Sourcing & Services Matter: Why Price Alone Won’t get your Customers to Stay

Price wars are a st andard challenge of marketers, whether working on the retail or manufacturing side. They have become more frequent in the last couple of years following the recession. Consumers are today even more price sensitive and are searching for great value and even greater deals. However as most retailers are now claiming lower prices, it becomes less of a differentiator. I therefore read with interest that Walmart is moving from its emphasis on low prices to one on sourcing.

Walmart gives serviceIn 2007 Walmart replaced its “Always Low Prices, Always” slogan by “Save Money Live Better”, so this new push with the message “ Made in the US” is worth noting. This latest announcement is made in conjunction with its promise of an additional $10 million in grants to non-profits focused on “on-shoring” manufacturing efforts.

 

Target gives serviceTarget announced last October its plans to introduce the “ Target Sustainable Product St andard” which was developed to “establish a common language, definition, and process for qualifying what makes a product more sustainable.” Target will ask vendors to complete an assessment that is designed to determine a sustainability score for their products. Products will be assigned a score of between zero and 100 “based on the sustainability of ingredients, ingredient transparency, and overall environmental impact”.

 

Both these initiatives show a move to a more caring retail environment. A study run by the Boston Consulting Group at the end of last year, found that more than half of companies with sales greater than $1 billion are actively planning or considering to bring production back from China to the U.S. This rise from a mere 37% just six months earlier shows a significant shift in American sensitivity.

 

Jumping across the “pond” to the UK, something similar is happening in terms of shifting attention from price to value, or should I say values?

 

Tesco gives serviceTesco recently introduced their “ Price Promise”, a pledge to match the price of a basket of both own-label and br anded products at Sainsbury’s, Asda and Morrisons, or to offer customers a voucher at the till for the difference. Sainsbury’s has appealed to the Advertising St andards Authority, arguing that this claim was misleading customers. However, their wrath was, in part at least, sparked by the fact that this new Tesco pledge came in response to their own highly successful “ Br and Match” scheme, although the latter only compares br anded products.

 

Sainsbury's gives serviceSainsbury’s has now retaliated with the launch of a new campaign with the title “ Same price, Different values”, a possible dig at the fact that although Tesco won the ASA appeal, Sainsbury’s might appeal as they claim that their own-label products cannot be compared since many are locally produced. To support this position, the National Farmers’ Union has now taken a stance, backing Sainsbury’s. In light of last year’s  horse-meat sc andal, the values of retailers and the sourcing of food has become even more crucial, and Sainsbury’s sees this latest row as an opportunity to emphasise the difference between itself and Tesco. Continue Reading

The Minimalist Guide to Customer Satisfaction

Are you looking to provide the best Customer Satisfaction and Experience with the minimum amount of effort? If so, then read on.

During lunch with a friend this week, we were discussing how apparently impossible it seems for many retailers to satisfy their customers. We exchanged recent experiences about our own customer satisfaction, or lack thereof, his concerning the in-store purchase of a radio, mine during a sales pitch from a local telecom company.

We laughed together as we realised that neither of us had bought the product / service we had the intention of purchasing because of the “salesman’s” basic errors. When we realised this, we started to enumerate what potential customers are looking for, when making a purchase. Hopefully the list we developed will serve you in providing better service and satisfaction to your own potential clients.

#1. Underst and who your potential customer is

If you don’t know who the person with whom you are discussing is, then it is unlikely that you will be able to effectively empathize. Start by listening to them, to better underst and who they are and what they could be interested in buying from you. Only then should you propose a solution, or perhaps a choice of two. Remember too much choice is likely to result in no sale too. Read more about this in the Columbia / Stanford paper “Choice is Demotivating”

#2. Underst and what your customer wants

In my case, the online salesman started by telling me there was a great offer, which included all local calls for free. When I explained that I rarely called others, preferring to use VOIP services such as Skype or Google Talk, he then changed the offer to a higher priced one that included making calls when I was traveling. If he had simply prepared for the sales pitch, by reviewing my past behaviour, over the previous 6-12 months, he would have been better able to propose a more attractive new service to me.

As it was, his proposals meant my spending more money for less service, which of course was not of interest. In addition, after three attempts at proposing new services I, like many customers I imagine, had lost interest in listening to him. He didn’t know how to excite me and spent useless time in a conversation that had no value to either of us.

Again, listen and learn before proposing a product or service, to ensure you are making the one best possible suggestion. If you just keep throwing offers at a potential client in the hope that one will stick, even ones with potential are likely to go unheard.

#3. Underst and what your customer needs

In many cases, a potential customer wants something different from what he actually says he needs. Remember one of many famous Henri Ford quotes:

“If I’d asked customers what they wanted, they would have said a faster horse”

Underst anding the need that is behind the claimed want takes you half-way to actually satisfying the desire of the customer. Continue Reading

How to Innovate better than Apple

Last week I gave a lecture to a group of Executive MBA students at Miami University. It was a fabulous new experience for me, having only done lecturing in European Business Schools until now. There were lots of great questions and many comments about why organisations do what they do when looking to innovate.

It’s always easier to identify the sub-optimal processes a company uses when you’re on the outside and even easier to suggest possible changes that are needed, but when you are in the heat of the action, it is not so obvious.

I therefore thought it would be useful to list some of the ideas we came up with, in the hope that it will help all those challenged to improve the status quo within their own organisations and to provide some new ways to look at innovating outside the box.

 

#1 What business are you in?

When you are looking to innovate, instead of starting with your own current technology and skills, or products and services, how about taking a step back and thinking about what business you are really in. Lego is a great example; they realised that they were not selling (just) toys; they understood that they were in the imagination business. Which business are you in? Do you have an opportunity to redefine it? Here are some ideas to get you started:

  • Food: Family Time, Neutraceuticals – offer family sized portions, children’s play areas, partner with another industry as Nestlé did with L’Oreal when creating Inneov
  • Cigarettes: Personal Pleasure – tobacco companies should be going far beyond their current simplified expansion into electronic cigarette offerings
  • Alcohol / Beverages: Fun / Relaxation: br and lounges, music, video or internet services
  • Pharmaceuticals: Wellness – instead of curing or treating, offer prevention

 

#2. Can you add something new to an existing product?

Professor Steenkamp Knox Massey Distinguished Professor of Marketing and Area Chair of Marketing at Kenan-Flagler, proved back in 2007 that at least for Fast Moving Consumer Goods, small innovations (which are often referred to as renovations) can be just as successful as large step-changing breakthrough innovations. His research came to the conclusion that it was the ones that fall in the middle of “newness” that don’t meet with significant customer success. So what small changes can you make to your current offer to make it more appealing?

How about adding sound to a food, as Kellogg’s did with their Rice Crispies or Nestlé did by adding a layer of chocolate to the top of their cream deserts in France? Or what about adding smell to your outlet, as bakers and coffee houses already do these days, or Singapore Airlines did many years ago? A small change can have a big impact, especially if tapping into a different sensory perception from those customers are used to having stimulated.

 

#3. Can you add a service to the product?

Some products are actually designed to work with services, which are quite often the more expensive part of the sales equation (e.g. Continue Reading

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