Keep your friends close

How much value do your friends bring to you? Silly as this question may be, its one being asked in offices and boardrooms across the country. Companies are trying to understand how much a “fan”, a “follower”, or a “like” is worth.  The most common response is, “I don’t know, but more is better.” However, in this case more isn’t always better.

Social media sites leverage something called EdgeRank to determine what content is shown to people when they log in. On Facebook, it’s believed that only less than 2% of eligible content has the potential to show up in the news feed.  So, the question shouldn’t be how do I get more fans, the question should be how do I get my posts to show up more than 2% of the time. The simple answer is engagement.

When people interact with your content it’s more likely to show up again in the future in their feed and the feed of those that are “close” to them. When companies attempt to gain just any followers via contests and other means, adding them could in fact be decreasing the total value of all their fans.

So how much value do your friends bring to you? Within social media, just like the real world, in some cases less may in fact be more.

$200 to Fly, $400 More to Bring Your Bag

Airline after airline is approaching bankruptcy only to be rescued by another airline. At the announcement of most of these mergers the airline proudly proclaims that they will be taking the best of both airlines and making one new better airline. In reality most of these mergers were done for two reasons. The airline wanted to buy more gates and reduce competition in its more profitable markets.

The major airlines do everything they can to manipulate the supply of seats from one city to another. Another way they accomplish this is by treating a seat on a flight differently for those flying direct than for those flying a connection. Same plane, same seat different cost. In many cases it’s pay more get less.

An example: To fly direct from LGA (New York) to DTW (Detroit) on a flight tomorrow the lowest fare on a major airline is $585. However, for flights on the same day you can fly to MCO (Orlando) for $215. What is incredibly interesting is that the $215 to MCO is a connecting flight which stops in DTW. By spending an extra $370 you get a seat on the same plane from LGA to DTW but you give up the seat from DTW to MCO and gain the right to check bags. You thought $30 to check a bag was a steep price. Keep in mind you could already be paying over $300 for that ability.

I’m a huge proponent of analytic based pricing; it’s what I do for a living. But, somewhere along the way airlines allowed computer pricing to take over and common sense went out the window. Then again if consumers want to complain they need to use the power of the purse. Next time you fly see if you can’t get less for more.