Don’t make your customers pay for your reduction in cost

Don’t make your customers pay for your reduction in cost image

When companies decide to make customers do things they could solve, but choose not to, they are in effect externalising their own cost. Don’t make your customers pay for your reduction in cost. Instead, see it as a marketing opportunity.

Think about it this way: when a supermarket makes you self-checkout, they are making you spend time and energy instead of hiring more staff and taking on that cost themselves. When getting a contact centre employee from the lowest bidding external firm and waiting in line forever (although ‘your call is important to us!’), that means the company puts their service cost on you. And when a furniture and appliance company ships unassembled products, they are again making you spend time and energy they would otherwise have to bear themselves.

The result is very similar to the debate about enterprises polluting the environment and society at large having to pick up the cheque. If you look at it on an aggregate level and examine the cost and effort by customers and society, you will realise that it is far higher than what these enterprises would be paying if they did things ‘right’ on their own. Yet they choose not to do so, because of their desire to reduce cost. After all, why spend your own money when others can spend theirs?

Companies generally only have a few levers to increase profits – decreasing cost and increasing sales being the main ones. Lowering the sticker price of your services by cutting cost seems to achieve both, as more people buy the product or service with a lower price, and you earn more per sale. But when you are simply shifting the cost from your own company to that of your customers, it eventually has the opposite effect.

Now, I am not going to propose companies and enterprises move to a total cost model, because it isn’t going to happen by itself. But what I would suggest as a minimum is: if the cost for your product or service borne by everyone in total is higher than what it would be if you, as much as possible, took on all such cost yourself – consider internalising that cost as a marketing expense.

Looking at it from a marketing perspective, it makes sense to staff your supermarket checkout lines instead of directing customers to self-checkout. It is also why you should hire for peak demand and not normal demand. And it is why you should always ship fully assembled. Because doing these things right is a form of marketing in itself – the quality of your service has an impact on your reputation, which will eventually have an impact on your revenue.

In the end, the mantra for every marketer should be: make your advertising memorable, don’t make me think (or spend time and effort) to buy your product and make it easy to use. When you get that right, advertising to drive business goals will become so much easier.

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