Is it just me?
or
Is there a time when “good enough” isn’t “good enough”?
What is the lesson for Revenue Science™?
Lately, there have been a lot of books that talk about disruptive business models ripping business way from the current provider through a combination of low price and “good enough” product or service offerings. Just think what if those current providers’ business models were also based on “good enough.”
I grew up in Michigan and in the car business. Besides cars, Michigan had something else it was famous for (at least in Michigan), and that is Vernors Ginger Ale, and today it was Vernors that launched me on a day of learning about “good enough,” the Cost of Chaos and Revenue Science™.
I went to my local Safeway store (a large grocery chain) to buy Vernors. When I found it, there were only two 12 packs with a sale tag stating “if you buy 3, your price is $2.99 each.”
Since Safeway acquired the store, the story is always the same. There are 2 or less on the shelf and the pricing is to buy 3 or more and sometimes “buy 3 get 3 free.” For 4 years, this practice required me to search the store for an employee who will search for the balance of 12 packs needed to get the benefit of the best price.
Today I was finally done with this silly practice. I explained the problem to the manager. He, of course, gave me excuses about why, but when I asked him why for 4 years his staff kept putting pricing on the shelf with clearly not enough products to support the offer without doing something about it – he went silent.
Next, I went to Staples (another multibillion-dollar company) to buy 1 mouse pad and recycle 4 used ink cartages. Of course, no one helped me (If someone would have helped me quickly, I would have bought a new Microsoft tablet), but I found my mouse pad and went to check out. The mouse pad was listed at $5.99. The first amount I was asked to pay was $76.55. The cashier and I talked, and she decided to give me recycle credit for the empty ink cartages instead of charging me for them a second time. Next, the price on the monitor was $7.85 which seemed high even with the high Phoenix sales tax. With additional conversation, we finally got to a price of $6.67 which at least seemed closer.
Next, I needed to get gas and went to QT (another HUGE company) that like the previous two tries to be “good enough.” Today I got gas, went inside to get my retirement plan funded (lottery tickets), and then returned ready to rush to pick up my grandkids. However, the screen on the pump said to go back inside for a receipt. So I went back inside to get in a long line and got the receipt I should already have.
Since I was rushed, I was hoping to get these tasks done quickly. Since I just read a book about “good enough” as a strategy for disruptive products and services, these experiences became an important lesson.
All three of the businesses are B2C and highly competitive working on small margins. Here at The Revenue Game, we have written about the Cost of Chaos for producing revenue, and today’s lesson was a great example of that chaos.
Safeway with this pricing model guaranteed high costs of operation, lower gross revenue, and may also lose additional revenue for every customer who gets tired of not being able to get what they need without finding staff and waiting. Not to mention the shelf is now bare, and the next customer will find NONE. Worst of all Safeway is training their staff to mark prices that make no sense at best and looks out of integrity or stupid at worst.
Staples missed the opportunity to sell me a new tablet and now have me checking all details at the register, and I am skeptical about making referrals to the “Easy” company since they aren’t very easy. They will have to buy a lot more ads to convince me.
QT got my business today because I thought they would be fast to get in and out of at a reasonable (not the lowest) price. Next time if I don’t think QT is easy and fast, I will go to the lowest price. Keeping receipt paper in the POS device at the pump is a simple way to reduce the Cost of Chaos, and to keep customers returning.
Imagine if these 3 current providers showed me this many points of Revenue Chaos in less than 90 minutes, how much more there really is, and how large the opportunity is for reducing the Cost of Chaos while growing the topline.
B2C organizations like these sell the exact same commodities to the same group of buyers with the same expectations of getting the same problems solved over and over again. These B2C companies have all had many years to develop and implement policies, processes, systems, technology, training programs, etc. to drive out the cost of chaos. But since their goal seems to be “good enough,” they are still full of cost, missing out on topline growth and pushing away great long-term customer relationships, while opening the door for competitors.
There are places like Nordstrom’s, Google, The Ritz and Johnson and Johnson, and IBM that don’t settle for “good enough.” These types of companies aren’t perfect, but they don’t settle for “good enough” and have high valuations with long histories for growing profitable revenue.