06/01/2012

By Robert Craven, MD Of The Directors' Centre

I have long been a fan of creating different service qualities for different client groups; different service packages at different price points for differing client needs and pockets. Gold/Silver/Bronze can in fact be expanded into Platinum/Gold/Silver/Bronze/Paper product classes where ‘platinum’ is uber-expensive and ‘paper’ is free (See Expensive is the New Free).

The incremental cost of selling the premium price product tends to be negligible so it makes sense to spend more time selling the better (and more profitable) offering. Despite this, there is an opposite pull – a force to dissipate the benefits of premium pricing. One which will damage your business.

So, here’s the problem, the paradox. In the interests of growing our businesses we look to maximise our opportunities to grow our client base. As a result we might abuse the various package offers and alienate our existing loyal customers by doing the following:

- Take away parts of the platinum offering to increase profits quickly

- Downsell clients as a quick win (losing out on the more profitable opportunity)

- Upsell clients when they don’t really want it creating resentment

- Discount the higher level offering to win the sale

- Forget about the platinum clients as we chase new sales.


Of course it is correct to sell (or rather to upsell) to people who wish to pay a premium price. Do not forget, however, that they are paying for and expect to receive the premium-priced service.

Creating different product packages (gold/silver/bronze) works, but please be careful not to kill the goose that lays the golden egg.


Economy airline food!

Just travelled economy class (airline not relevant) to Joburg with knees up under my chin and elbows digging into my neighbour. Sounds like I am getting too old. But...my point...

- Question: “Do the air stewards and flight deck crew eat it?”

- Answer: “No way — they have more sense.”

- So, the next question is: “How come it is good enough to give to the people in ‘cattle class’?”.

- And the answer is: “Because the airline simply doesn’t care about these customers.”

Am I just a victim of my own ‘ology’ (sort customers between platinum/gold/silver/bronze offerings, sack pondlife customers buying on price, focus on giving premium service to premium paying customers)? I think I am and it’s not very nice.


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