In the hunt for more streamlined businesses that are less resource intensive, how real is the risk that brands are actually putting people off dealing with them? When does an efficient process become so rationalised that it loses its humanity and therefore its appeal?
On the face of it, brand and efficiency have similar objectives. They’re both about creating financial headroom – but of course they approach that goal from opposite directions. Efficiency is so often about what can be subtracted. Brand is all about what can be added, at least perceptually, that people will pay more for.
The problem occurs when the experience is over-compromised in the interests of saving money: when the seats become too cramped; the aisles too narrow; the servings too small; the service too automated … Because it’s at that point, that delight leaves the building, and customers start looking elsewhere because they feel you’re being mean-spirited.
There are, as I see it, two ways to address this:
1. Set very clear customer expectations. If you’re running a high volume, scaled brand, make it very clear to customers why they’re getting what they’re getting. And when you make a change that delivers them perceived greater value, talk about that openly and clearly as well. I refer to this so much because it’s remarkable to me how many brands are vague about what customers are getting that they’re interested in for their money.
2. Make your efficiency drive as invisible to the customer as you can. In other words, focus on adding perceived value where you front customers and removing cost where you don’t. That way, customers won’t feel like they’re being short-changed. But remember that the two are not disconnected. There’s no point in having a nice shop window if there’s no infrastructure to support it.
One idea that I am interested in is the concept of an “efficiency dividend”, where you effectively reward the brand for streamlining by reinvesting a percentage of the savings made. Whilst this may appear contradictory at first, it’s in fact an investment in the long term health of the brand from short-term cut-backs. (I’ve advocated for the same idea in terms of channelling profits into innovation as well.) It helps ensure you don’t just cut the business off at the knees.
How you deliver is your brand’s business. But what you deliver is your customers’. In each case, that’s the party that feels most directly affected. So my three questions are always:
1. What can we add to the experience to make us more competitive?
2. How much is the business going to pay for that? (by way of efficiencies elsewhere)
3. How much more will customers pay for that? And for how long (before it becomes commoditised)?