What do we like to pay for? Certainly not our music, text messages, software, kids’ meals, the internet, shipping and handling, health care, medicine, retirement, or education just to name a few. Now, if you lose your job, they will even pay for your car. 
More and more, we want more for less, or even better, for nothing. And I am not being preachy here, I am as guilty (or cheap, maybe) as anyone.
I have heard discussions, and noticed it in my own business. We are a culture where we expect things to be free, but there is no business model that has the word free in it anywhere. We won’t recover economically giving away (or by just taking) things for free. There is a cost to produce products, and deliver them to market, and whether or not it is by you, the costs are paid for by someone. My industry, office supplies, is exceedingly cut-throat and a good example.
Me and other businesses like me constantly need new customers to survive. (And there are lots of businesses like me. It has been said that if you want to get into the office supply business all you need is a phone and pen and paper. It is not completely untrue.) In a commodity driven business like ours, we are all selling the same exact items at the same exact prices, so we can only differentiate ourselves by our service. But it is hard to sell service, at least initially. When looking for new customers, it is nearly impossible to not be just one more name in a long line of people promising the same exact thing. My service may actually be remarkably better than what they are currently getting, but no matter how many emails or voice messages I leave explaining that, it is something the customer has to experience to appreciate, and besides, everyone calling on this prospect is telling her that their service is better, so how does she really know, and how do I rise above the noise?
Well, the obvious way is to shoot over some pricing that I know is better than what she is paying. And since me and my competition are all paying roughly the same price for our inventory, the only way to do that is to cut my profit margins to the bone, or give something away for free, like delivery. And to compound this, my competition is in my existing business, and I in theirs, so we have to do this same process with our existing customers just to keep them in the fold.
This is what is I see happening in society in general, and my line of work in particular. Everyone needs new customers, and to hold on to the ones they somehow still have, but the only way to do this is to give something away. But if I do that, do I actually have a customer? Or just another dependent on my tax return?
When times are slow, it is even harder. Do we reduce our prices or give away our services to attract new customers? It’s tempting, especially when you are struggling just to pay your overhead every month. But what are you really getting? A customer addicted to and appreciative of your great service? Nope. I would offer what you have is “a free addict”. Someone who is used to you giving them something and who will react poorly if and when you try to take that something away. When times are better, will you be able to raise your prices? Will you be able to start charging for that delivery? No, you won’t, because as soon as you do that the customer will turn to one of the half dozen or so of your competitors that are calling on her every week, and who are all more than willing to give her whatever you are not just to get her business.
It’s all a quandary that I don’t have a ready answer for. Some days I think all you can do is put your head down, ignore all of this and keep at it. You know, embrace the blind squirrel theory: just keep at it and at some point things will work out. And then some days I think the whole process defines insanity and I wonder what I am doing.
Today is closer to one of those days.
Happy birthday, Greg!
Happy birthday, Greg!