High Touch, High Value or Commodity?

Business is ultimately about making more money than you spend; that is a given. I would never suggest otherwise.

If you are running a commodity business, you focus on volume and keeping costs low; that is where the margins are made. Customers can go pretty much anywhere and get a similar experience. Wendy's or McDonald's? Best Western or Holiday Inn? Does it really matter which one you pick?

In sales people talk about the lifetime value of the customer; how much money is the typical customer likely to spend on your products and services over the lifetime of the relationship? How do you increase this number? How do you get customers to spend more so you can make more money?

This is "us" focused thinking and not customer focused thinking.

This is bass-ackwards.

If you are running a business that purports to be high touch or high value to your customers, why are you using tactics to increase the value of the customer to YOUR bottom line first and foremost?

Don't you think your customers will eventually catch on as to who you really consider the most important (you)?

We had one marketing consultant who would ask if his cheque was ready for pickup almost every time he came for a session (we weren't late in paying). How do you think that makes your customer feel? Seriously, if you are that hurting for money you certainly don't want your customers to see it in 3D techni-colour… and if you are always taking all the money out to spend as personal income and not putting any away to weather business cycles, please don't offer to consult or coach me; you are incompetent and have no business advising others.

The personal and business coaching industry is like that too in many cases. You attend a free seminar and they do a hard sell at the end for their product or service with a discounted "today only" pricing. You sign up for the two day seminar and they sell you the advanced seminar, books, DVDs, and ongoing coaching programs. The programs are designed to keep you coming back for the next great answer or step in the (very long) process. Kind of like therapy; you feel good after the session but never get any better.

The stated message is: "We are here to help you. We love helping people and businesses succeed. That is why we are coaches or consultants." But the underlying message is we will hold back so you have to keep coming to us.

Great managers and leaders freely help other become great as well. The pie can be as large as you want.

What if you focus on the value you are creating for the customer instead of the value the customer is creating for you? Value is anything the customer is happy to receive and pay for. You can charge a percetage of the value you create and customers will willingly pay as long as they continue to get that value. Why would anyone stop coming to you if you are always delivering value. This is sustainable.

1. What is your business's lifetime value to the customer?

Can you imagine a doctor holding back? I know how to cure your disease, but I need revenue. So instead of curing you I will keep doing little things to slowly fix you (and prolong your agony and suffering). Yup, I figure I can get 2-3 years out of the average person before they will get better.

2. What if you give everything you have now and don't intentionally hold anything back?

Great businesses generally have a meaning bigger than just making money or products. Create a product or service that creates value for your customer today. Focus on the value to your customer. Keep improving it. You don't need long-term contracts if you are not a commodity and deliver value.

It is likely they will still be your customer tomorrow, even without the traps or hard sell… and likely that they will refer many others to boot.

To be a high touch, high value company you need to address these two questions.

By | 2017-04-03T11:50:54+00:00 October 13th, 2010|Categories: Business Strategy, Doug's Blog|

About the Author:

Doug Wagner is an entrepreneur, President and Co-founder of Sunwapta Solutions. Sunwapta's mission is to help businesses transform from surviving to thriving, sustainable growth. From strategy to implementation, this means marketing, sales, managing your brand and delivering consistent value. Get more clients and keep them.