Trade offs during down turn?
"A house divided against itself cannot stand." - Abraham Lincoln
Often times when an organization is going through a down turn either in it's, business cycle, industry cycle, or economic cycle it is faced with trade-offs that may be greater than they realize during more robust cycles. According to columnist and business book author Kevin Maney, who recently wrote Trade-Off Why Somethings Catch on and Others Don't (which will be reviewed in January's Just-In Newsletter), that business must choose between Quality and Convenience.
In down market moments it is tempting for businesses who stand for quality to give up some of that quality in an effort to maintain margin. This temptation lures the organization to reverse their position in the market to one of convenience. Tiffany once tried that by selling trinkets for under $100 and it began to destroy their upscale brand. What is at risk is the brand promise to your customer.
Perhaps you have seen, during the holidays what I have experienced while vacationing in Steamboat Springs, CO during Thanksgiving and Holiday Brake. I have seen businesses that are suffering from knowing how to keep their brand promise to their customer. They are focusing on margin while losing focus on the quality that built their reputation. This puts organizations at risk of not distinguishing for the customer between the quality and convenience trade-off in which they were known.
I have been skiing since I was four and a Professional Ski Instructor for many years. Last winter I wore out my ski boots so it was time to go shopping. After a good year in the coaching business I decided I would spoil myself and went to the highest quality place to buy boots, Surefoot. Before I went into the shop I did my pre-shopping on-line to understand more about boot fitting and what boots I might find that fit my feet (which are wide and have a high instep) hence the reason for custom boots. There were a number of boots on sale - this in itself is unual for SureFoot not known as a discounter or high convenience. There customer promise is no matter what it takes we will get your boots to fit right.
In entering the shop and it was clear there were no sales. I sat down and began being fit to a pair of boots. The guy was an experts, expert. And before the filling process began to customize the boots I asked, "Are these boots on sale because I thought I noticed them on the web on sale." He responded," no, if you want a boot that is on sale I can find one for you but then we will have to do all this modification and I don't think you will be happy." Along the way he up-sells me into heaters and then tries to sell me , orthodics for my tennis shoes, a box of socks (12 pair of ski socks - at first I thought he was kidding until I saw them up at the registerand more stuff! Yes an entire box of sox! By this time I was feeling like I went in to Tiffany's to buy quality and I was walking out of the place feeling terrible, like I had been slimmed. When I got back home I looked up the boots on-line and sure enough they were on sale.
During the holidays I went in and asked if they would re-emburse me on the difference. The manager said that the website pricing and store pricing are never the same. I simply said that may be the case and as a customer I see you as one brand. You have to make the decision what you want to be one brand or two and then let your customers decide on where they want to shop. They gave me store credits in the end, which I did not need or want and tarnished there brand forever in my mind. I use to think of them as a high end - high quality firm and yet they treated me like a ski shop of convenience and charged me twice as much like a luxury brand. During positive economic times this might not have been the case. It will take a lot for them to win me back to seeing them as High Quality.
Another example of this Trade-off happened the other evening when dining at one of the major hotels in town. We went to have dinner at the grill only to find it closed which left us the upscale dining area which they told us would have many of the same menu items. We walk into the fine dining area and to our surprise the lights not dimmed as usual but turned bright to give more of a family atmosphere feeling. We sat down and noticed that indeed as well as the high end dinning (High Quality) they had menu items from the grill (High Convenience). What surprised us and every other guest who were looking for the high convenience (Eat and Run) that the service was calibrated on High Quality and slow service. There was not a table around us that the manager and wait staff had to repeatedly apologize for during the meal. It would appear that the company wanted to reduce cost by closing one of the kitchens early and decided to blend the two restaurants traffic together. The issue with this is that when you try to do both High Convenience and High Quality you do neither very well.
In these economic times you need to trim expenses but not so you tarnish your brand and lose your customers for good. It will be some time before I will recommend either Sure Foot or one of these restaurants to anyone - during a good or bad cycle. Do you know which customer you are trying to serve?
Often times when an organization is going through a down turn either in it's, business cycle, industry cycle, or economic cycle it is faced with trade-offs that may be greater than they realize during more robust cycles. According to columnist and business book author Kevin Maney, who recently wrote Trade-Off Why Somethings Catch on and Others Don't (which will be reviewed in January's Just-In Newsletter), that business must choose between Quality and Convenience.
In down market moments it is tempting for businesses who stand for quality to give up some of that quality in an effort to maintain margin. This temptation lures the organization to reverse their position in the market to one of convenience. Tiffany once tried that by selling trinkets for under $100 and it began to destroy their upscale brand. What is at risk is the brand promise to your customer.
Perhaps you have seen, during the holidays what I have experienced while vacationing in Steamboat Springs, CO during Thanksgiving and Holiday Brake. I have seen businesses that are suffering from knowing how to keep their brand promise to their customer. They are focusing on margin while losing focus on the quality that built their reputation. This puts organizations at risk of not distinguishing for the customer between the quality and convenience trade-off in which they were known.
I have been skiing since I was four and a Professional Ski Instructor for many years. Last winter I wore out my ski boots so it was time to go shopping. After a good year in the coaching business I decided I would spoil myself and went to the highest quality place to buy boots, Surefoot. Before I went into the shop I did my pre-shopping on-line to understand more about boot fitting and what boots I might find that fit my feet (which are wide and have a high instep) hence the reason for custom boots. There were a number of boots on sale - this in itself is unual for SureFoot not known as a discounter or high convenience. There customer promise is no matter what it takes we will get your boots to fit right.
In entering the shop and it was clear there were no sales. I sat down and began being fit to a pair of boots. The guy was an experts, expert. And before the filling process began to customize the boots I asked, "Are these boots on sale because I thought I noticed them on the web on sale." He responded," no, if you want a boot that is on sale I can find one for you but then we will have to do all this modification and I don't think you will be happy." Along the way he up-sells me into heaters and then tries to sell me , orthodics for my tennis shoes, a box of socks (12 pair of ski socks - at first I thought he was kidding until I saw them up at the registerand more stuff! Yes an entire box of sox! By this time I was feeling like I went in to Tiffany's to buy quality and I was walking out of the place feeling terrible, like I had been slimmed. When I got back home I looked up the boots on-line and sure enough they were on sale.
During the holidays I went in and asked if they would re-emburse me on the difference. The manager said that the website pricing and store pricing are never the same. I simply said that may be the case and as a customer I see you as one brand. You have to make the decision what you want to be one brand or two and then let your customers decide on where they want to shop. They gave me store credits in the end, which I did not need or want and tarnished there brand forever in my mind. I use to think of them as a high end - high quality firm and yet they treated me like a ski shop of convenience and charged me twice as much like a luxury brand. During positive economic times this might not have been the case. It will take a lot for them to win me back to seeing them as High Quality.
Another example of this Trade-off happened the other evening when dining at one of the major hotels in town. We went to have dinner at the grill only to find it closed which left us the upscale dining area which they told us would have many of the same menu items. We walk into the fine dining area and to our surprise the lights not dimmed as usual but turned bright to give more of a family atmosphere feeling. We sat down and noticed that indeed as well as the high end dinning (High Quality) they had menu items from the grill (High Convenience). What surprised us and every other guest who were looking for the high convenience (Eat and Run) that the service was calibrated on High Quality and slow service. There was not a table around us that the manager and wait staff had to repeatedly apologize for during the meal. It would appear that the company wanted to reduce cost by closing one of the kitchens early and decided to blend the two restaurants traffic together. The issue with this is that when you try to do both High Convenience and High Quality you do neither very well.
In these economic times you need to trim expenses but not so you tarnish your brand and lose your customers for good. It will be some time before I will recommend either Sure Foot or one of these restaurants to anyone - during a good or bad cycle. Do you know which customer you are trying to serve?
Labels: strategy
posted by GCohen at
3:03 PM
0 Comments:
Post a Comment
Subscribe to Post Comments [Atom]
<< Home