It couldn’t have been any more perfect. I’m getting ready to write my third installment to the Psychology of Free Series and the example I was going to use struck again. I have given you examples of the new Freemium Model, and now it’s time to touch on the more traditional Cross-Subsidy Model. Who is the cream-of-the-crop at this craft? Chic-Fil-A(wesome).
I was told by my lovely-lady friend to make a reservation for Chic-Fil-A breakfast. I was a tad taken aback considering the last reservation I made was the night of my High School Prom. This isn’t entirely true as I have enjoyed many fancy meals since the early 2000s; but I KNOW I haven’t made a reservation at any diner dawning a drive-thru.
Seeing that the lady-lover is smarter than mwah, I took her advice and made a reservation at Chic-Fil-A Breakfast (.com). After typing in my zip code, it asked me what I want for my free breakfast. THE CHOICES WERE ENDLESS (assuming you’re okay with chicken and biscuits)! I select my sandwich and agree to be there bright and early between 7:30-8:30 the following morning.
This morning I wake up (a little more excited than usual), shave the stubble, and dash out the door. It took me all of 3 minutes to get dressed. I knew what was awaiting me.
Avoiding traffic, I drove 3 quarters of the way on sidewalks to ensure I didn’t miss my reservation. What I found at my reservation, was no reservations. I mean, they kept my reservation; but there were no reservations with the reservation.
Bad choice of words?
What I’m trying to say is there was no catch. I didn’t HAVE TO purchase anything with my sandwich but I CHOSE TO. Who can resist the coffee and hash brown combo?
What comes next is Chic-Fil-Amazing. To reduce car clutter, I typically toss my receipt back at the drive-thru worker in the same sort of fashion that the American Gladiators assaulted their contestants. This receipt was too long to launch. It read: Bring back this receipt to redeem for one FREE chicken sandwich. Are you serious? They just gave me a free sandwich. Now they want to give me another free sandwich? It’s no wonder I love this place.
How can this be?
This is the cross-subsidy business model at its finest. There are a few different definitions for cross-subsidy, but none of which I’m pleased with. I don’t want to get too Economicsy on everyone. Think of it this way: the profit that Chic-Fil-A makes on the drink and hash browns subsidize the cost of the chicken sandwich.
Kudos to me for explaining cross-subsidy without using the term ‘marginal cost.’
Kudos to you for still reading.