Coen Welsh | Aug 9, 2017 | 0
The customer is not the king
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I’m not entirely sure how memory works or how it is formed, but what I do know is that if the moment is right, and you say something simple that matches the moment, then it will be remembered and repeated by just about everyone. If I understood exactly what it was, I would own everything.
Of course, what is said doesn’t have to be entirely clever, Remember that ‘Whaaasssuuup’ thing? Everyone remembers that. Everyone repeated that. Can you remember what was the name of the beer? Don’t worry if you can’t. I can’t either.
I watched the ad a couple of times then irritation crept in. It was a dumb way to say the thing.
There’s another expression that makes me homicidal: ‘the customer is king’. It’s never uttered by people who have strong, solid lines of business. It’s always uttered by people who are uncertain. No, the customer is not the king. For a start there is only ever one king. Secondly, grovelling to everyone is no way to do business.
What does the customer want? The customer wants more, for less, preferably delivered for free. When the customer gets bored with what he or she is getting, the customer wants something new or something else.
The ideal control for this lies in the economics of the transaction, the exchange of value. In a perfect system, this would entail a series of swaps, but ideals are rarely reality. Given the drive to win customers, there are a host of complications, including pricing strategies which reduce profits, massive amounts spent on advertising, innovation, product add-ons, product reinvention and, of course, servile grovelling.
Barring the later, there are times when some of this is necessary however, a lot of the time, many of the efforts to win customers reduce the optimum value of the product or service, while driving up the costs.
The damage arises when the customer senses the ability to negotiate. At that point the customer will naturally begin to seek price concessions or product add-ons to gain value. The seller is lured by the prospect of the sale, and will be inclined to reduce the price, often with a sense of insecurity.
In the process of bargaining the price-value perception is damaged. Very often a product is judged not by obvious quality but the price premium. By discounting outside of the accepted circumstances of end-of-line, promoting trial or limited attacks on competitors, the perception of value of a product or service can be damaged.
The second threat in negotiation lies in add-ons or product redevelopment. The customer will naturally seek a product that is best configured to his or her needs and the seller will want to make the offer, however this can entail a loss of focus. In order to produce a product or service, the enterprises finds the optimum production mix. An add-on or unplanned evolution can damage the mix and the viability of the line, again with profitability rendered tenuous. The focus of the enterprise is one of the brand assets that is well worth preserving.
The most sensible solution is to communicate well. Describe what you are prepared to offer in terms of product and / or service, and stick with that. Obviously there have to be standards of quality, but there is little point in going to the effort, if the profitability of the thing is sub-optimal.
In the case of a large corporate, the offering is easily justified by corporate philosophy, particularly if it framed in the context of a statement of values.
It becomes a bit more difficult with small enterprises, and particularly new ones which are beset with doubts and cash flows that are not secure.
The solution lie in simple relationship techniques, statements of what the entrepreneur can be reasonably expected to offer. It is also critical to be aware of how an amendment of the transaction can impact the bottom line.