How important is honesty to a product manager? You would think that this would be a big deal to most of us, right? The thinking goes that if we’re not straight with our customers, they they’ll stop trusting us and they’ll go somewhere else to get the products that they need to solve their problems. However, what would you do if you found out that this wasn’t true? What if you discovered that your customers wanted you to lie to them?
The Problem With Concert Ticket Prices
Welcome to the 21st Century! If you are planning on going to see a live concert, then you are going to need to get your hands on some concert tickets. The way that we do this today is everyone goes online and goes shopping for the best price possible for the event that they want to see. The company that has always dominated the online selling of concert tickets is called StubHub. StubHub, which is owned by eBay, is a key player in the US$6B annual market for concert tickets.
Awhile back the StubHub product managers did exactly what they were supposed to do: they took a survey of their customers. They were looking to find out what part of the ticket ordering process caused them the most grief. It turns out that just about everyone said that they hated the fact that the tickets were priced at a low price until you reached the end of the online buying process and all of sudden how much you were paying shot up as additional fees were tacked on.
Based on what they were hearing their customers tell them, the StubHub product managers decided to make some changes to their product development definition. Under a program that they decided to call “all in”, they changed the prices for tickets that were listed on their website to reflect the final price that someone would end up paying for the ticket. However, when they did this, all of sudden to online shoppers it looked like StubHub’s ticket prices were higher than their competitors. StubHub’s share of the online ticket sales market started to decline. Over time it went from 60% – 70% of the market down to roughly 50%. Clearly something was wrong here and this was not going to look good on anyone’s product manager resume.
StubHub’s Next Steps
The idea behind the “all in” pricing program was a great idea. Since customers had identified separate service charges as being their top annoyance, the natural action for a product manager was to make that problem go away. By showing customer what they would really be paying at all times the customer should be happy, right? In this case, that did not turn out to be the case.
It was pretty clear pretty quickly that StubHub had made a mistake when their customers started shopping at other sites. StubHub had thought that because of their dominant market position, when they created a price that included all charges, everyone else in the market would be forced to do so also. When this happened customers who were shopping for tickets would see roughly the same ticket prices from all vendors. Much to the dismay of the StubHub product managers, this did not happen.
This has left StubHub in a difficult position. Thy tried to do the right thing by presenting their customers with the actual amount that they were going to end up paying. However, their customers have reacted angrily to this honesty and are now shopping at other vendors who are lying to the customers about how much they are going to end up paying for tickets. The StubHub product managers feel that they have no choice: they are going to have to go back to the old way of doing business. They are going to leave a checkbox option on their shopper’s screen that will allow them to see real ticket prices; however, the default is that customers will see lower prices until checkout time where they’ll see their cost shoot up by about 17%.
What All Of This Means For You
As product managers we spend a lot of our time trying to get to better understand our customers just like our product manager job description tells us to do. What we want to know is what parts of our product offering they like and where we can make improvements that will make our products more attractive.
Over at StubHub they sell concert tickets online. Their product managers surveyed their customers and discovered that they didn’t like it when extra charges were tacked on to their concert ticket purchases when they were making a purchase. StubHub created an “all in” program that showed their customers the true price of what they were planning on buying. However, it turns out that once customers saw these higher prices they fled to other websites that listed lower prices and then increased prices during the checkout process. When StubHub’s market share started dropping there was only one thing for the product managers to do: go back to the old way of doing business. Sometimes your customer doesn’t want to know how much they’ll be paying.