A disturbing business trend has been developing over the last few decades that should be addressed by many businesses. Many businesses acknowledge the desire by the consumer to have lower prices and the desire to please your customer is good but are you risking your business for short term gain?
 
Let’s look at two examples that should illustrate my point:
 

U.S. Auto Manufacturers – For years, U.S. made autos were sought by people in many countries because they were well built and lasted a long time. As the manufacturer’s overhead went up the prices had to go up or the product quality had to be reduced. Consumers can only absorb so much of an increase before they start looking at alternatives. These alternatives may not be exactly what the consumer wants but they settle. When the manufacturer sees their consumer base eroding, they take action to try to keep their customers. Employee wages cannot usually be cut, benefit packages for their employees are usually locked in as well so this leaves the manufacturer in a position where they must either move their business to a place where labor is less expensive or the quality of the product must be sacrificed.

Foreign auto makers looked what the Americans were doing and learned from them. They started building cars that were of a higher quality than their previous models, marketing improved and their employees often made less money and had fewer benefits than their American counterparts. This environment allowed these manufacturers to create a quality product for less money.

The American consumer found a quality that was improving and at a better price so they jumped towards the newcomer. The American auto manufacturers weren’t able to adapt fast enough and this cost them market share.

Your consumers expect both quality and a good price. If you cannot stay ahead of your competition, you will see your market share suffer.

Computer Manufacturers – This is a very competitive industry with slim profit margins and very few ways the hardware costs can be reduced. Because the hardware costs are similar for all computer manufacturers, the cost savings MUST come in other ways. This means buying more hardware to get better prices, paying your employees less or saving on support.

A number of manufacturers chose to outsource their support to foreign countries and the language barrier often angered their buyers.

Imagine buying a computer that was assembled in the United States and needing support for it so you call the telephone support center and end up speaking to a person that can barely speak your language AND has nothing more than a manual to answer your questions. You get frustrated and hang up only to call again to repeat the process with another support person that has English as a second language. The process will be repeated until you tire of it and either give up or ask for a supervisor.

This or a similar scenario has been repeated many times with customers from more than one computer manufacturer. These frustrated customers often tell their friends about the bad experience and buy their next computer from another company hoping for different results.

In the 2 examples above, you have seen either customer service or product quality sacrificed as ways to hold down cost. The results of both of these methods have meant a reduced market share for the businesses that made poor decisions. I know we need to be sensitive to the consumer demand for low prices BUT we need to find a way to educate the value of a quality product and good customer service over inferior products and poor customer service.

Your business may deliver a physical product, a service, a digital product or a combination but ALWAYS keep in mind that your customer expects a reasonable price, a quality product and great service before, during and after the purchase.

Have You Noticed This Business Trend?

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