W&A Monthly Newsletter, June 2018: Honoring the Value Proposition
By: John Wilson
We changed our Internet Service Provider (ISP) the other day – decided to go with a local company. When I called big boy to disconnect, they wanted to keep me and started making all sorts of offers based on my long tenure with them. As they offered lower prices and increased bandwidth, my pervading thought was, “So all this time you’ve been overcharging me? Why, if I’m such a valued customer, didn’t you offer me these discounts earlier?”
I demurred and said, no. I asked them what they wanted me to do with their old receiver. They told me to throw it away. Even if I had renewed they would have replaced it with new and better technology. Again, I was struck by the attitude that while I was an old and valued customer I wasn’t valued enough to get the best deals and the best technology without asking.
We’ll see how the new team does. At the moment, it’s just two guys and an office worker running their high-tech business. I can walk over to that office for a visit, and they’ll explain in detail how everything works. That’s nice; it’s personal. The digital service is good, too. Since I increased my bandwidth by 50% and have the latest technology on the roof, things are flying between my home and the electronic world. It’s odd how good that makes you feel.
It still puzzles me, however, why the old provider never made any move to improve my service during our entire relationship. They took my money and let my technical situation gradually degrade over time. They probably saved a few bucks, but in the end, it was a false economy. I left for slightly greener pastures. And that is particularly true with bandwidth. Of all the things they sell, that is the cheapest and easiest to upgrade. It’s seems to me, in this day and age, a good customer retention program is important, and one way to do it is to ensure your clients are getting value for their dollar.
This means watching rates and always ensuring the solutions offered are on the cutting edge and helping to keep the client on the cutting edge, or at least current, if that’s all they desire. The proposition is always value for the dollar. The penalty for failure can be stiff – loss of a client, as happened to my old ISP. Of course, they may have more than they can use, but market decay starts small and it can hit critical mass before you realize it.
There is also the possibility the market can change and leave you out in the cold. In the good times, it’s hard for some companies to ignore the lure of charging what the market will bear and ignoring the value proposition. You have a customer; charge them until they squeal. I’ve seen companies do it. Back in the 80s during one of the busts, I remember one company in particular being punished for its aggressive, no quarter pricing during the boom. When the downturn came, no one on the operator side felt any qualms about dropping them. Once again there was competition, and the people who acted fairly during the boom got to stick around during the bust.
It’s an old, old story: be fair and treat your customer well. Make sure you’re really helping them make a profit and not just pretending. Think about their business. Don’t oversell, and make sure you over-deliver. Maintaining value for your customers is an old idea with long legs, but it’s easy to forget, and it’s forgotten at your peril.
Hiding In Plain Sight - Hidden Costs and Low Cost Solutions
Outsourcing telecommunications solutions increases business capability, not cost.
“Although initially viewed as simply a way to slash costs, in recent years other reasons for outsourcing, including operational efficiency and the desire to focus on the core business, have moved to the forefront.” 1
Large companies often do not look at costs in non-operating areas (administrative work and processes) as carefully as one would expect, and oftentimes the potential to find cost savings is high. Generally, there are only a limited number of ways to reduce telecommunications costs and costs accrued from Office NPT™ (non-productive time):
- Outsource telecommunications management
- Find less-expensive suppliers
- Stay on top of new technology
- Use more efficient internal processes
By taking document, data, and process management (among other company-required administrative tasks) away from higher paid team members and putting them on the plate of a highly skilled, less pricey Technical Editor, organizations enable team members to focus on core competencies. It is an effective way to stretch your budget, increase productivity, and benefit from a cost reduction of up to 40%:
“Telecommunications is the second highest non-operating expense for the average Fortune 1000 firm. Most organizations can reduce these expenses by three to fifteen percent; some can cut costs by 30 to 40 percent. The key to achieving and maintaining lower telecom expenses is to understand industry drivers, technical alternatives, and effective telecom procurement and processing techniques.” 2
Costs associated with Office NPT™ can be reduced in virtually every organization.