Posts Tagged ‘price’

Two factors comprise the market potential for any product or service – demand and attachment.  Demand is about quantity – how many people want what you sell.  Attachment is about quality, how much do people want what you sell.

There are some products and services for which there is obvious demand.  For example, almost everyone needs a grocery store, a cell phone and the occasional cup of coffee. Universal demand creates extraordinary opportunity.  But universal demand also spawns burgeoning supply and intense competition.  The harsh reality is, in virtually every sector, supply exceeds demand in a way that isn’t cyclical.  We’ve crashed full speed, head first into a world where we have more stuff to sell than people want to buy.  And yet, a number of companies in highly contested categories are growing dramatically, even exponentially.  How do they do that? What’s their secret?

Attachment

Their secret is attachment.  Attachment is about how much your prospects and customers value the product or service you provide.  It’s about the extent to which you improve their lives.  And at the highest level, it’s about how your product or service defines or supports your customer’s aspiration and self-image.

There are five fundamental value platforms – what you might think of as the five basic reasons that any customer is motivated to make any purchase.  They are:

  • Price/Value
  • Location/Convenience
  • Quality/Functionality
  • Style/Status
  • Experience/Lifestyle

The platforms of Price/Value and Location/Convenience are rational platforms and very seldom create much attachment.  If a Walmart customer discovers that Target has a lower price on laundry detergent this week, that Walmart customer will probably hot-foot it over to Target and load up.  She’s not attached to Walmart, she’s attached to the low price, which is relatively easy to replicate.

At the other end of the spectrum, a Nordstrom’s shopper who is motivated by Style/Status or Experience/Lifestyle is unlikely to darken the door of JC Penney, even if JC Penney has the same item at a lower price.  Style/Status and Experience/Lifestyle are emotional platforms.  They have the potential to invoke powerful feelings and create strong attachment which are almost impossible to replicate.

Effect of Attachment

Let’s think about the effect of attachment in one of the categories with universal demand, grocery stores.  Have you ever met a customer of Trader Joe’s?  They are borderline rabid.  Given half a chance, they’ll regale you (endlessly) of their Trader Joe’s favorites:  Two Buck Chuck, Green Papaya Salad, Mango Butter or Chili Feta.  To say these folks are attached to Trader Joe’s might be the understatement of the century.  And that attachment translates directly into revenue.  Think about this:  According to Fortune Magazine, Trader Joe’s averages $1,750.00 per square foot in sales.  That’s more than double the sales per square foot of competitor, Whole Foods Market.

Now let’s turn our attention ro cell phones.  Ever try to pry an iPhone out of the hands of an Apple fanatic?  That’s attachment in every sense of the word, attachment that has led to astonishing growth for Apple.  Since being released in 2007, well over 100 million iPhones have been sold and Apple has become the most valuable tech company on the planet.

Attachment means your product has become an essential, even indispensable, part of your customer’s life.  When that happens, you have a shot at exponential growth that few can match with, let alone surpass!

Quality #9: Quality of Relationship and Communication

by Tanmay Vora on November 19, 2009

Welcome to the ninth post in this 12-part series on QUALITY, titled #QUALITYtweet – 12 Ideas to Build a Quality Culture.

Here are the first eight posts, in case you would like to go back and take a look:

  1. Quality #1: Quality is a long term differentiator
  2. Quality #2: Cure Precedes Prevention
  3. Quality #3: Great People + Good Processes = Great Quality
  4. Quality #4: Simplifying Processes
  5. Quality #5: Customers are your “Quality Partners”
  6. Quality #6: Knowing what needs improvement
  7. Quality #7: Productivity and Quality
  8. Quality #8: Best Practices are Contextual

#QUALITYtweet How NOT to deliver total quality:

Focus on quality of product without focusing on

quality of relationship and communication

In an increasingly service oriented business environment, what you sell is not just a product but an experience. People may forget explicit details like specifications or price, but never forget the experience they had when they bought the product.

Experience extended to end-customers largely depends on attitude, values and behaviors of each individual who interacts with a customer. One of the most important challenges is to keep this group of people aligned to organization’s quality system and values.

Communication is the backbone of organization’s success in marketplace. Effective internal and external communication within an organization ensures that:

  • Your employees understand your value system
  • They understand what is expected out of them
  • They are motivated to walk an extra mile to deliver excellent service
  • Your customers know your value system
  • You build trust-based relationship with your people and customers with consistent communication
  • Manage expectations with your people and customers.

How can you motivate your teams to deliver excellent customer experiences through simple communication processes? Here are a few ideas to consider:

Train:

Training your internal team can be your biggest tool for clearly explaining the process of communication and how important it is for the business. Consistently train your people on value systems, leadership, quality management, effective communication, what works in customer management, what not, expectations management and cultural aspects of client’s location. Clients also need training on how best they can use your products. Companies organize client workshops to educate them about different aspects of product/service. Train consistently to streamline communication.

Support:

Once your people are trained, you need to support them in doing right things. Supporting can be a simple act of being there with your people when they talk to customers. Help them improve and share feedback on how are they doing. Some companies may see this activity as an “overhead” but it is an “investment” in your people.

Monitor:

Once you have confidence that your people will be able to do the right communication, monitor them. Take periodic feedback from them. Communicate consistently to ensure that they are motivated enough to continue doing it.

Delivering consistently superior experience to your customers (via quality of products and communication) results in a long-term relationship based on trust. In business, as in life, relationships are crucial. Quality of your relationships is as important as quality of your products, or perhaps, even more.