by: Robert Bradford, CEO, CSSP, Inc.
Stealing from customers. Some would tell you it’s the secret to profit in today’s economy. If you are only worried about the next quarter, it is. You can always make more money in the short term by delivering a little less than your customers expect. For example, if I am making automobiles, I can use less steel, making the body lighter and, unfortunately, less durable than previous models. Customers won’t know the difference until years later, when that model starts to fall apart faster than its predecessors. Did I get the same price from the customer as I did for the earlier, more durable design? You bet! So why wouldn’t I continue to behave this way, cutting little bits of value out of my product or service in order to fatten up the bottom line at the customer’s expense?
Obviously, this strategic approach starts your company down the road of commoditization. If you are pursuing a commodity strategy, you should already be driving towards the “no-frills” experience your customers are willing to pay for. But for a company with a specialty strategy, this amounts to trading some of your specialty status (usually irrevocably) for short-term profit.
What do you think? Is this a viable strategy? If I’m an executive in a big auto company, who can’t even trust that I will have a job three or four years from now, why would I care? Are you adequately addressing this issue in your strategic planning process?