Is The Customer Always Right?

When doing business in a competitive environment, a customer always has choices. If they don't like your price, service, payment plan, or you, they can always do business elsewhere. Often overlooked is the fact that businesses also have choices, they don't have to want you as a customer. To some business owners, this is heresy. They attempt to cater to every customer, thinking that they have to try to eke out every possible dollar. Let's examine some scenarios which prove that you can build a business by not catering first and foremost to your customer.

First, let's look at premium brands and boutique businesses. In economics, the concept of price discrimination basically says you can charge more for a product or service, if you can identify, or create, a demand for it. The most obvious example is a business which sells expensive things to people who can afford them. It obviously works, or brands such as Versace, and store such as Saks Fifth Avenue would not exist. Premium appeal, and a premium price tag. Such businesses realize that not all customers are interested in a bargain. Bargain hunters are not their customers.

Sometimes a peculiar business decision has obvious benefits. Other times they are not readily apparent. Express Fitness Jamaica fits the later description. They are a self described "fitness club" bringing a new kind of gym to Jamaica. Membership gives you access to all five locations across the island. They have an automated billing system through which your membership is deducted from your bank account monthly. They also have fully automated twenty-four hour facilities, which aren't staffed beyond specified hours. The lights come on when there is activity, and turn off when you leave.

Express Fitness' model won't cater to everyone. First, some will be reluctant to provide their banking information for automated deductions. Such customers don't like the idea of relinquishing control of their money, or just don't trust a company with their banking information. The gym also doesn't cater to those who may be at the extreme of body building - they don't offer free weight bench presses or weights above a certain amount. Additionally, the facilities are monitored by surveillance cameras to make sure you're not sneaking others in, or loaning out your membership card. The weight restrictions are due to the fact that the facilities aren't staffed around the clock, and they would rather you not decapitate yourself on one of their benches. The surveillance has the two fold purpose of protecting you and safeguarding their business model.

The fact that there is only one payment option, and the lack of equipment for certain classes of gym users means that they will not attract everyone. But do they need to? Conventional business wisdom says you should cater to all kinds of customers so that you can have a larger customer base. But as we already established, there are business that cater to a subset of potential customers, and that works for them. They are in effect saying 'no' to customers who want to be members, but want to pay using a credit card, debit card, or cash. They are also saying no to customers who want heavier weights, certain free weight exercise options, and constant supervision.

A business doesn't need to win every potential customer to be successful and profitable. And sometimes streamlined and efficient operations beat the complexities involved in catering to everyone. If you could earn money with very minimal effort and low overhead, wouldn't you choose to?

Then there is Apple. This most valuable company and brand has a reputation of disdain for customers, at least that's how it appears to the uninitiated. Apple seems to snub it's nose at customers by making their devices non modifiable and closed physically and in software. Apple believes in making great products by controlling the entire user experience. The success of the first Macintosh, the iPod, iPhone, and iPad all seem to lend credence to that philosophy. So as people continue to call for openness, more features, and lower prices, Apple continues to ignore them. Yet they continue to be successful.

Depending on your viewpoint, Apple may be successful either because of, or in spite of their disregard for customer input. But again, what you think doesn't matter to them. Steve Jobs believed that "people don't know what they want until you show it to them". His goal was to "figure out what they want before they do". This philosophy is the touchstone of Apple, directing their every decision. The $100 billion dollars they have in the bank says they're on to something.

Customers make your business successful, but you aren't beholden to them. And you certainly don't have to cater to everyone. You can and should discriminate by price, choice, or philosophy. It will keep you focused, on the ball, and in the money.

The Easy Button

There is value in making something simple. And where there is value, there is the potential to make money. Therefore, simplifying a process is an excellent start for a business idea. Airplanes simplified travel. Coffee makers simplified getting a caffeine fix. Google simplified finding things, in the catacombs that is the Internet.

Like Google, Facebook has also made a name for themselves online. What have they simplified? They simplified finding and connecting with people online. While their stocks have been taking a beating, they remain popular amount the social networking crowd, and will remain that way for the foreseeable future.

Twitter simplified sharing things online. They make it easy to tell the world what you had for breakfast, to give others an opportunity to read that interesting article that inspired you, to get traction on your newest blog post, and even to share the latest fake celebrity death.

I don't know any celebrities, but I regularly write on my blog (which you should read sometime). And I recently found a new use for Twitter. I linked my Twitter account to my Facebook page, my LinkedIn account, my Blackberry Messenger profile, and my blog. Now, if I want to share something, such as a new blog post or an article I read, all I do is compose a tweet using the Twitter client on my Blackberry. The link is automatically shortened, my BBM status is updated, my Twitter feed is fed, my Facebook timeline gets a timely new post, LinkedIn gets the link, and my blog is logged.

I never used Twitter much before now. But this integration simplifies my desire to share things with my readers. Twitter's business model is built on simplifying sharing with the masses.

If you're interested in starting your own business, look for opportunities to simplify something. It gives a new meaning to easy money.

Growing Pains

When you are a small, new company you have to do things differently to carve out your place in the market. You have to be faster, customer centric, better. You move quickly, adapt readily, you're nimble and innovative.

With success comes baggage. As you grow, so do your expenses, and you become more concerned about making the money you need to continue to exist. It begins to seem as if your existence isn't as much dependent on innovation, as it is on cash flow.

Cash flow is important. But when it all starts to go south is when the business begins to compromise on the things that made it successful, in exchange for a quick dollar. And when they start to focus on the minutia of business, and lose sight of what made them different, the battle is lost. No need to be as customer centric, because losing one customer of 1000 isn't as devastating as losing one of 10.

In order to keep their edge as their business grows, entrepreneurs should always be mindful of what made them succeed. And instead of cutting off old roots, they should keep them firmly planted as they also add new ones.