Why we can't resist perkonomics

Ever paid a premium to jump a check-in queue, or speak to a personal banker? You may think you're beating the system – but are you really? Tim Walker investigates
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You know the feeling. You're booking your Ryanair flights online, which you're not precious about, because why pay a premium when you're only going to be in the air for two hours, right? But, all the same, you're thinking about last time you flew, about the 40 minutes you spent in the queue for check-in, while some pig-headed bozo argued with the ground staff about his luggage allowance. It was nearly as bad as that time you waited all morning to ride the Nemesis at Alton Towers. You're thinking about the woman with the screaming baby, who you had to sit next to because it was the last seat on the plane – the one beside the loo, naturally. And you're remembering how the drinks trolley kept bashing into your knee as it trundled down the aisle. You're thinking: do I really want to go through that again?

Now you're thinking: wouldn't it be nice to have a little bit more time in duty free? And maybe the opportunity to choose where I sit on the plane? And your mouse arrow is hovering over the little circle that says "priority boarding". And now you're thinking, weeeell, it's only another few quid, isn't it? Congratulations – you're about to buy in (literally) to a truly 21st-century consumer doctrine: perkonomics.

Everybody loves an upgrade, because everybody loves to feel special, to feel important – more important, specifically, than the person sitting behind them. Perkonomics is the icing on the cake of life. More precisely, it's the glacé cherry on the icing on the cake of life. Banks, airlines and credit card companies have rewarded loyal customers with goodies for generations, but "perkonomics", according to the analysts of trendwatching.com – who coined the term – is now a movement: "a new breed of perks and privileges, added to brands' regular offerings, [and] satisfying consumers' ever-growing desire for novel forms of status and/or convenience, across all industries."

Once, such privileges – picking a window seat, speaking to the same person every time you visit the bank – might have been included in the price, all part of the package; an incentive for customer loyalty. "You stick with us," they seemed to say, "and we'll look after you, we'll see you right."

But in today's contrary consumer world, many of these perks aren't perks at all; they're purchasable upgrades of service, speed or convenience. Trendwatching.com has pitched these upgrades as an effective way for brands to attract new customers, or to persuade existing customers to spend more. But what about the consumer? Aren't we all just being conned with the promise of privilege?

"We're starting to see a growth in companies charging for things they never used to charge for," says Martin Lewis, who runs the personal finance website moneysavingexpert.com. "But I wouldn't call it perkonomics, I'd call it 'jerkonomics'! Take bank accounts. There's a staggering range of extras that banks will try to make you pay for, most of which you can get for free elsewhere. They'll call you and say, 'Hey, you're a valued customer, we'd like to upgrade you.' And what they mean is that they'd like to charge you extra. They'll offer you better interest, but if it's one of the big four high-street banks, then their interest rates for savers are already substantially lower than the best on the market. They'll offer you breakdown cover, travel insurance, mobile phone insurance and so on.

"Most people say yes, and then never use any of those added extras, despite paying for them. £12 per month on a bank account, say, is £144 per year. The cheapest breakdown cover is £30, the cheapest annual travel insurance is £30 – that's £60. You're paying twice what you should, and the bank account isn't as good as some of its competitors offer without any fee at all. I wouldn't call it a perk. Most of the time it's a punishment. Often you're paying for things that you shouldn't be paying for, and that you could get cheaper elsewhere."

Meanwhile, Easyjet and Ryanair are frequently attacked for their priority boarding policies, which add to the cost of a plane ticket, but which, it is argued, offer little real benefit to the passengers who elect to pay the premium. And when Alton Towers introduced a similar scheme, allowing people to pay more for their tickets and jump to the front of the queue for popular rides, they were accused of instituting class divisions among their visitors.

But, as trendwatching.com observes – and Lewis readily admits – perks work. If businesses offer a freebie with their latest product, or a cheap upgrade, they'll often draw in more customers and more cash. "Some perks can be good," adds Lewis, "But too often people consider the perk to be in isolation from the product, when they should consider the entire package and calculate its overall value."

Rob Walker writes a weekly consumer column for The New York Times and is the author of I'm With the Brand: The Secret Dialogue Between What We Buy and Who We Are. "All brands," he says, "must deal with the problem of advertising clutter. We're hit with so many marketing messages per day that we can't really remember which one was for which bank or which airline. They're trying to come up with any gimmick that breaks through the clutter but, of course, they're just adding to the clutter, making it that much harder next time. Many businesses have become interchangeable: they're all basically selling the same thing. If you're shopping for a stove, there's a hundred different choices, they're all pretty good. What difference does it make? It's a challenge for any one of those choices to stand out, so anything they can come up with to get an edge, they will use."

Perkonomics applies most forcefully to brands for whom consumer loyalty is most difficult to maintain: those selling intangibles, such as travel, personal finance or communications, rather than the sorts of products that have American Apparel labels or glowing electronic apples attached to them.

"Airlines are the classic example of a business where it's pretty hard to differentiate on a brand level," explains Walker, "so they're trying to figure out ways to be more efficient, and position those measures as somehow good for the consumer as well – by offering lower prices to those consumers for whom those extra 'perks' aren't meaningful. They have to be careful. In the US airline market, people are all talking about how airlines have moved to a menu of charges, where they'll charge you for checking a bag, or for your meal. Anecdotally, the way that's been interpreted by the US consumer is not as a perk; instead, people feel they're being asked to pay for something they should get anyway."

Perkonomics took root in an age when consumers were feeling flush, when an extra fiver here and there was no big deal, especially if it meant keeping ahead of the Joneses in the queue. But as the "real" economy begins to feel the pinch, people will be less likely to fork out for the window seat, and businesses will have to devise more and more imaginative ways to squeeze cash out of their customers.

"If this recession becomes as grim as everyone thinks it will," says Walker, "then people will get much more focused just on value, and consumers will be far more savvy than they have been for the past seven or eight years. I assume that what you'll see more of from businesses are attempts to position nickel-and-dime tactics as perks, or even as reverse perks: 'if you don't want to pay extra for the coffee on the airplane, then you'll save five dollars!', something like that. They'll try to position it as great value."

So, that cherry on the icing on the cake might look sweet, just watch you don't choke on it.


Earlier generations might have looked on our hi-tech commercial banking system with awe. Not, one should hasten to add, the bits of the system that generated the current economic crisis, but the bits of the system that allow Joe Public to check his bank balance from his desk, to pay bills or to transfer money hither and thither at the click of a mouse.

Try, however, to get a bank employee on the blower, and this technological idyll of financial facility becomes less appealing. If you don't want to wait in a queue on an 0800 phone line, while listening to "I Will Always Love You" on the Andean pan-pipes, or repeat your mother's maiden name every five minutes, you must invest in a little something called "Personal Banking". This involves paying a bit extra every month to have someone who actually knows you from Adam on the other end of the phone, a service that our mothers would have taken for granted. Indeed, they would have been able to visit their "financial adviser" in person at the drop of a hat; they called him the "bank manager". Making this man (or woman)'s time a little more exclusive is perkonomics in action.

Royal Bank of Scotland, Natwest and LloydsTSB all offer private banking as part of their now semi-public businesses. For £25 per month, for example – or £17.50, should your salary run to six figures – you can enjoy the perks of Barclays' Premier Account, including the support of a whole team of "Premier Managers" (Not Premiership Managers: "Afternoon, Arsène, what sort of a deal can you give me on travel insurance?"). They'll even come to your house. After all, they probably own at least half of it.


Theme parks are notorious for the interminable waits one must endure before blowing one's mind on the newest, highest, fastest or wettest rollercoaster. As an antidote to this particular problem, many such establishments have begun to offer "VIP" tickets, allowing those with deeper pockets to jump to the front of the queue. At Alton Towers and Chessington World of Adventures, this "perk" means paying £30 per person, on top of the regular ticket price, to ensure you jump to within 10 minutes of the front of each queue.

Over the course of an entire day of death-defying rides, this would appear to offer value for money, and so it does, for those who can afford it. But it has also caused controversy for dividing the democracy of the theme park into economic castes. How would you feel if you'd saved for weeks to take the kids on a Big Day Out – paid for the train, the tickets (£17 each for the kids, £28 each for mum and dad), the sweets, the hotdogs, the T-shirts – only to find yourself stuck in an hour-long queue, while some snot-nose with more disposable income marches straight past you?

In the US, Disney has devised a more elegant queue-jumping method. Disneyland's Fastpass programme encourages visitors to insert their car-park tickets into a machine at each ride, which produces a free coupon allocating them a time at which they can return to the ride and skip to the head of the line.


Trading Standards recently condemned Easyjet and Ryanair's priority boarding services as the next best thing to "fraud", and there is much anecdotal dissatisfaction among passengers with this prime example of perkonomics. On Ryanair, a fee of £4 online, or £8 at the airport, will earn you the right to board before your fellow passengers. That said, Ryanair flights allocate up to 80 priority boarding spots per flight – 40 per cent of the seats. On an unpopular flight, you could easily find the priority queue longer than the regular one. Easyjet offers "Speedy Boarding", with prices varying according to the route. The airline recently launched an "Easyjet Plus" card, which allows members speedy boarding on all flights for a one-off fee of £100. All very well, but if (as is often the case with budget airlines) you must take a bus across the tarmac to the plane, you may find yourself boarding the bus before everyone else. Once you reach the plane, however, it's every man, woman and overtired toddler for himself, leaving families and groups exposed to the possibility of being split up on board. Meanwhile, it has now become a paid-for perk not only to board a plane quickly, but also to check in a bag or eat on board. Throw in the amount it costs to reach some of those far-flung airports served by the budget airlines, and you have to wonder how cheap all this low-cost flying really is.

The detailed "menu of charges" is a culture that has trickled down from the traditional airlines, specifically Virgin Atlantic, which has led the way in turning a lust for privilege into profit, constructing the sort of complex onboard class system that could only have been thought up by a Brit. Don't fancy squeezing in alongside the proles, but can't quite stretch to business class? Why not take a seat in "Premium Economy"? You can just feel that extra legroom...


Credit-card companies are the original perkonomists, offering a direct correlation between exclusivity and the colour of your card: black, gold, platinum and so on. For a mere £300 a year, for instance, the already wealthy holders of an American Express Platinum card can toast each other smugly in 500 VIP airport lounges worldwide. In the US, Amex cardholders, and Amex cardholders alone, were offered the chance to procure the winning dress from the fashion design reality TV show Project Runway in September, as chosen (but not designed, mind) by Diane von Furstenberg. Palmeiras, a Brazilian football club, has 5,000 seats reserved for Visa card customers in an exclusive area boasting bars, a VIP lounge and restaurant.


Mobile phone providers, like banks, love to mix up their interchangeable contracts with the promise of perks. O2, now a major sponsor of musical events – specifically those at the O2 arena, formerly the Millennium Dome – offers its customers priority ticketing and exclusive "Perk packs", including access to the pseudo-posh-sounding O2 Cocktail Lounge prior to concerts. Orange's "gigsandtours" system allows Orange customers to reserve event tickets 48 hours before anyone else, and "Orange Wednesdays" allows them two cinema tickets for the price of one at selected cinemas every Wednesday. Why else would anyone go to the movies on Wednesday?


Wondering why the car you reserved has always left the garage by the time you reach the car hire desk, leaving you to prowl the Côte d'Azur in a deeply uncool Renault Espace for a fortnight? The answer: "Avis Preferred", a worldwide members' club enabling its card carriers to skip queues worldwide. Cars – and particularly the parking of cars – offer infinite possibilities for the perkonomist. In friendly Canada, Ikea stores are encouraging their customers to save the world, by offering reserved parking to those who drive hybrid cars. Babies'R'Us in the US have long offered expectant mothers priority parking close to the store, while in Ljubljana, Slovenia, trendwatching.com has discovered, Diners Club Black Card holders get prime parking spots reserved at the airport.


Have you received any mildly suspect cheap deal vouchers via email yet? I bet you have. The subject line says something like "Fw: Credit Crunch Food Deals!" and the email boasts of money off at Wagamama, Strada, Giraffe and a whole bunch of other restaurants at which you probably wouldn't have thought about eating very often, even in a "fat" financial year. These forwarded emails are the first sign that in a financial crisis, reverse perkonomics (ie, charging you less for the same) is the best way to give consumers a sense of superiority over their peers.

In the US, several shops run classes on the art of penny-pinching. The Stop & Shop grocery chain offers "affordable food summits", teaching customers to lower their food bills; hardware store Home Depot gives classes on cutting energy bills; and Wal-Mart now has an online "family financial expert" offering its consumers an education in the theology of thrift.