“Find a friend and you will find a treasure; but, find a treasure and you will see how many friends you will get!...” This nice saying was printed on a good night note that was placed on my pillow at the Quinta Real hotel in Monterrey Mexico. The note was neat, but was not the focus of my attention. What did grab my attention? The piece of chocolate placed next to the note. I stared at it with amazement trying to remember the last time I was provided with a good night chocolate by a hotel. The good night chocolate is a long gone practice of many hotels. It joined the thousands of other cost savings activities and items that were scrapped in the name of cost reduction and profit maximization. I miss the chocolate. It was a small thing, but somehow managed to communicate caring. Now all I find on my pillow is a shrewd reminder that it is time to use the hotel laundry services.
The chocolate was a small, very inexpensive item that the finance bureaucrats took away from us. It celebrated the last frontier of cost cutting they identified. They also failed to see the damage they inflicted on loyalty and customer preference. Joining the missing chocolate are a host of other small touches that made a big difference, each in their own small way. Replacing another small touch is the bizarre practice of having a player piano instead of a live musician playing a real piano. Whenever I see one I wonder “who are you fooling?” Why bother with a piano if you are going to have automated music; you might as well replace it with a boombox. You are not fooling anyone and you cannot fake the personal human touch and the virtues of a real piano player. There is no replacement for those small touches. By removing those touches all you do is dilute the customer experience and make it bland, vanilla and boring. They are the invitation for customers to search for other experiences, as yours become more cost efficient. I wonder if all the cost reducers will ever actually measure the impact of their actions. This is the one secret that no one in the company wants to talk about. I suspect that they know the truth, which is they are hurting their customers and long term prospects, but prefer to ignore it and hope that it will go away on its own.
But all these actions do not bother me as much as the ongoing complaints about products and services reaching commoditization stages at a much faster pace. Who is causing it? I would argue that it is the companies which are moving toward cost efficiency too quickly rather than providing innovation and adding more value.
At the heart of commoditization, you have several choices.
1. You can focus on adding value before the purchase and participate in the product design and selection. This way your knowledge and product become customized and specialized and, as such, are not commodities. Adding value before the purchase point allows you to differentiate yourself before the competitors gets into the picture.
2. Add value after the purchase – Enlarge your definition of value by adding more services after the purchase point to ensure a complete experience with a longer staying power. By doing so you save your customers time and money and provide a holistic experience that is worth a premium price.
3. Innovate New Products – Learn your customers' experience and innovate brand new products that are different and surprisingly pleasing. Give your customer something beyond their normal expectations and you will be able to command a significant premium. Do not follow the old beaten path of incremental changes and improvements, but go the max. Take a risk and bring a new product out there. The new product, if it matches the customer experience, will command a premium price and become a strong preference.
4. Discount – Now this is one practice you do not need much help with. This is the default solution of many lazy executives who prefer discounting the sure thing over raising and developing something new. The reward is equally unimpressive. Discounting sends the message to your customers that you surrender and are out of new ideas. That is it. You are giving up, and soon your customers will too.
Be generous with your customers. Companies have lost the art of generosity. We forgot how to surprise our customers with small touches such as chocolate. As for the efficiency argument often voiced by finance people, I would be more inclined to accept it if they actually knew the impact. Often efficiency moves are done without measuring the impact on the customer. The assumption that the customer will not notice is incorrect. The customer is more attentive to the small details than ever before and in the world of even faster commodities, it is actually the small details that make the difference, are memorable and impact loyalty. So it is expected, especially from the numbers people, to know their numbers before moving in on my chocolate.
Commoditization is a threat almost every product and service face today. Commoditization comes faster then ever before and dilute our values quicker then we can maximize revenues. The panacea for it is generosity and innovation. Be generous with your knowledge and share it with customers to ensure that you differentiate yourself through this expertise. General Electric recently started to offer free advice on its legendary methods, such as six sigma, to help its customers be successful. This generous move creates customer “debt” which is repaid through repeat and greater business with GE.
Generosity is the weapon against commoditization. Share more and add more value. Providing less is not a wining strategy as it forces customers to both pay less for your products and at the same time search for better more generous providers. The chocolate is a symbol. It is a symbol of how much you care. If you ever dream about customer loyalty and decent margins, make the first step and bring back the chocolate on the pillow.
Lior Arussy is the president of Strativity Group, Inc. and the author of The Experience! (CMPBooks 2002) He can be reached at lior@strativitygroup.com