I’m a Chump. How to deal with the Wise guys
Before I get any further into this I want to state for the record that I’m a chump. I’m one of those people who believe in queueing up, that the best person wins, that you shouldn’t litter the streets, or park across the lines in the parking lot. In other words I believe in playing by the rules and think we would all be better off if everyone else did as well. That makes me a chump in the modern world. In today’s world being a chump is a losing strategy. Today we are increasingly living in the world of the wise guy.
"You’re going to get eaten anyway, but if you don’t at least scream a bit the bear is likely to think you want to get eaten."
Wise guys, don’t park considerately, they simply dump the car wherever works for them, walk straight to the front of the line, push in, bare faced lie to get into the event and laugh in the face of the chump who has the temerity to even ask them to if they might consider getting in line. They don’t believe the rules matter, and increasing our society is proving their hypophysis right.
Wise guys don’t care about the rules, those are for the little people, the idiots. The sort of idiots who pay taxes, are respectful to others, don’t simply repeat lies often enough that somehow they become facts, the sort that wise guys call losers.
Society has always had wise guys and it’s always had chumps. For society to function the number of wise guys needs to be a very low percentage. If we all acted like wise guys then the parking lot would look like a tsunami has hit it, there would be no line, but a scrum, the wise guys would all be fighting to get into the club. No one would pay taxes. In other words it would be chaos, anarchy. Even the wise guys would hate that.
Even wise guys need to have rules. Observe how the mafia operates. Sure they treat the little people, the old, the young and the weak appallingly, they are all trampled on, but they have their own honor system among themselves. It’s brutally violent, arbitrary and unfair, but it retains order among themselves.
For wise guys to be successful they need to swim in an ocean of chumps unwilling to stand up to them, and with a group of the weak to pray on. Additionally to be successful wise guys mustn’t make themselves too obvious. Sometimes they need to appear to be the nicest, most respectful types, but when you’re not looking they put the knife in.
This is small installment from Simon Dudley’s upcoming new book. His first book The End of Certainty. How to thrive when playing by the rules is a losing strategy, is available on Amazon.
The working title for the new book is, Wiseguys and Chumps. How the world is split between those who play by the rules and those who ignore them, and how to succeed without being an asshole.
In this vignette from the book I talk about the Wiseguys ran the loyalty programs, and the chumps participate in them.
Rewards programs are a huge business. According to Package Facts, Arizona research firm, there were around 500m “rewards” credit cards in the United States alone in 2010. That is a little over 2 for every adult in the country.
Accordingly to Colloquy a consultancy, there are 2.65B loyalty memberships in the US in 2013. With 44% active that equates to over three and a half active loyalty cards of one type or another for every man woman and child in the United States.
I think it is safe to say, loyalty programs are wildly popular with consumers. They are also wildly popular with the Wiseguys because of how they change behavior, and in many cases at no cost at all to them.
Airlines miles expire. We all know that at an intellectual level, but few of us make much effort to track them, we should. After all airline miles have a value, are therefore an asset, and for the cost and inconvenience many of us go to, to acquire them, we should be much more careful with them.
The majority of airline miles expire after 12-18 months. Some like Alaska Airlines are a little better at 24 months, with SouthWest and Delta best by never expiring. But others, like Spirit Airlines have their airline miles expire after only 3 months!!! Most of us never actually use our airline miles effectively anyway, but Spirit Airlines really are taking the Mickey.
According to Colloquy, of the $48b of accumulated reward miles earned last year, almost $16b went unused. To put that in perspective, of the $620 earned per household over $200 of it was effectively thrown away.
If loyalty cards were simply a free perk that many of us simply fail to use efficiently, that would simply be a wasted opportunity. But it is way beyond that.
Companies do not run loyalty programs because they want to give you nice things for free. They run them because they are great for their business.
Loyalty cards are highly effective marketing instruments, targeted directly at consumers, to affect their behavior, and companies do it because they are wise guys who know that and the vast majority of us are chumps who get taken for a ride every single time we let them.
Loyalty systems affect chumps behaviour by making them lower the number of options they will consider. Flying from Texas to California? Sure use my United rewards card. I get points, is the mindset of the chump. Most people believe they are winning because they get points. What they don’t understand is that there might be a cheaper flight, or a more direct option by looking for alternatives. Chumps become, American Airlines men, or Marriott people. They stop looking for alternatives.
The Wise guy airlines are laughing all the way to the bank. They know most of their chump consumers don’t keep track of their rewards. They love the air miles horder types who wear the “I’ve got 2m points Gold card, as some sort of badge of honor”. Even better for them are the hypermilers who destroy their personal lives gaining as many points as possible. These are like the winners shown off in Vegas as something to attempt to emulate. The 0.01% “winners”.
Ultimately all the rewards program managers know that if their program is being too successful for the chumps, they can simply build some hyper inflation into the system and devalue the chumps “earnings”, or simply make it effectively impossible to spend rewards with blackout days.
I have been in business for 30 years and I’ve never met a business executive who isn’t enrolled in half a dozen programs. To not be rewarded does on the surface seem to be the chump move.
This is a classic example of the wise guy chump conundrum. The prospect of being the wise guy in this scenario is effectively zero for most of us. Unless of course you’re planning to run an airline, big box store or major hotel chain, or all of them. But who wants to be the chump?
Having our strings pulled by wiseguys in this environment is, to an extent, inevitable. To some extent it’s like being attacked by a bear. You’re going to get eaten anyway, but if you don’t at least scream a bit the bear is likely to think you want to get eaten.
So assuming this isn’t something we can reasonably get out of what can we do to keep the wiseguys off our money?
There are a number of strategies.
It’s a game. This is a game, the rewards provider is not your friend, and the moment you stop playing it you lose. As a minimum go into the relationship knowing this. They are not going to remind you your points are going to die, or that you could transfer them to some other program.
Keep track. Letting point expire, being oblivious to what’s going on is simply playing into the reward providers hands. You’d not have a bank account in which the money expired if you didn’t use it. Ensure you keep track.
Consolidate. There’s no point in having a tiny number of rewards with 20 different companies. As a result it’s important to do everything you can to keep the number of rewards programs to a minimum.
Useful. Are the points you’re earning going to add up to something useful? Personally I found myself with a mountain of Emirates Airlines miles. A pretty useless mountain after I moved to Texas and had no further reason to travel to the Middle East.
Exhausted. If you travel 100 days a year, you’re likely to have lots of air and hotel reward points. So when you do get a break from this punishing schedule do you really want to fly somewhere and stay in a hotel? Ensure the points can be used to do something else.
Switch. or at least consider it. Once you become a British Airways, or Hilton Hotels Gold card user, they have you trapped. You get used to the better service, the knowing smile when you check in. The piece of grubby gold carpet you get to stand on while staring down in distain at the peasants with their Silver card when checking in. This is when the wiseguys really have you. Once you’re in their system not only do chumps stop looking for alternatives. They’ll go out of their way to keep that Gold Card. Telling your rewards provider that you’re looking to switch can have some dramatic effects. When I first moved to the US I switched my British Airways Gold card for an American Airlines Platinum. You don’t always have to change, but just threatening to do so can have some amazing upside.
Credit Cards. In another chapter of the new book I will be picking apart one of the greatest wiseguy businesses, finance. So for now just consider whether that free, or high points credit card is doing as much for you in year two three or four as a shiny new card would from a different provider. Typically the first year is where all the goodies go. This is due to the incredible power of incumbency, and that truly is a powerful wiseguy trick. To be discussed elsewhere.
If you would like to know more about the book, and/or found this piece interesting or thought provoking please get in touch and do please share this article so others might see it.