendly, trustworthy and genuinely customer-oriented.
But this goes beyond authentically being consistent with brand values – which, by the way, is worth a lot in today’s market – it has hard commercial logic behind it.
The promotion reduces customer stress and negates that nagging feeling that you might need to go home or cut your visit short because of the weather. Reduced stress means customers are more likely to be in the mood to browse and buy.
The cost of getting a customer to commit to the membership scheme is a maximum of £2.50 – in reality, it’s less than that. The average cost-per-lead is £30+ in the retail sector, making this extremely cost-effective. In telecoms, customer acquisition cost varies between markets, but typically ranges from $300+ (B2C) to $700+ (B2B). A £2.50 acquisition cost would seem like a revelation.
The offer has viralised – everyone’s talking about it. The promotion has been far more effective — and far cheaper — than any television ad campaign. The sheer volume of earned media – including in dark social channels – has been priceless. Even those who don’t shop at IKEA, or don’t need an umbrella, have a warm fuzzy feeling that the brand has done something good.
The promotion builds emotional trust and communicates that customers’ needs are important to the brand. This emotional resonance is priceless. The next time a customer wants to buy a kitchen or sofa, they will immediately consider spending that money with IKEA.
HOW WE APPLY THE LESSONS TO TELECOMS
Some telcos have already adopted this approach. Run out of electricity at Glastonbury? Customers and non-customers alike can charge for free courtesy of Vodafone – which is now offering free eSIM trials in selected areas.
Unfortunately, such examples are still rare and siloed. Out of desperation – and a kind of institutional tunnel vision – telcos still rely on overage fees, sneaky price rises, and penalties.
To customers, this shows up as dishonesty and inauthenticity – behaviour that feels counterintuitive and infuriating. Customers:
expect to be treated better the longer they’ve been with you; not worse because they’re ‘loyal’. Limiting offers to subsets of customers feels outrageously unfair
believe contracts should mean what they say: a set price, for a set time, for a defined service. Mid-contract price rises drive them crazy, and they don’t accept your arguments or reasoning for them (no matter how clearly you communicate them). These rises read as sneaky and dishonest
see overage fees as uncaring and exploitative. They expect you to have their back and warn them or limit their exposure. When you charge them overage fees you are killing goodwill and undermining trust
read inflexibility as uncaring and a fundamental lack of realism. People change. Circumstances change. Needs change. They want you to be human, not bureaucratic. By holding someone to a deal they signed 12 months ago for an additional 12 months – even though the deal no longer meets their needs – you profoundly increase the risk of churn. That’s because you communicate you don’t care, you’re officious and you’re more interested in rules than relationships.
Telcos have spent billions on loyalty schemes that don’t work, only reward part of their customer base – and then reward the wrong behaviours – and approach the customer relationship in a one-sided manner. The old adage about treating others as you’d wish to be treated applies to customer relationships as much as personal ones. It might be your night to do dinner, but if you’ve got a migraine and your partner still insists you cook for them (because that’s your agreement), the relationship is already doomed. The generosity of spirit to cook dinner for your partner because you can see they’re unwell – even though strictly you don’t have to – is what keeps relationships going.
The telco equivalent is simple: look for ways to make customers feel protected, not exploited. Make exceptions for good customers. Reduce stress, not just cost. Protect them when they’re vulnerable. This isn’t charity – it’s strategy.
They say a happy spouse makes for a happy life. A happier customer base doesn’t just feel better – it performs better.
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