“Cheap is Beautiful?”
Over the last couple of years there has been a slogan in Germany that was quite popular; at least for a while: Geiz ist Geil ! Quite difficult to translate but basically saying “Cheap is beautiful”. Terms like added value and problem solutions were considered not to be as attractive to the customer so the focus was purely based on offering the lowest prices and driving sales through discounts. Looking at other markets in Europe, such as the UK, they have to some extent been developing along the same lines, so this is actually not only a German phenomenon.
A lot of companies in Germany have followed this slogan and the short term effect has been to increase business volume; but there have also been dramatic negative impacts on customer satisfaction. Many companies are now struggling because they seriously under-estimated the fact that customer requirements are much more complex than they sometimes appear to be.
It’s an old story but sometimes it is worth being reminded that at the heart of all successful business activities there is a customer with specific needs and a service provider who has got the right answers and solutions to fulfil the customer’s requirements.
From a strategic point of view a successful supplier needs to satisfy a multitude of different aspects that make up the customer’s requirements and expectations. Here are some examples of the most important factors:
Economical Aspect:
This is not a synonym for cheap, however the customer’s budget situation is important and needs to be considered and compared with their specific needs. We have to identify exactly what the parameters of a customers requirements are before suggesting any product. What we would like to sell to the customer is not relevant, we must focus on providing the customer with the right product or service to suit the specific requirements of that customer. In some instances it can make sense to step back and walk away if your product or service is not the right one for the customer rather than sell them something that you know is unsuitable.
Ecological Aspect:
Environmental compliance is getting more and more important and everybody has to take individual responsibility for it. The beauty of current and emerging technologies is that you can often save money for a customer when you are helping them to be more environmentally friendly; for example new Energy Saving Management Systems built into office products such as shredders save energy. This is good for the environment and saves money for the customer by reducing their energy bills. The interactions between economical and ecological aspects of products are providing a big opportunity for companies who are thinking about the future!
Quality Aspect:
From a manufacturers point of view good quality may cost a little bit more. However, by putting the investment in, and building quality into the whole production and aftersales process at the beginning of a product’s life-cycle, in the long term saves money and vastly reduces noise from unsatisfied customers when you have to face and cope with a high volume of customer complaints. The consequences of inadequate investment in quality are that a customer looses faith and confidence not only in the product but in the brand in general. The life-time costs of the product from manufacture to recycling, as well as soft factors such as customer satisfaction need to be calculated - not only the first investment to physically make the product.
Support & Advice Aspect:
This is crucial for a longterm customer relationship. The sales process does not stop after invoicing and getting the money in but continues by offering a reliable after sales service and quick response times when the customer needs help and advice. This is the beginning of the next sales process, even a breakdown can be an opportunity for an improved relationship because the customer feels safe, comfortable and secure in the knowledge that help is just a call away!
At HSM we try to combine and implement all of these multi-dimensional aspects in our business plan and we strongly believe that customers appreciate this kind of added value. A successful business is not about selling at a discount or offering the cheapest but offering a one-stop-shop to fulfil the complex requirements of customers.
Thomas Graf
Burntwood, 07th May 2008
