The Spanish Olive Paradox

When I was very young, I heard Joe, a friend of my older brother, talking about his job at the local grocery store. Joe had opened a case of Spanish olives, checked the price list, set his price marker (called ‘rotators’ back then), and marked each jar $.95. They sold out in a couple of days. The next case came in, and my brother’s friend checked the price again, and realized his mistake. The olives should have been marked $.59. He put the lower price on the jars of olives, and they sat on the shelves. Feeling experimental, he marked them back up to $.95 each, and they again sold out. Even at the age of 17, Joe was able to extract a business lesson from this incident: People will pay according to their perception of value. Spanish olives must be worth more than just plain olives, and if they cost the same as—or less than—other olives, they must not be anything special.
We see this every day in the marketplace: Brands with some cachet are priced higher. Value is subjective. Price is set by what the market will bear.
This is very basic, but sometimes we lose perspective when we start valuing our own products or services. We know what raw materials went into the product and exactly what it cost to produce. We incorrectly assume that some standard markup percentage will suffice to price the item. If we sell services, we might think it’s better to bid low rather than risk losing the work. If we look deeper, however, what we find is that a premium product or service often attracts more business. This is the basis of the concepts of differentiation and value-added.

Here are some steps to take to make sure you are not undervaluing your product or service:

• Know your market – If you have a basic understanding of what your customers consider a fair price, you are halfway home
• Differentiate your product or service – You should be able to clearly articulate why your customers should choose you as opposed to your competition, even if you cost more
• Brand yourself appropriately – If you are a Spanish (i.e., special) olive, make sure your customers can clearly see that, and will know they are getting a premium product or service

The next time you are pricing your products or services, remember the Spanish Olive Paradox, and price accordingly.

This post originally appeared on The Management Experts


Photo Credit: Graham Colm

Review - Roadmap to Revenue: How to Sell the Way Your Customers Want to Buy

Henry Ford is often quoted as having said, "If I had asked my customers what they wanted, they would have said, 'A faster horse.'" Whether or not Mr. Ford actually said this, it has been used many times to back the position that asking your customers questions is fruitless, because they don't know the answers that will help you.

Obviously, Mr. Ford did not have the benefit of Kristin Zhivago's Roadmap to Revenue: How to Sell the Way Your Customers Want to Buy This book is the latest in a series of books aimed at--or coincident with--the swing toward more customer-focused business, and, in my opinion, it is the best.

Many books that include roadmap in the title are well composed theoretical works with a touch a futurism thrown in. Not this one. Ms. Zhivago's experience with top companies comes through as she builds a step-by-step guide to finding out how do deliver your products and services in the manner and by the means which make the most sense to your customers.

Ms. Zhivago cautions the reader not to give short shrift to the processes laid out in the book, which are not easy. Don't expect to skim the book and then transform your company in a few days. Do expect to do lots of hard work and get solid results.

If you've ever been through a fruitless off-site management meeting where strategy seems to be pulled out of thin air and the same points are discussed over and over again and nothing really changes, go get this book. You'll learn:

• What questions to ask your customers, and how to ask them
• How to discuss the findings and report them (with recommendations)
• Why your customer gives more scrutiny to some products than to others
• How to build buzz for your product or service addressing each level of customer scrutiny
• How to support your customers' buying process
• How to keep on doing it right

Your customers know that you are unintentionally making it hard to find, learn about, and buy your products and services. You can follow the steps laid out in Roadmap to Revenue or you can flail around, engaging in hit-or-miss tactics without the kind of transformation that can happen if you use this detailed, engaging, no-nonsense book as a guide.

Go get the book. Now.


Disclaimer: I was provided a copy of this book for review.

Product, Service and Value

Last week, I found myself in a Twitter dialog about whether product and service were really two separate things. Many people view them as being completely separate. I am not so sure.

Where the two things connect, I think, is value. I've seen value defined many ways. One of the best and simplest is this: Value is what the customer will pay for.

So, would I pay as much for my car if the nearest place to get it serviced was 300 miles away? I don't think so. I think that the value of my car is based largely on its utility. (Of course there are other considerations as well, such as comfort, economy, features and more, but if I really can't use it, what good is it?) If I find myself with a broken gearbox or failed fuel injector 300 miles from the nearest repair shop, I've got a problem. The very same vehicle purchased in an area where there are 2 dealers within 50 miles, it seems to me, is literally worth more to me. In fact, I have not considered buying one particular brand of car (rated one of the two or three best in the world by most standards) for this exact reason. There's not a dealer anywhere within 200 miles.

The very same thing is true in many other areas: I buy coats and boots and many other items from a company with a great customer service record and a 100% guarantee because I know I'll get more out of what I buy--so I'm willing to pay a little extra. Well constructed, guaranteed items have a greater value.

Are there exceptions? Of course. If a service or product is unique, its value is increased even without any good customer service. If, for example, someone were to invent a car that never needed maintenance and never broke down or wore out, that car would have tremendous value even if the car maker didn't appear to care less about its customers. But in fact, the company would have built the service into the product. They've given their customers the best service of all.

Give it some thought.

Please Note: This blog will be moving to royatkinson.wordpress.com as part of my effort to use Google products and services as little as possible.

Super Every Day

No matter who is the champion of whatever sport we happen to be following, we know that there are some important characteristics of teams (and individuals) that win:

• They are talented
• They are well trained
• They are unified in their objectives
• They are focused on achieving the goal

Can we say that about the teams we work with? 

• Do we have the right people in the right places?
• Is marketing getting the word out and presenting our products and services in the proper way? 
• Does sales handle the "play" properly and, as Lou Imbriano would say, "Win the customer"? 
• Is our service and support team ready to "defend" our gains by keeping customers happy and making sure they remain customers? 
• Is our production or professional services team ready to fulfill the promises made by our advertising and sales? 
• Do we have the right coaches in place for each of the specialty teams we field?

In almost every sport, coaches stay on the sidelines, or in the dugout, or behind the tee, or overlooking the tennis court. They are almost never active players (although there ave been some exceptions). Are you a manager? Do you also find yourself on the team you are trying to manage? Is the workload so intense that you must be counted as one of the players? Consider what you might be losing in terms of perspective and strategic view.

Sometimes, even in the most intense of competitions, there are time outs. Do you need to call one and assess how your organization is working together as a team? 

Give it some thought.

Image from iStockPhoto.com

Do. Improve. Repeat.

If you've been following me on Twitter for any length of time, you've read these three words before:
Do. Improve. Repeat.
I call it my "mantra." I've used it in just about every aspect of my life. Of course, it's my personalized version of "Practice makes perfect" or "La práctica hace al maestro" or "Kaizen," but with emphasis on a central step: Reflection and the conscious intention to make the next golf swing, guitar riff, kata routine, blog post or paragraph better than the last.

Every day presents a new opportunity to get better at something, whether it's being a better follower, leader, thinker, writer, golfer, musician, student, manager or martial artist (or whatever it is that you've chosen to apply yourself to). It seems to me that this is a common thread among the people I have admired throughout my life: They have worked on the things they find valuable, and have tried to continually improve not only for themselves but for others as well.

I realized long ago that practice doesn't guarantee you excellence as compared with the greats. I found out that I'd never be a major league baseball prospect, or a pro golfer, or lots of other things I might have enjoyed. But knowing I can't be the next Jack Nicklaus doesn't stop me from heading to the range and trying to get better. It's easy to put yourself on "cruise control" when you reach a certain level in your chosen profession or hobby or sport, and many people do. It's not my way.

Does this make me better than other people? Absolutely not, and that has never been my goal (especially because it isn't possible). It only makes me better than my "yesterday self."

If there's some area of your life, be it hobby or work, that draws you on and makes you try and try again, think about why that is, and see if you can't bring the desire you feel there into other areas of your life.

I would thoroughly enjoy hearing about your experiences.

Give it some thought.

Golf practice photo by Roy Atkinson

Customer Empowerment: Lessons Learned

Some very large companies learned lessons this year about the power of customers. There was the Bank of America fee story and the Verizon fee story. Now, those fees hit customers in the pocketbook, and it's easy to see why people rebelled against them. But things get very interesting when we look at what happened to GoDaddy, which lost upwards of 72,000 domains when customers decided there were better alternatives.


GoDaddy didn't increase its fees, or do anything directly draconian to its customers; the company did, however, indicate that it was supporting SOPA, the very controversial legislation making its way through the U.S. House of Representatives, and customers didn't like it.


There's always been an adage in business about customers who "vote with their feet," heading over to the competition if they find something they don't like about you, whether it be price or service. But now, people may leave you if they don't like your backing of a bill, or if they don't think you pay enough attention to the environment. And this is just the beginning.


Those of us who follow and contribute to social media are well aware of the ability to use outlets like Twitter and Facebook to make noise when something doesn't appeal to us, and some even credit, or partially credit, social media with a role in the recent governmental changes in Egypt, Libya and elsewhere, the so-called "Arab Spring."


But customer influence is being taken seriously at levels most of us are not even aware of. Take for example the complex social media analysis being done by Bluefin Labs. As explained in a recent article in Technology Review (login required for the full story), Bluefin extracts enormous amounts of information from social media updates related to TV programs and advertisements. It won't be too long before they can deliver detailed analysis related to almost any topic in any medium.


All of these things should be a very big warning to companies: 


Pay attention to your customers. They are empowered now in ways that they have never been before. They may vote with their feet, and take thousands of others with them when they go.


What are you doing to make sure your relationship with your customers stays on the positive side?


Give it some thought.

Was It Customer Service?

A couple of years ago, my (then) employer moved me into a windowless office. I decided to buy a full spectrum desk lamp.  There were two home improvement "big box" stores on my way home from work, practically across the street from each other. I'll call them Orange and Blue. The Blue one was fairly new and I'd never been there, so that's where I went.

After a couple of minutes of looking at the choices, I picked out a nice, inexpensive lamp that I felt would look good on my desk and get the job done. As is usual, there was a display unit and a shelf full of corresponding boxes. The only problem was, I couldn't find the lamp I wanted among the boxes.

I went to find some help, and soon saw someone in the store's blue apron. I asked for assistance with the lamp and was told, "I don't know anything about that department. I'll find someone and send them over to you." Having a little faith, I stood by the lamps for a few minutes, and someone in a blue apron came by. Apparently, however, not the one I'd been hoping for.

"Excuse me," I said, "can you help me with these lamps? I can't seem to find this one," I said, pointing to the one I wanted.
"Whatever we have is on the shelf," said the blue apron.
"OK. I guess you don't have one of these in a box, then?"
"Um, whatever we have in on the shelf."
"Will you be getting more of these?"
"I don't know."
"Well, can I buy this one?" I asked, indicating the one chained to the display.
"No. I can't sell that."
"OK--let me be clear," I said, slowly. "I would like to buy this lamp. If you don't sell me this one, I'm going to go across the street and buy a lamp there."
"Well, I can't sell you that one."

I did go across the street and buy not one lamp, but two.

When I mentioned this episode at work, there was a universal, "Oh yeah--their service is terrible."

I never went back.

Well, the Blue big box home improvement store closed up shop a couple of months ago. It was not because I didn't buy the lamp that day. It was because hundreds of people did not buy their lamps, drills, blinds, carpets, nails, pipes and whatever else they needed or wanted there. And it wasn't because I told a lot of people. The people I mentioned this to already knew that the service was bad. It was because people simply stopped shopping there.

An easy alternative existed, and this business failed to make the commitment to be better. Too bad, so sad, as the saying goes. Now, let me say that Orange does not have the best service I've ever had, but it's orders of magnitude better than Blue.

Moving in to compete? Customer service might be the difference between you and your competitor.

Give it some thought.