Three Simple Steps For How To Ration Service And Cut Perks Rationally

Consider these recent news items:

  • Ryan Air considers installing pay toilets on their flights.
  • Royal Caribbean eliminates passengers’ dining room trays to reduce their food consumption.
  • Hertz now charges double digit fees daily to authorize your spouse to drive your rental.

While we roll our eyes at these examples, why be surprised when so many businesses are cutting back? For me watching the irrational ways big companies cut back is really amusing. What were corporate marketing and finance departments thinking when they made the above cut backs? Why didn’t they focus on the following simple questions?

  • What services to provide?
  • Who gets them?
  • And what will they cost?

In your small business you as the owner should make these decisions. When you must charge more or provide less you can do it intelligently.

Three Simple Steps For How to Ration Service and Cut Perks Rationally.

If you cannot raise revenues by increasing your prices and you must make cuts that impact your customers, keep the following mantra in mind, ask your customers and fulfill their ultimate interests.

First, assemble a customer council, focus group or other modestly staged gathering and explain that you can no longer provide your product or service at the same level of …

  • Quality
  • Price or
  • Service

…but that you want to make them as successful as possible.

Ask them to rank the above in terms of from most to least important to them.

Second, break down the services and products whose costs you need to reduce by learning which features, benefits your customers really say they:

  1. Need? How, when and at what price?
  2. Want? How, when and at what price?

Third, reassemble what you will continue to offer to fulfill 1 and then 2 above at what level of quality, price and service.

Working together with your customers will likely yield some surprising and possibly attractive options. We are all faced with stark choices and are becoming more flexible about what is really important in our lives. We just would prefer to have these decision made to our benefit, not arbitrarily without our input.

Returning to our three examples of our three large companies let me share what happened in each case without customer input.

  • Ryan Air abandoned their pay toilet plan after suffering derisive ridicule in the media.
  • Royal Caribbean may have saved food costs as some passengers decided to eat less but many complained about carrying (and spilling) overloaded plates on rough seas. The waiters took more time and thus cost Royal Caribbean more money to clean up and bus these tables.
  • Hertz and other car renters’ spousal policies inadvertently created a new competitor, AMEX’s one-price car rental insurance which covers spouses and much more risk for a better price.

If only each big company had asked their customers first. Don’t make the same mistake for your business and go ask your customers what they need and want and make the changes you must!

Contact Andy Birol using the form below for more information on assistance on rationing your services and using wisdome when cutting your perks.

 

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