In this struggling economy, it would serve both consumers and suppliers well to take a step back and give a little thought to the implication of the phrase “You get what you pay for.”
Unfortunately, we’ve heard the saying so often that its wisdom may be diminishing with the repetition – and that will cost you whether you are looking to purchase or hoping to sell. We all understand that there is often a direct correlation between the price one pays and the quality of that purchase. We all inherently believe that if we pay a high price for something, that object should be of a higher quality than if we paid a lower price for the same thing or something similar.
Bargain Hunting
For example, how much difference can there really be between two brands of paper clips? Most people would think that every box that contains 100 paper clips should cost exactly the same, but such is not the case. (Please allow me to offer my apologies to all the overly sensitive paper clip suppliers to Staples, Office Max, and all the other office supply stores the world over, if it appears I have forgotten to mention style, function, color, labor costs, taxes, insurance and million other factors that come into play in the production of their exceptionally useful product.) I intend to talk about products and services that are both larger and more expensive that the under-appreciated paper clip.
Now it is only natural for someone in search of a paper clip or anything else to want to get the best product possible at the lowest price available. Bargain Hunting is ingrained into the heart of anyone who has ever clipped a coupon. But when it comes to services that require “out-of-the-big-box” custom effort, a person should truly take to heart the “You get what you pay for” saying. Avoid the bargain unless you like disappointment – and believe me you will be disappointed and here’s why.
Unless you the type of person who is a 100% compulsive buyer, and never, ever compares two or more versions of the same product or service before purchasing, you are going to want to get the better product or service at the least expensive price. And the longer you take to make your decision between the two (or three or four), the more you will become confused between not only the differences of the products or services, but the value associated with those differences.
Email Newsletters
Let me talk about a service I know a little bit about – email newsletters. One pretty much looks like another and odds are you have personally created enough Word documents in your life that you know how any document looks is easy to change - as easy as clicking a different font style and color or other similar functions. You’ve probably already created something that looks like a newsletter and sent it to a group of business associates right from your desktop computer.
So why use an outside service? Here’s a simple metaphor to help understand the answer. If you live one mile from the nearest grocery store, you are probably close enough to walk, but I’m betting you drive your car 99.9% of the time for a whole bunch of reasons. Take my word for it there are a bunch of reasons to use a professional service to send out your company newsletter too. Then the question becomes, why does one newsletter provider’s service cost more than another? Don’t they both do the same thing?
The quick answer by extension of similar metaphor: If you had to drive from New York to Los Angeles, would you rather make the trip in a Chevrolet Aveo5 priced at $10,235 or a Mercedes-Benz SLR priced at $495,000? They will both get you there. Now you may not have a half million dollars to spend on a car, much less a newsletter service, but unless you’re delusional, you are not going to expect the same level of quality between the two vehicles and you shouldn’t in your newsletter providers service either.
Here’s the part that most business owners don’t get. If you walk into the Mercedes dealership and tell the sales manager that you were just shopping a Chevy Aveo5 and wondering if he could pull out the leather seats and match the price, what do you think would happen? Why then would you lower your price if the service you provide is world-class? And why would you expect a company whose service you recognize as superior to reduce their incentive to provide superior service by asking them to compete with an inferior service?
Let’s face it. No one knows your business like you do. There are considerations that consumers will never understand and they don’t even want to make the attempt. I’m not saying you should never give someone a discount to get their business, but if you do it on every deal, words spreads – not only to other prospects and customers, but you can bet your own staff will start believing that your service isn’t worth what it used to be. That’s a nasty road full of potholes you don’t want to drive down.
An August 2008 article in the Wall Street Journal reported that The Big Three auto makers have asked their ad agencies to cut fees, with General Motors demanding their fees be slashed by as much as 20% this year and next. You can bet GM doesn’t expect the volume or quality of service to be reduced however and any agency that fails to meet expectations will undoubtedly find themselves replaced. What does this do?
Well, it creates downward pressure throughout the media chain, meaning that suppliers, such as publishers will pressure printers to also cut costs. Staff in every supply to the advertising agencies will find themselves downsized to meet the price demand. But worse, look at the message it sends to the marketplace.
The message it sends to the marketplace is that if your company is suffering, or isn’t successful, your first recourse is to squeeze those in a position to help your firm regain its success. It just doesn’t make sense to make it harder for those suppliers responsible for communicating your value proposition to the marketplace in economic times when you are in most need of their expertise. Unfortunately common wisdom (or lack thereof) demands that advertising is the first item cut when things go bad and the last put back in place when prospects improve.
When you realize that GM’s proposed advertising savings of $20 million in fees is only 0.13 percent of their total losses for the second quarter of this year, it’s hard to believe that the savings is really worth the kind of reduction in quality for the service product being purchased?
And make no mistake, not only will you get what you pay for, but remember the correlation of the three production constants of “Time, Money, and Quality.” Everything affects everything else and your long-term success is always based on the success of those who work for you.
Mike Braun
Online Marketing Manager
BizActions LLC
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