This article originally apppeared in the Sept. issue of CUSTOMER magazine.
Recently I went to Best Buy (News - Alert) to make a purchase of a few items – some of which I didn’t need right away. The thought of paying full retail for products I didn’t need right away didn’t sit well with me, but I realized I was in a store and perhaps there would be some flexibility. Turns out the store had price matching with online stores and would have matched a $73 price on Amazon instead of sticking to its $100 retail price. Realizing Best Buy was air conditioning a store in 105-degree heat, I suggested a compromise, and the assistant manager offered $90 per item, which I accepted.
The typical consumer won’t be paying more than they have to, and I realize my experience is likely atypical. Moreover, even Amazon struggles to make money at its prices; it seems impossible that other retailers will survive for long if they match the leading ecommerce site on pricing.
My experience has sparked a few conversations about how companies can survive in this new world of commerce. Here are some tips which should help any company looking to manage in a world where a lower price is a search away.
Predict. There is a simple truth and that is that people are more connected and want everything faster each day. Customers are getting more social, and you must be where they are to keep them happy. Social is a huge part of the mix and should tie your other efforts together. Knowing what is coming from the viewpoint of the customer will help you be ready to serve them as the transition takes place.
Pricing denotes value and prestige. A BMW at Mini prices would be bad for business in the long run, as it would show weakness to customers. Apple (News - Alert) and Bose show us the value of not discounting at all and, moreover, enable them to make money in retail because consumers are willing to pay for products in the store because they save nothing by going online. If you believe retail is an important part of your sales strategy (at this time in which so many retailers are struggling), you need to be positioned to have a profitable retail strategy on your own if needed.
Disrupt and evolve or you will die a horrible death. Amazon had a thriving ecommerce business but realized it could sell its server capacity and in the process became a huge cloud computing company. The company then decided to launch the Kindle and became successful despite what critics like me said about the device at first.
Customer experience is becoming one of the most important differentiators in business. People like their Apple experience. People also like the experience in the dealership of foreign car makers as opposed to domestics. A recent trip to the local Cadillac dealer had me wanting to sprint away as fast as I could. The BMW dealer, on the other hand, just tore down its dealership, which looked great, to build an even more impressive structure. You want to linger in the BMW dealership and have a coffee while you peruse the cars. BMW understands customer experience. So does Mercedes.
Social is becoming more, not less, important each day. You need to acquire customers by engaging on social networks and be there to respond to customer complaints and problems wherever and whenever they appear. I write about this a lot and promise to stop doing so when every company starts to integrate social effectively into the mix.
Become a resource or risk becoming commoditized and squeezed out of the market. Geek Squad is a great example of this. As TMC (News - Alert) Senior Editor Peter Bernstein points out, this an area of differentiation for Best Buy and is similar to the Apple Genius Bar. This value-add strategy is how you take a commodity business and make it exceptional.
The amount of time a company remains a leader in its market shortens on a daily basis, meaning if you are comfortable at the top like AOL (News - Alert) and Yahoo once were, you will wake up one day and find out you have been disrupted. Likewise for GM, Sears and myriad retailers who got fat, happy and lazy.
Embrace speed. Embrace creativity. Disrupt or risk becoming disrupted.
Edited by Brooke Neuman