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A couple of weeks ago I went camping. I haven’t camped in over 2 decades, so I needed a tent.  After checking a couple of placed on line, I decided to go with the Mountain Equipment Co-op Wanderer 4.  The tent was thoughtfully constructed with a full fly and lots of useful features. But it wasn’t until the last night of the camping experience when a deluge struck that I realized just how important quality was to me.  Despite being stuck in a tent during an extremely heavy rainstorm, we were dry.  The tent outperformed my expectations.  Looking back, the other cheaper tents I saw wouldn’t have performed under those conditions.

Cheney Window and Door is another example of quality and service.  When it came time to replace the windows and doors in our home, we were thrilled with the quality of their product, but more important was the service we received.  The installer was second to none; he took a great deal of care and added some extra touches along the way.  The owner also offered some great renovation advice, and pointed us in the direction of our next successful venture, soffit and facia.

Now this provider was a long-time installer who was preparing to retire, but because Cheney gave us the recommendation, he took our job.  Again, we delighted with the entire experience. 

The final exterior improvement on our list was paint. I knew that it would be tough to find someone who met my standards, having done my share of painting.  A friend had recently had some work done by a painter who came highly recommended to her, so I took a chance.  His work was amazing.

Pricing for Quality

Could I have paid less for these services? Yes.  But I opted for quality, and in the end with a job well done, I was further ahead.  Will I shout these companies’ praises from the rooftops?  You bet!

In a world where all too often we are disappointed by the quality of the goods and services we purchase, it is nice to know that excellence still exists.  This fact provides an opportunity for businesses: customers are willing to pay for quality and great service.  But make sure that you deliver, because bad news travels fast.  My neighbours thought they were buying and paying for quality and service but instead received a nightmare.  I won’t be contacting that company for their services any time soon.

Whether you are an employee, business owner or consultant your reputation matters.  Despite its importance, it isn’t entirely under our control.

The scapegoat

Maybe you are an employee in search of a new challenge. You move on your new job and in doing so you become the scapegoat for problems at the old one. It can be one of the most frustrating, helpless situations.

Or perhaps you are an external consultant. After accepting what seemed like an interesting contract, you discover that you’ve been hired to “prove” an unpopular course of action is appropriate; deflecting criticism from the management team. The added bonus being that if the recommended option doesn’t work out – it’s your fault. 

For service providers whose product is largely intangible, reputation is one of their most important assets.  However, the quality and achievement of their projects’ goals are subject to opinion.  With the qualitative nature of their vocation – reputation can be at risk.

Managing your reputation

While we can’t control what is said about us, we can take measures to improve it.

1. Before starting a contract, take the time to meet with the client and determine their goals. Develop meaningful, quantifiable indicators and milestones that will clearly demonstrate the client’s objective has been achieved.
2. Strive to deserve a positive reputation.  Always do your best to provide a quality product that meets the client’s needs.
3. Put yourself in their shoes.  How do you feel when a co-worker leaves or a consultant moves on?    All sorts of emotions from loss to thankfulness can be in the mix.  Keep in mind that these emotions are in play, and be ready to respond to them with sensitivity. Assure them that you are moving on to new challenges, not running from a bad situation. Point out the positive aspects of the job or contract that you’ve enjoyed, things you’ve learned, and positive memories that you will carry with you.
4. Before leaving, ensure the transition is seamless.  Document your work, put your files in order, and offer to train your replacement.
5. Request a wrap up meeting where you request feedback from the client and confirm that the contract goals have been met.

Confirm in your client’s, coworkers’ or boss’ mind that you achieved their goal and you did a good job.  And keep in touch.  After all, these are folks you shared time with and perhaps a few laughs along the way.  Besides maintaining some valued relationships, it might even mean repeat business down the line.

Here is an update to an earlier post “Real Estate Transactions: When price doesn’t equal perceived value”.

At their annual general meeting yesterday, Canadian Real Estate Association (CREA) members voted in favour of allowing agents to post listings on its MLS system on behalf of sellers for a flat fee. Melanie Aitken, Canada’s Competition Commissioner said it didn’t go far enough, as it keeps the power in CREA member’s hands, squelching innovation.

CREA has until March 25 to provide a response to the Competition Commissioner’s application to the Competition Tribunal.

See the Globe and Mail story: “No Sale: Realtors’ plan gets bad review” by Steve Ladurantaye.

What makes a customer shop at one hardware store vs. another? I have an example where price was not a deciding factor.

There are two hardware stores, Rona and Home Depot in close proximity to my home. Both stores offered the same or similar brands of toilets. So what if anything would determine where I made my purchase?

The deciding factor was service. A toilet is heavy and I was pretty sure that I wouldn’t be able to lift it, and even if I could I didn’t want to risk hurting my back.

The following table contains a comparison of the service I experienced at the two stores:

 I wonder if the two stores realize the vast difference in service they are offering.  The gradual move to the big box store format has brought the customer more selection and better prices for some items, but it seems to have come at a cost – a loss of knowledgeable service.

And why not? Labour is a very expensive input. So minimizing its cost by hiring the bare minimum on a part time basis makes economic sense, because the savings can then be passed on to the consumers as a means to draw them into the store.  This may work on some items and for some customers.  But for other customers, whose time is at a premium or knowledge of all things hardware is precious little, or physical strength lacking, the lowest price isn’t as important, because the customer is willing to pay a bit more for the service they need.

Rona has chosen customer service as its value proposition.  This is evident from the corporate values published on their website, which lists customer service as its top priority.  Home Depot lists excellent customer service at #4.  From my experience, both live up to their values.

The preceeding is but one example of a customer purchase – but it gives pause to consider the psychology behind customer purchase decisions. Cost is not always the deciding factor.

With Federal Competition Bureau’s announcement of its challenge of the Canadian Real Estate Association’s (CREA) rules before the Canadian Competition Tribunal, significant changes to the pricing of realtor services may be soon to come.

Pricing of Realtor Services

Ever wonder why the cost of a realtor is tied to the cost of your home?  The Competition Bureau alleges that it has a lot to do with CREA’s control over Canada’s MLS service (http://www.realtor.ca/).  From the seller’s perspective, pricing realtor services based on a percentage of the seller’s home price doesn’t make a whole lot of sense.  Does it cost more for the realtor to list and advertise the home if it is worth more?  If not, why does the seller have to pay more?  It is this decoupling of the value of the service from the price that is the root of so much discontent with the real estate experience.

To add insult to injury, when no cooperating (buyer) agent is involved, the seller’s agent is allowed to represent both buyer and seller, collecting the full fee.  I would imagine it would take something akin to schizophrenia for the agent to act objectively in that situation. And what value does the seller perceive that they are receiving?  It can leave a seller feeling bitter and taken advantage of.

Real Estate Lawyers: A contrast

In contrast, real estate lawyers generally charge a flat fee.  The legal aspects of a residential real estate transaction are pretty standard, so the lawyer can with little risk on their part offer their services for a set price.  The client knows the cost of the service and can link it to the value they are receiving, with no variability based on the value of their home.

The Future of Real Estate in Canada

If the Competition Bureau’s challenge is successful, I believe it will give many of the real estate agents who have a finger on the pulse of what their clients need the freedom to implement a little innovation in the pricing of their services.  And for those clients who still want the full service option – no doubt it will be happily provided. I predict a marked increase in client satisfaction!

Pricing your product or service is an important part of a successful pricing strategy, but it is only one part of several components which must work in concert to achieve success.   Here are ten things to consider in designing a well coordinated pricing strategy.

1. The company mission statement guides the overall strategy, which in turn guides product or service attributes, price point and marketing strategy.
2. You have chosen a value proposition (e.g. value, low price, service or quality) and your price and marketing strategy is aligned with it.
3. You have a clear understanding of your cost structure.
4. Know your competition, including their strategy, market power, strengths, weaknesses, price point and quality.
5. Allow some room for creativity in your pricing methods; be flexible in how pricing is structured so that you can meet the client where they are at.
6. Know your customers – give them what they want.
7. Keep close tabs on your sales force. Are their incentives in line with yours? How far apart is the list price vs. final price?
8. Ensure that your star clients aren’t costing you more than they are worth.  Discounts, time and extras all add up and serve to reduce profitability on a client by client basis.
9. Follow through. Do what you say you will do, be it quality, low price or customer service to differentiate your product or service from your competition.
10. Constantly evaluate.

Since we posted “Grocery Bag Wars“ on January 7th, Atlantic Superstore, part of the Loblaw chain said it is “evaluating” their 5 cent bag charge at their Maritime stores.   See CBC article “Grocery giant reviews fee-for-bag program“ posted January 28th.

Since the City of Toronto implemented its plastic bag by-law in June, grocery store chains have left a patchwork of bag policies across other jurisdictions, making the simple act of grocery shopping an agonizing experience.

 It begins at the check-out, when customers must in some stores guess whether they will be charged for bags.  If there is a charge, the customer must estimate how many bags will be required to contain their order.  This is further complicated by whether the clerk will bag or not, and if so how efficient the clerk will be at filling the bags.

 Since the advent of bag fees, it seems that bagging can no longer be assumed, even when a bagging policy is in place.  Superstore abandoned their bagging service after offering a reusable bag.  Fortinos claims to bag, however experience dictates that it depends on the clerk that serves you. The same goes for Sobeys.  In the early days, Metro was still solidly bagging; however this policy appears to be slipping, as are the pleasant smiles and chitchat, while Longo’s continues as usual with their complementary bags and bagging service.

 It needs to be said that the cashiers have been left ‘holding the bag’.  It is they who have been saddled with the unpleasant task of asking a customer if they would like to purchase bags, a question often met with a snide retort.  They are also left to awkwardly fumble with whatever style of bag a customer may choose to supply.

 So who benefits?  Stores offering five cent plastic and reusable bags make a healthy margin, while customers leave the store stressed and frustrated with their check-out experience, and front-line workers suffer from lower job satisfaction.  According to Health Canada, food placed in reusable bags may even be at risk of contamination. 

Loblaw, recently citing the poor economy for slower sales volume, vowed to keep their market share by offering discounts.  While we all like a bargain, it would appear they have failed to grasp that for the customer, time is significant consideration.  Many customers can’t afford the time to shop at multiple stores in search of deals, hunting down their list of items in foreign isles. 

 Customer loyalty translates into significant revenue for a grocery store.  If a customer spends an average of $200 per week on groceries, it translates into $10,000 per year in revenue.  Compare this to $15.00 in annual revenue from plastic bags, or the one-time $6.00 or so from reusable bags.  These token bag charges are more than just money to the customer; they represent shameless opportunistic profiting by stores in the name of the environment; reusable bags as yet another thing to remember; and the bagging stare-down at the check-out as just another uncomfortable situation which the customer is happy to avoid.

 In the middle of all of this angst, Wal-Mart and Zellers, the new entrants into the Canadian grocery market have taken a different tact, offering complementary bags and bagging service, no exceptions.  Their customers leave satisfied.

 Years ago, grocery stores would take your order, retrieve the items, and if you wanted, deliver them to your home.   Since then, selection has infinitely improved while service has all but disappeared.  A time-honoured method of attracting and keeping customers is customer service.  Canada’s grocers would do well to reinstate their bagging policy and offer complementary compostable bags, which can intern be reused in our municipal composting bins.  Sadly, a quarterly earnings-focused myopia has rendered some grocery chains incapable of see their customers’ torment.  Customers are destined to wander in the grocery store desert, searching for the store that cares about them.