« Back

Is The Customer Always Right?.

When doing business in a competitive environment, a customer always has choices. If they don't like your price, service, payment plan, or you, they can always do business elsewhere. Often overlooked is the fact that businesses also have choices, they don't have to want you as a customer. To some business owners, this is heresy. They attempt to cater to every customer, thinking that they have to try to eke out every possible dollar. Let's examine some scenarios which prove that you can build a business by not catering first and foremost to your customer.

First, let's look at premium brands and boutique businesses. In economics, the concept of price discrimination basically says you can charge more for a product or service, if you can identify, or create, a demand for it. The most obvious example is a business which sells expensive things to people who can afford them. It obviously works, or brands such as Versace, and store such as Saks Fifth Avenue would not exist. Premium appeal, and a premium price tag. Such businesses realize that not all customers are interested in a bargain. Bargain hunters are not their customers.

Sometimes a peculiar business decision has obvious benefits. Other times they are not readily apparent. Express Fitness Jamaica fits the later description. They are a self described "fitness club" bringing a new kind of gym to Jamaica. Membership gives you access to all five locations across the island. They have an automated billing system through which your membership is deducted from your bank account monthly. They also have fully automated twenty-four hour facilities, which aren't staffed beyond specified hours. The lights come on when there is activity, and turn off when you leave.

Express Fitness' model won't cater to everyone. First, some will be reluctant to provide their banking information for automated deductions. Such customers don't like the idea of relinquishing control of their money, or just don't trust a company with their banking information. The gym also doesn't cater to those who may be at the extreme of body building - they don't offer free weight bench presses or weights above a certain amount. Additionally, the facilities are monitored by surveillance cameras to make sure you're not sneaking others in, or loaning out your membership card. The weight restrictions are due to the fact that the facilities aren't staffed around the clock, and they would rather you not decapitate yourself on one of their benches. The surveillance has the two fold purpose of protecting you and safeguarding their business model.

The fact that there is only one payment option, and the lack of equipment for certain classes of gym users means that they will not attract everyone. But do they need to? Conventional business wisdom says you should cater to all kinds of customers so that you can have a larger customer base. But as we already established, there are business that cater to a subset of potential customers, and that works for them. They are in effect saying 'no' to customers who want to be members, but want to pay using a credit card, debit card, or cash. They are also saying no to customers who want heavier weights, certain free weight exercise options, and constant supervision.

A business doesn't need to win every potential customer to be successful and profitable. And sometimes streamlined and efficient operations beat the complexities involved in catering to everyone. If you could earn money with very minimal effort and low overhead, wouldn't you choose to?

Then there is Apple. This most valuable company and brand has a reputation of disdain for customers, at least that's how it appears to the uninitiated. Apple seems to snub it's nose at customers by making their devices non modifiable and closed physically and in software. Apple believes in making great products by controlling the entire user experience. The success of the first Macintosh, the iPod, iPhone, and iPad all seem to lend credence to that philosophy. So as people continue to call for openness, more features, and lower prices, Apple continues to ignore them. Yet they continue to be successful.

Depending on your viewpoint, Apple may be successful either because of, or in spite of their disregard for customer input. But again, what you think doesn't matter to them. Steve Jobs believed that "people don't know what they want until you show it to them". His goal was to "figure out what they want before they do". This philosophy is the touchstone of Apple, directing their every decision. The $100 billion dollars they have in the bank says they're on to something.

Customers make your business successful, but you aren't beholden to them. And you certainly don't have to cater to everyone. You can and should discriminate by price, choice, or philosophy. It will keep you focused, on the ball, and in the money.
comments powered by Disqus