Written by David Tebbutt, PC Dealer 09/89 item 01 - scanned
The profit and loss of customer care
As a writer, I don't spend much time on spreadsheets. This weekend, however, I decided to take a peek at Lotus' latest 1-2-3 offering, release 2.2. After playing with pretend models, I soon felt the urge to use the program in earnest. I decided to build a model of my wife's small business. It contained the cost breakdown of each type of product, the sales of each product and the operating expenses of the company.
I'm sure this is all old hat to you, but it highlighted a particular problem to me. From time to time my wife receives orders which can't be dealt with in the normal way. Perhaps she decides to reward a frequent buyer with a special price, or she accepts a trade-in. Who knows what the special deal will be? She's flexible, to say the least. The fact is that there are enough of these transactions in a month to prevent the Lotus model being a perfect reflection of the business.
I could have struggled with the program and tried to make it cater for every eventuality but she was happy to account for the exceptions by hand. I could have insisted that she adopts a more rigid policy and becomes less reasonable with her customers, but neither of us believe that is the right way to do business.
Yet I know at least one computer dealer who has fallen into the trap of allowing its computer system to dictate the treatment of its customers. It must be a coincidence that the dealer is the one who appears to benefit most from this approach.
To be more specific, this dealer is committed to a particular type of computer. You might even describe it as the BMW of personal computers. You pay through the nose, but you do get good quality. Having decided to take this route into computing, you resign yourself to paying premium prices for this company's offerings.
All I wanted was a couple of cables. The official ones are colour-matched to the computer: a sort of beige. What I received was a pair of black cables which, although they didn't come from the computer maker, worked perfectly well. These cables retail at just under £12 each unless you buy from my supplier. It charged me £57.50 for the pair - the same price, in fact, as that for the colour-matched official ones.
The dealer explained that it was 'too much trouble' to change its computerised stock control and invoicing system to cater for the fact that it was flogging low cost cables. I found this attitude deeply offensive. Can you imagine a BMW dealer even attempting to sell Lada accessories, let alone selling them at BMW prices? It's a ridiculous idea, yet this is what the dealer did.
What it has done wrong, of course, is to forget where its bread and butter comes from the customers. Customers who, if they feel they're being ripped off over a simple thing like a pair of cables, will wonder what other liberties the dealer is taking.
The trouble is that they won't realise they've been had until they compare notes with other users. Eventually they'll catch on and, if they've got any sense, will switch to another supplier.
In the grand scheme of things, £30 is not that important (yes, I did pay up), but the underlying attitude is. After I'd challenged the price, the company offered to swap the cables for proper ones 'when they come in'. But, by then, I really didn't want to have any more dealings with it. I will never go to that company for future supplies.
What's your attitude to customers? Are you there to serve them or to exploit them? Are you after a long-term relationship or are you out to get as much as you can from them in the shortest possible time? Are you in business for yourself, for your customers or for both of you? Only one answer makes any sense and this marks the long-term winners from the losers.
Customers will allow themselves to be exploited as long as they are ignorant. If they feel warm and loved they will take a long time to wake up to reality. And even when they discover they are paying a premium for everything, they may accept it as the price for this caring approach. It could take a couple of years, but eventually the exploitative dealers will find their business drying up, as their customers become more confident in using computers and start to look around.
And it will serve them right.