At L Squared Wealth Management, excellent service is one of our core values. It surprises us when a company that provides poor service is very profitable. Spirit Airlines is one of the fastest growing airlines in the US, with revenue growth over 20% per year for the last five years. Spirit has specialized in a la carte pricing, including separate fees for airfare, seat selection, checked luggage, carry-on luggage, and refreshments (even non-alcoholic ones). Plus, there are punitive fees for paying for carry-on luggage at the gate instead of when making your reservation. Spirit has also increased the number of seats on each plane by using non-reclining seats. The use of a la carte pricing and more densely loaded planes has made Spirit one of the most profitable airlines. Spirit typically has lower published fares than other carriers, but when other items (such as carry-on luggage and seat selection) are included, the costs can actually end up being higher than other, higher rated airlines. CEO Ben Baldanza proudly claims Spirit’s a la carte pricing is what customers want. According to Baldanza, the customer is able to choose what they pay for and not have to pay for items that do not want. Unfortunately, customers seem to see it differently, consistently ranking Spirit as one of the worst US carriers. This is quite notable in an industry not known for great service. Still Spirit continues to grow, begging the question of whether bad service can be a good thing.
Perhaps one of the reasons for Spirit’s poor ratings are related to its “low price” marketing strategy. Spirit does publish the price for all items, so it cannot be said that they are using bait and switch tactics. However, I believe that they are counting on most customers not reading the fine print. They hope the customer will select them based on the low advertised airfare. Then they can make up the difference, and potentially more, by charging for every other aspect of the flight. While Spirit has been successful so far, I believe their disregard for customer service, as evidenced by airline service ratings, will catch up to them in the end. I know when I fly, I find myself selecting airlines like Jet Blue and Virgin America that offer a better customer experience. I’m willing to pay a little extra to be treated better.
At L Squared Wealth Management, providing excellent service is part of our culture. An important aspect of providing excellent service is treating people like we would want to be treated — the Golden Rule. We meet with our clients when and where it is convenient for the client, or even on-line. We are available evenings and weekends. Unlike bigger firms that have hundreds or thousands of clients, we know all of our clients. When you call, we don’t have to look you up on our computer system to try to remember you. Plus, we listen to what is important to you. In addition, we adhere to a fiduciary standard. This ensures that we act in the best interests of our clients and disclose any potential conflicts of interests. Finally, we disclose how we are compensated. At L Squared Wealth Management, we do not believe that bad service can ever be a good thing.