The Cheaper the Goods, the More Expensive the Customer

Cheap Labor

Business has been driven by one primary objective over the past decade:  Produce more with less cost.  The idea is simple really, if you can make something for less capital, you’ll be able to charge less for your product or service than your competitor, and what customer doesn’t want to pay less.

Walmart is the quintessential example of today’s big business models.  They’ve integrated their vertical supply chain cutting out any and all excess fat along the way.  The goods that Walmart sells are cheap to make, cheap to ship, and can be sold in bulk for cheap.  They can find cheaper labor, cheaper ways to make parts and products, and cheaper shipping costs which filter into cheaper products for the customers.

But that’s the benefit of Walmart – cheaper shit.  It works for them, in part because the people who buy their stuff want to buy it for cheap and they don’t give a rats ass about the experience of buying it.  They don’t need a Walmart employee giving them the run down of why you should buy this TV and not that TV.  Walmart customers don’t care if it takes 40 minutes of their day just to check out because the cheap labor is slow and inefficient, they only care about one thing – what it costs them at the cash register.

Long ago (more like 2 or 3 decades ago really) this was not the case.  There was a difference between cheap, and quality.  Quality offerings went above and beyond, people were happy to go the extra step to make you happy.  Customer service was a corner stone of some businesses offerings,  and their customers on the whole were more satisfied.  This approach, will be come critical in the future of business as more and more consumers are demanding more from the businesses they patronize.

Even today, the worlds best brands demand a premium price for their products in large part because of their ability to go beyond “cheap” and offer the customers real value.  BMW offers customers free maintenance (including new brakes, wear and tear items, oil changes, etc) on new cars for the first 3 years, Zappos has repeatedly been praised for their customer service, and Ally Bank allows customers to skip any automated teller response for call-ins simply with the press of a button – all great examples of offering the customer more.

Social Media forces business to interact with their customers throughout their life cycle.  No longer can a business hide after they sell a cheap, crappy product to the customer because that individual will tell the world about their experience.  Because of this interaction, the shift from customers wanting cheaper shit to better overall experience and value is rapidly happening and beginning to grow in demand.  Customers are drowning in internet data, reviews, and information and as a result are demanding more from the products and services they use.

The moral of this tale? Be smart – offer better, smarter service to your customers, and don’t focus as much on cutting costs.  If you have a superior product or service, charge a premium for it and then execute.  You’re not competing with the rock-bottom price dealer, you’re forging a new level of customer experience, and that warrants the premium price.  If you or your products or services are better, they’re worth more, and the customer will pay for them.

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