Voltaire wrote “Le mieux est l’ennemi du bien”, or “perfect is the enemy of done”.
Have you ever been so overwhelmed by the enormity of a project that you are too paralyzed to even start? More often than not, we are bombarded by tasks and projects from all areas of our lives. It is those who have the ability to prioritize and then begin chipping away who will be successful in the end.
Is the end in sight?
To further confuse the matter, it’s rare that a project has a clearly defined endpoint. So when to deliver the goods? If perfection is your goal, the recipient of your amazing creation may not live to see the unveiling. Your product or service is of no use to anyone if it doesn’t exist, so whom is perfection serving? If it is functional, roll it out.
The value in “good enough”
Most things in life are iterative, and thus offer revenue opportunities related to each additional unit of value you provide. This isn’t a new concept. There are many examples of companies who follow a strategy of continuous improvement:
After all, a product that can’t be improved is likely obsolete or easily copied. Why not continue to grow your business by offering your clients your commitment to continuous improvement?
Voltaire offered us a way to succeed in this crazy busy world we live in. He told us that the road to perfection is a journey; one that requires stops along the way.
What impression does your website make? Does it imply credibility and quality? Is it up to date?
It amazes me how many small businesses aren’t making their website work for them. I find this particularly true of restaurants. Websites are such an easy way to tell potential customers about your business. If a customer drives by your restaurant or someone recommends it, they will probably want to check out the menu or location by visiting the website, only to fine that it either doesn’t have a website, it’s hard to find, or it isn’t up to date.
Here are some handy tips to help customers find your site, and keep it current.
Seek inspiration from websites that you admire
Take a good look at your website and compare it to others in your industry, or websites you really like. Once you’ve found a few, look at their code to see how they achieved it. To see the code, in MS Explorer click on “view”, “source”. The key here is inspiration not plagiarism. Make your website your own.
Keep true to your brand
What colours and font styles have you chosen for your logo, signage, menus, etc? They should be consistent across all mediums including your website to keep your brand consistent and easily recognized by your customers.
Meta data – a search engine’s best friend
What is metadata? Metadata is data about data. It lets search engines such as Google, Yahoo and Bing understand what your website is about. This is important because not everyone who is interested in your product or service will know your website address. You will want search engines to be able to display your website to those searching for it.
The key pieces of code you want at the top of your website’s home page are as follows, with examples from our website:
Webpage title: The title is more than just metadata, in that it appears at the top of your web page. This should be the name of your website, and the purpose of the page they are on. For example: <title>Economic Insights Consulting Inc.| Pricing Specialists</title>
Keywords: These words are indexed and used by search engines and compared to search criteria entered by users. For example, our keyword meta tag is: <meta content=”Pricing Strategies, Billing Strategies, Strategic Management Consulting, Management Accounting, Health Services Consulting, Canadian, Toronto, Oakville, Ontario, Economics”/>
Description: This is the information provided about the website that is returned to the users. Ours is as follows: <meta content=”Economic Insights Consulting Inc. is a Strategic Management Consultancy located in Oakville Ontario Canada which offers Pricing Strategies and Strategic Management Consulting Solutions.”/>
Let search engines know you exist
Don’t wait for search engine robots to find you, tell them where you’re at! Submit your site to Google and other search engines. After all, you want potential customers to find you, right? Here are the links to the pages that you can submit your web address to. After a few days, the search engine will index your website and your customers will have an easier time finding you.
There are also sites that will do the submission to multiple search engines for you. Just do a search on “submit URL”.
Keep it current
Nothing says out of date like a copyright at the bottom of your website from 1999. Updating this section of code is as simple as changing the year on an annual basis. It is even simpler if you have a php footer file. Click here for code that you’ll never have to revisit.
Resources
Web designers come from both coding and graphic design disciplines. The following resources tell the website development story from both of these perspectives.
Clark, Andy. “Transcending CSS: the fine art of web design”, Berkley: New Riders, 2007.
Castro, Elizabeth. “HTML, XHTML & CSS Sixth Edition”, Berkley: Peach Pit Press, 2007.
Once you have a website, maintenance doesn’t take much time at all, but you do need a few pieces of software.
If tinkering with your website isn’t your cup of tea, by all means hire someone to maintain your site. Now you know a few more ways to ensure your site is working for you.
When the Ontario government hands them lemons, Loblaw will make lemonade.
Loblaw has crunched the numbers and anticipates that they can still come out on top despite the low margins on generic prescription sales resulting from government reforms.
A new strategy
Loblaw announced on May 4th that they will extending their hours and services at most of their 500 in-store pharmacies, and more than double the number of onsite medical clinics to capture customers who are shopping around for a provider that offers the service they seek.
This is thanks to the droves of customers they predict will come their way from smaller non-diversified pharmacies who can no longer make a go of it, and larger players such as Shoppers Drug Mart, who have driven their customers away by cutting their hours and service.
Their strategy assumes that the customer will drop off their prescription at the Loblaw pharmacy and then browse the rest of the store, picking up higher margin items such as health and beauty products, or other grocery items. They are betting that these sales will more than make up for any losses on the prescription side. To minimize costs, Loblaw will be instituting automatic pill counting machines.
At what cost?
This development raises broader questions. If Loblaw is correct it points to a fundamental change in how we as consumers will be able to purchase prescription drugs. We are shifting from a market of many players of different sizes with varying levels of service to a few large players who control the dispensing of drugs in Ontario.
Will oligopolistic behaviour ensue? Will these larger players raise their dispensing fees to increase their margins, and if so will private insurance companies react? Or will they exercise their market power towards the generic drug manufacturers, to get a better price in return for exclusivity?
Health Minister Deb Matthews is reportedly pleased with Loblaw’s plans, but is the Ontario government sacrificing service in the name of cost? What will become of small pharmacies? Or underserviced areas where there is no Shoppers or Loblaw?
Pharmacies of all sizes are fighting back with an aggressive campaign against Liberal MPPs including radio ads, mailings and a website portraying the elimination of professional allowances as “cuts to frontline healthcare”. It will be interesting to see what the public and government response is to such an overtly negative campaign.
One thing is for sure, we will see some innovative pricing strategies resulting from the reforms.
For more background on this issue, see my post “Generic drug manufacturers are the key to solving pharmacy woes”.
By now we’ve all heard about the Ontario Government’s plan to lower prescription drug prices by banning professional allowances paid by generic drug manufacturers to pharmacies.
Drug companies provide these allowances or discounts to pharmacies in return for exclusively stocking their brand of generic drugs. It is subsequently built into the price that is passed on to the consumer.
A significant portion of a pharmacy’s revenue comes from these allowances. This is particularly so for smaller independents then larger corporate chains who depend less on their prescription related revenue.
What is not being said however is that the generic drug companies also stand to lose as a result of the reforms. Without the professional allowance arrangement they will lose their exclusivity with pharmacies. Therefore the drug companies have a strong incentive to find a solution to the pharmacies’ perceived loss as a result of the Ontario Government’s reforms.
How will the generic drug manufacturers address this issue? They might consider borrowing a trick or two from their name-brand cousins.
Brand name drug companies already deal with a similar situation vis a vis physicians, who are subject to OHIP regulations and the Canada Health Act. In return for prescribing their name-brand drugs, physicians receive incentives including free samples, conferences and trips, and research funding.
I think in the months to come we will see the generic drug companies using some innovative pricing strategies to once again secure pharmacies’ allegiance.
One final though. What is the Ontario Government doing to lower the price of name-brand drugs?
Recently I picked up a small box of Godiva truffles to share with my spouse. What a disappointment. They were hard and the flavour was inferior. At a price of $3.33 per truffle I felt I had been ripped off. You see, truffles from Eitelbach at $1.50 per truffle are heaven in a box. Their truffles are fresh and they offer a nice variety of flavours. Soma offers its truffles at $2.00 per and are also excellent.
With other better quality truffles available, how can Godiva sell theirs at premium prices?
Godiva is held by a Turkish confectioner Ülker Bisküvi Sanayi, who purchased the company in 2008 from Campbell Soup which previously held it for 40 years. Eitelbach Baumkuchen Pastries Ltd. is a small Toronto based privately held company opened in 1989 and has two retail locations and an on-line store shipping to Canada and the US. Soma Chocolatemaker is owned by David Castellan, a former executive pastry chef at Oliver Bonacini restaurants. It opened in 2003 and has one retail location in Toronto’s Distillery District and online ordering shipping in Canada only.
How does Godiva do it?
The majority of chocolate consumers do not eat fine chocolate on a regular basis, if at all. So when it comes to special occasions or communicating thoughts of affection, Godiva is seen as a safe bet.
So why did I purchase the Godiva truffles? This was a spur of the moment purchase, with no Soma or an Eitelbach in the vicinity and no time to order from their websites. I relied on my perception of Godiva chocolates, the perceived perception my spouse would have, and the reassurance that the higher price provided that I was buying quality chocolate.
But because I have tasted quality chocolate, I knew instantly on tasting the Godiva truffles that I had been had.
That is the key to successful marketing – having customers believe a desired attribute about your product. We believe that Godiva, Soma, and Eitelbach offer quality truffles. In the latter two cases I believe it to be true because I’ve tasted them and know they are good quality chocolate. In the case of Godiva, I was relying on truth in marketing and appropriate pricing.
I would liken Godiva’s strategy to Starbucks’ (see post “The Starbucks Strategy”) in that 15-20 years ago before relatively good 70% dark chocolate graced the shelves of every grocery and drug store in the land, Godiva was relatively speaking, fine chocolate. However as the years passed and demand for good chocolate increased, Godiva opted to pursue a volume strategy, while getting by on status quo quality.
This brings me to my last point – making the customer believe something that you can’t or won’t deliver on leaves a lasting negative impression. The worst kind of PR a company can have. And while an entity as large as Godiva may be able to withstand a some disappointed customers, many small businesses whose reach is a great deal smaller and depend on repeat business, can’t.
The moral of this tale? Tell an honest story, deliver on your promises, and price appropriately.
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:
| Home Depot | Rona |
| Toilets mounted on a wall above my head, out of reach | Toilets on a floor display, within reach for easy comparison |
| After 10 minutes of looking at the display, no one comes to assist me. I leave. | Two staff members offer to assist: one immediately and one 2 minutes later. Both give advice on which toilet offers the attributes I am seeking. After a model is chosen, the second also explains what if any additional parts might be needed to complete the job. |
| Generally no assistance in transporting items the customer’s vehicle from this store. | I pay and then drive to a loading area where a staff member loads the toilet into my vehicle. |
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.
Just when you thought books were a dying breed, along comes something to breathe new life into the publishing industry. Digital books are an ideal example of pricing perfection!
A war over words
Since the announcement of the new Apple iPad, publishers have pitting Amazon, maker of the Kindle digital book reader against Apple. Publishing companies such as Macmillan and Harper Collins have threatened Amazon with joining the Apple store, saying that Apple is offering them more pricing flexibility. (See blog post by Ed Sutherland for more on this story.)
The Amazon Kindle’s competitors include:
Adobe Digital Editions digital book reader application which allows you to download digital books to your computer.
The margin is where it’s at
Note the differences in margin that the various formats offer. For example, the teen sensation “New Moon” is available as follows according to the Amazon site:
Amazon offers the Kindle digital edition and paperback with only a 34 cent price differential, despite the additional shipping and handling costs incurred for online paperback book sales. The cost of the same book at Barnes and Noble stores is $7.99, just $1.74 over the digital price to cover the sales staff and brick & mortar.
So given that a digital book is simply a small file uploaded by the publisher to the vendor’s web site and downloaded by customers, what do you think the profit margin will be for the publisher and the vendor? Comparatively speaking, digital vs. paperback, whether purchased in the store or online are quite significant. Cutting out the cost of postage is huge for the vendor, and the cost of printing a boon for the publisher. For the customer downloadable digital books mean instant gratification, although some miss the act of turning the pages of “a real page turner”.
Another revenue opportunity is gained from the lack of transferability. You can always share your paperback with a friend, or sell it in a book sale or to a used bookstore. Not so much with the digital version. Yet another win for the vendor and publisher.
These tantalizing profits are a good reason why Amazon wants to keep publishers away from the Apple store as much as possible, and why Amazon caved to publisher demands for pricing flexibility.
In summary, digital books provide an excellent example of how innovative marketing can lead to improved customer service and drastically higher margins and volumes for your product.
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.
Starbucks’ strategy had gone off the rails. Happily for Starbucks, the solution to its flagging performance is in its mission statement.
In its 2008 annual report, Starbucks acknowledged a decrease in customer traffic in the US and Canada due to internal and external factors. Their response was to close stores in the US, restructure its upper management, and make changes to the food and beverage menu.
Two missions?
In theory, strategy should flow from a company’s mission statement. In the case of Starbucks however, this is not an easy task. Why? Because the company has two of them. The first appears on the company fact sheet dated February 2008:
And the second on their website:
“To inspire and nurture the human spirit— one person, one cup, and one neighbourhood at a time.”
So from the get go, the company is running in two different directions.
Let’s assume that the first statement which refers to offering the finest coffee in the world is outdated, because it surely doesn’t. That leaves us with the second statement: a somewhat abstract declaration. Its accompanying guiding principles refer to:
The grade
Using Starbucks’ own measuring stick, how does it stack up?
First, the coffee: More often than not, I hear the words “strong” and “burnt” associated with Starbucks coffee. My experience with their caffè mocha, my preferred drink, is that it is an overly sweet inconsistent drink. Sixteen years ago when I was living in Vancouver, Starbucks was a destination where the in-crowd sipped lattés. Since then, the competition has evolved, and our tastes matured. Starbuck’s has updated their interiors, but the coffee is the same old, same old. So – quality coffee, perfectly made to inspire and nurture? Starbucks gets a failing grade.
On the community side, I think it deserves a better mark. It is after all one of very few environments where professionals, families and those who are just looking to read while slowly sipping, co-exist. The stores, at least in Oakville, also support local events.
Why does Starbucks insist on wandering in the wilderness by continuing to introduce substandard fare? In June 2009, it offered a new line of food with its inspiration drawn from real bananas, instead of banana flavouring. And what possessed them to introduce instant coffee dressed up like the 1970’s version of Sanka? It hardly screams quality.
Practice what you preach
The Starbucks mission is to inspire and nurture. Why not do just that? Offer great freshly brewed coffee, properly sweetened consistent drinks and lose the Sanka. And why not purchase baked items made fresh by local bakeries? That would be a leg up for the community, wouldn’t it?
Until Starbucks returns to its mission statement, its unfortunate reality is to be the McDonald’s of mid-level coffee. Found pretty much anywhere, nothing special, just something familiar.
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