‘Noblesse oblige’: if you offer branded products or services, ensure your pricing model enables you to maintain the loyalty of your clients by offering a ‘hassle-free’ after-sales experience.
In both the B2C, as well as in the B2B world, there are usually three reasons why people buy branded products and services, instead of generic ones:
1. Unique features
2. Exclusivity
3. Quality
The first two aspects can usually be evaluated before the purchasing process. The third one, however, is mostly experienced only after the initial purchasing process has been completed, and therein lies the problem…
Is quality really free?
Philip B. Crosby, a management guru, once made that famous statement ‘Quality is free’. What he meant was that, by doing things right, there should be no need to fix or repair products or services after they had been delivered to the customer.
Unfortunately, in reality, quality often does not turn out to be free. Despite the popularity of TQM (Total Quality Management) in the late 1980s, at the same time, a shift in the corporate mindset regarding after-sales issues took place. Instead of seeing service and repair activities as a necessary evil to fix problems that should never have occurred in the first place, companies turned service and repair departments into ‘profit-centers’. This meant that, instead of financing service & repair departments from other activities (e.g. sales), these activities needed to finance themselves and contribute to the overall profitability of the organization.
This proved to be relatively easy. Given the fact that customers already invested a lot of money in the original product or service, they often felt they did not have a choice. Therefore, they grudgingly paid for a repair or fix they did not think should have been necessary in the first place.
However, this attitude to after-sales services created the same issue in the B2C, as well as in the B2B world: it decreased customer loyalty.
Customer loyalty at stake
If customers feel they are being ‘ripped off’, their loyalty to the brand will suffer. Once I was a big fan of a particular camera brand. When I handed in one of my lenses for a repair and saw the price tag afterward, my loyalty to this brand evaporated on the spot.
On a corporate level, repairs, fixes and additional services that are not budgeted, often create a ‘hassle’. It forces the internal champions (‘user buyers’ and ‘coaches’) of the product or the supplier, to go back to the ‘technical buyers’ and ‘economic buyers’ of their companies to ask for an additional budget or expense approval. A painful loss of face in the corporate world, often also resulting in strong ‘Fool me once, shame on you; fool me twice shame on me’ feelings at the side of these (now former) champions.
Charge enough
Several years ago, I worked with a high-tech company that solved this dilemma in a highly effective manner. It sold products with a rich brand heritage and extensive feature set at a premium price in the B2B market. The price level of the products and services of this company was considerably higher than the competition. However, user buyers acted as coaches and preferred buying from this supplier. They even did everything in their power to convince the technical and economic buyers in their companies to go along with their preference. Why?
The first reason was that the products were technologically advanced, but secondly, and perhaps even more importantly, the most important reason was that the after sales service of the company was great. Customers hardly ever experienced discussions whether features were included or not, and did not have to go through torturous ‘design versus wear & tear’ debates in case of issues.
The morale? ‘Noblesse oblige’: if you offer branded products or services, ensure your pricing model enables you to maintain the loyalty of your clients by offering a ‘hassle free’ after-sales experience.
(Note: ‘User buyers’, ‘coaches’, ‘technical buyers’ and ‘economic buyers’ are actors in the sales process based on work by Miller Heiman)
Dirk Verburg 