I’ve written frequently about how putting together LaunchPad Coworking is like piecing together a massive puzzle. Sometimes it seems as though the puzzle has 20,000 pieces and they’re all the same shade of blue. And then there are the times when some mystery piece, let’s call it Piece Number 20,001, shows up and we have to figure out how to make it fit.
Well, PN20001 did, in fact, appear recently. It has to do with our cancellation policy. We’ve been working nonstop to create our own software, Spacer, that can handle things totally specific to LaunchPad Coworking, which, as a new business model, is setting precedent rather than following it. The idea is that coworkers will have a seamless, easy — even delightful — experience making reservations. Spacer will keep track of all purchases (time/space, food, beverages) in one spot and a history of all transactions will be readily accessible from anywhere. Sort of how online banking is supposed to work.
Into the mix of technology and practicality comes the need for order and, yes, reality. Toward this end, we’ve been working on a cancellation policy that won’t be unreasonable to customers but that also won’t leave us in a lurch. Because if we’re booked solid and wind up dealing with no shows, especially if we have to turn other people away, that doesn’t just cost us money, it affects our reputation. The model we’re currently considering goes like this:
For individual workspaces
Individual workspaces will be rented by the hour.
- If you end early, we’ll credit you 100% of the remaining time.
- If you show up late, you’ll still be charged from the start of your reservation time.
- If you cancel more than 24 hours in advance, there’s no charge and no penalty.
- If you cancel fewer than 24 hours out, you receive 100% credit to use at a future date.
- No-shows will be charged for 1 hour.
For meeting rooms
Meeting rooms will be rented in chunks of time. At least one meeting room will be availble in 2 hour increments. The others will be available 4-5 hours at a time (morning, afternoon, evening) or by the day.
- If you show up late or end early, you’ll still be charged for the full reservation.
- If you cancel more than 24 hours in advance, there’s no charge and no penalty.
- For the 4 smallish meeting rooms there is a 50% charge if you cancel in fewer than 24 hours.
- For the 2 larger conference rooms, there is a 50% charge if you cancel in fewer than 48 hours.
- No-shows will be charged for the entire reservation.
That seems fair for customers. But we already see potential pitfalls on our side.
What if someone reserves space for ten days in a row — blocking others from reserving those spaces — and then they cancel as the dates draw near (but still more than 24 hours in advance)? They aren’t penalized, yet we can’t offer those spaces for reservations.
And what if someone who is trying to coordinate the schedules of several people for a meeting puts a hold on a meeting room for five days? Their intent is to hold onto options until they have a solid date/time lined up, but then they forget to cancel the ones they don’t need. Again, we won’t be able to let others reserve those rooms on those dates.
We know such folks won’t have sinister intentions blocking the system — they’ll just be covering their butts. But we need to cover our butts, too. And we don’t want to be jerks about it.
We’ve got to come up with something that works for us and for our customers without leaving anyone feeling irritated or ostracized. This is the policy we plan to start with, with the understanding that it will evolve as we learn what works and doesn’t work. In other words, if we get into a jam, we’ll have to get stricter.
Does this policy make sense to you? Do you see any glaring problems or gaping holes?
photo by macwagen
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8 responses so far ↓
1 donell // May 28, 2008 at 9:53 am
seems to me - you should create a longer cancellation window when someone books multiple days. so add 24 hours of cancellatoin notice needed for every full day booked. so if someone puts a hold for 10 days - in order to not be charged - they would need to cancel within 10 days of the event.
and pro-rate the cancellation…if they cancel 9 days out - they are charged for one day, 8 days out - charged for two days, etc.
and in terms of any customer “forgetting” to release dates they were holding - it seems more fair that they are charged and then given it back as a credit they can use at a future date.
another option - since you are building a custom tool - build in the option for people to “sell off” their room cancellations - which will be handy for someone who may complain that they are from out of town or will have no immediate future need to book another room.
and - (oh yea! i love dreaming up functionality when i dont have to write the code!) allow other users to queue up for rooms in the event of a cancellation.
and so maybe allow like a 2 hour window where if someone in the queue takes over a reservation within that time frame - the first person is not charged.
once the two hour window passes and if no one has claimed the time slot - the person is charged and given the credit. and then beyond that - if someone books the new open slot before it expires, the original person who booked the room can then be electronically notified and given the option to receive a refund, or keep the credit for future use.
2 David Giesberg // May 28, 2008 at 2:01 pm
How about a reputation/customer loyalty type of system? If someone has a reliable track record (shows up for reservations, etc) give them more latitude for longer reservations?
(There’s a good idea in there somewhere, I swear, it’s just a little bit underdone right now)
3 Julie Gomoll // May 28, 2008 at 9:15 pm
David - we’ll essentially be doing that manually, i.e., if you’re a regular, responsible customer and one day you simply make an honest mistake, we can override the policy and say “no problem - no charge”. We won’t automate that, though, until we have more data.
Donell - the line that jumped out at me was how you love dreaming up functionality when you don’t have to write the code :) That said - lots of good points here.
We do want to have a waiting list, especially for meeting rooms. It was on our original list of requirements, but has now been pushed to “phase II”.
The thing with prorating cancellations and basing allowable cancellations on the length of the original reservation is that it makes for a really complicated, hard to explain policy. We’ve worked really hard to come up with pricing and policies that can be explained in a few sentences. This stemmed from visiting some coworking sites with convoluted pricing schemes that left us wondering “so, uh, really then, how much is it?” We don’t want to give people headaches trying to figure out what they’re signing up for :)
Re: “selling off” reservations. Interesting. We haven’t looked at that possibility. I like the idea, although I think we’d be better off some how making the reservation transferable, and letting any “selling” happen outside our system. But that’s definitely a new way for us to think about things, which is awesome.
Thanks for the comments! Every time we fill someone in on this stuff, we get some new, original thinking :)
4 AugieG // May 28, 2008 at 9:51 pm
Charge everybody double for any cancellation!
moneymoneymoneymoneymoneymoneymoney
5 wade holloway // May 29, 2008 at 10:43 am
Carrot/small Stick Method - i.e. ‘Rewards Program’
The issue you need to figure out is a way to recapture the lost revenue due to reservation hedgers. The best way would be to discourage through disincentive, reward for positive action, and figure out a clever but very simple way to recoup the margin directly from the hedgers
I apologize if this may seem redundant as David posted something similar.
It might be useful, for these corner cases, to include a reputation factor in the mix.
Here is an example of how this might work. If customer X calls at the beginning of each month to reserve a meeting room at 20 different times during the month and by the end of the month has cancelled all but 2, their reputation score would suffer by twenty and increase by two giving him a reputation of -19. You might use a weighted moving average, giving more value to the most recent behaviors. OK… I think I’m having some original thoughts… remember you heard it here first. :)
You could later assign rules for ranges of reputation scores if they become necessary*. You could even, if you deemed appropriate, deliver rulings on a case-by-case basis. This would give you some flexibility.
Best case-scenario, you don’t need to publish the rules under the ’stick’ method because it never arises, and thus saves adding complicated rules to the published set unnecessarily.
Another case, John Smith reserves 5 times in March and cancels all of his spots, or worse -no-shows, but John has been having 5 meetings a month and not canceling for the last six months. In this case John’s previous loyalty has earned him a discount factor for his more recent cancellations, but the more this happens, the more quickly John’s reputation fades. The calculation would likely look more like -5^(recency factor)+36^(recency factor) or something like that. Recency factor would be -days since occurrence.
This should be fairly straight-forward to integrate into a reservation system. Especially if you are building it yourself.
In the meantime, how about allowing up to two meeting room reservations per person, or party, if there are a limited supply available?
*Prepaid reservations by members with good rep scores are given a discount. In the case that person X is new to LaunchPad and cancels his 20 appointments, he might be asked to prepay those reservations in the future. This would help recoup lost revenue due to undesirable reservation hedging and canceling activity and provide a disincentive.
6 Julie Gomoll // May 29, 2008 at 6:42 pm
Wow, lots of really good thinking here, Wade.
I really love the idea of an automated, behavior-based reputation system. I’m always a bit leery of ratings systems that rely on external votes - it’s too easy for people to affect the ratings of others’ for purely emotional reasons.
Straight-forward to implement? I’m pretty sure our development team would beg to differ :) It won’t be in this first release, but this is very much how I’d like to see things work in future releases.
FYI, one of the facts I neglected to mention in the original post is that we started doing the information architecture on Spacer last June. We went through a very mature design process (there will be a post on that real soon now), and only started coding in Jan/Feb, with visual design being the last element. We’re about a week from starting to test it.
We were all a bit nervous about putting all these thoughts out there publicly, but I’m so glad we did. “Fresh eyes” are always a Good Thing.
The Phase II list is growing clearer :)
Thanks to everyone for the good thinking - keep it coming!
7 Susan Price // Jun 2, 2008 at 9:19 am
Since you’ll presumably be able to see that the same person or organization has blocked out a bunch of time, during the learning phase (to hold you out until phase II) you could simply proactively contact folks who look like they may be hedging, and solve the problems BEFORE they arise.
It’s tempting to try to anticipate and solve all the problems in the software, especially because you folks have a lot of experience building web products and businesses. But here you’ve got the relatively luxuries of bricks and mortar, and dedicated, intelligent staff. Don’t fail to take advantage of those!
My intuition tells me that the bigger problems will be stuff you didn’t anticipate :)
8 wade holloway // Jun 3, 2008 at 9:39 am
In reference to our earlier posts:
“…it’s too easy for people to affect the ratings of others’ for purely emotional reasons.” JG
solution: pin numbers or the like.
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