Why companies choose 'Price' over Customer Service

Here's an interesting story out of Asia

Here's an interesting story out of Asia. Apparently, although 75% of Asian consumersbelieve that customer service should be a company's top priority, less than half of companies surveyed invest in customer service. 1/3 of the companies invest in customer service "only when they see a real need." Why? According to the information out of Indonesia,despite the fact thatmost consumers claim to be concerned primarily with customer service, companies still believe that price' is the biggest factor.

Pretty much the same trap companies fall into in North America, Europe, Australia, Africa, etc

Here's why the price trap is so seductive to companies:

1. Focusing on price is just easier

Adjusting your pricing doesn't require a lot of thought or effort.

2. Price changes show clear results

If a company drops its prices by 20%, they will typically see immediate results. Sure, it's not sustainable, and sure, it's hard on the bottom line, but for those who need instant gratification, it's great. Customer service, of course, will also show clear results - with greater sustainability and profitability - but it's a little harder to measure, and there are too many people unwilling to change the way they've always done business.

3. The competitors are all using price

True. And it sucks when you see a competitor drop their prices and take a piece of market share because of it. (even whenit;s just for a couple of weeks). What most companies fail to realize is that those consumers who switch are the 17% who are price/quality driven. Research tells us that the rest - 83% - are service/quality driven. Which segment of the pie do you want to draw your business from?

From a strategic business perspective, positioning your company based on customer service takes much longer to establish than one on price. It also takes a different kind of investment. Where a price strategy takes the investment directly from margins, a customer service strategy takes it from operating expenses. The facts, the research, the anecdotal evidence, howeverpoints irrefutably tocustomer service being a far more sound and profitable route to take.

Why companies choose 'Price' over Customer Service

By: Shaun Belding

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