Quality doesn’t have to be a part of your services offering. In fact, it is completely reasonable to make the explicit decision to focus first on other factors that may be more important to your customers. Price comes immediately to mind. Customers of some services and products may be more interested in receiving acceptable quality with the lowest possible price. This happens particularly in the delivery of commodity products and services. However, if you have made the decision that quality is part of the way in which you are going to differentiate your business like we have at MB&A, it becomes critical to ensure that this message is constantly in front of both your clients and your employees. By virtue of choosing to differentiate on quality, you are almost inevitably asking that customers pay a price premium. Your employees then go the extra mile to ensure that your services and products are differentiated to the point that they justify this price premium.
I think the easiest way to explain why it is so important to compete on quality to employees, is to explain what happens when you choose to compete on price. The decision to compete on price, generally means the beginning of a ruthless effort to reduce costs. This needs to be done in order to support margins in the face of limited ability to support prices based on other factors. This almost inevitably ends in lower employee wages. Even in a products business where there may be some opportunity to simply scale operational efficiencies to support lower costs, competing on price is essentially a race to the bottom. Because of this, it shouldn’t be too difficult to explain to employees that they derive the most personal benefit from a quality focused strategy. The idea of building quality into every stage of the product or service life cycle is simply part of justifying the additional cost to the customer. In all probability, this results in higher wages relative to competitors in the same market that choose to compete on price. This is perhaps an over simplification, but I think it holds fairly true and it is certainly easy to explain and grasp intuitively.
Once there is broad recognition of the desire of the company to differentiate on quality, the hardest part begins. The market to compete on quality, is almost always very competitive because of the perception of higher margins. The very human desire to compete on these factors rather than simply on acceptability is another. Most people want to be perceived as delivering “high quality” services. Very few companies mottos or vision statements say that they aspire to be “technically acceptable” or the “lowest cost offering.” In order to compete on quality, the messaging needs to occur regularly, and not just from the vision of “being the best.” There needs to be a consistent focus on quality and identifying repeatable practices that lead to an increase in, or more consistent level of quality. Their also needs to be an understanding across the organization that quality runs across two axis. The first is the “level” or “grade” of the product or service being delivered, and the second is the consistency with which that “level” or “grade” of product can be delivered. The perception of quality is a very tenuous thing. Due to the price premium being paid, even small slips in quality can have disastrous results for the company. Companies attempting to go down market for sales should be very wary of the pressure to sacrifice cost elements that are important to delivering quality in the search for additional revenues. Years of hard fought gains in the market for client perception can be lost in moments, dragging the company into the very price competitive environment that it initially chose to avoid by competing on quality. Therefore, it is critical that the quality that is being messaged to the client be delivered every time, and that the internal messaging around quality be just as consistent and deeply embedded.
I think senior managers that are part of quality based companies simply cannot talk to quality points enough. The message surrounding the pursuit of quality should be something that is openly stated at every meeting. There may not need to be a ten minute diversion at every meeting, but something as simple as a single sentence reminder that “this is another chance for us to show we are the best,” on a daily basis ensures that people don’t lose site of the number one goal. I know that in our services business there is always pressure to compete on price and an instinctive desire to increase margins. However, we constantly remind our people and ourselves as a leadership team that competing on price is a slippery slope and that we are better served by innovating on our clients behalf to deliver more value at our current pricing. The message surrounding quality should also figure prominently in the work environment via the presence of the message in corporate communications, office decor, training, and performance management. Every element of the organization needs to be tuned to drive quality or the organization will end up competing on other elements of its product or service delivery.
The same approach of consistently messaging internally must be applied to existing and prospective customers. One of the most frustrating things that can happen in the pursuit of a sale is to have a customer compare your quality differentiated approach and price to that of a firm competing on price. This is inevitable as customers are always searching for a better price for “similar” services, and price competitors certainly do not advertise their products and services as “ok” or “not so great, but good enough.” When this conversation comes up, you had better have an answer at the ready or be ready to lose the client, at least in the near term. I have on several occasions said, “I almost hope that they end up choosing company xxxx.” It feels good to say, but it is a terrible approach and shows that you are failing to communicate your value to the customer adequately. This may be harder with prospective customers because quality is a hard sell, and competing on quality leads to very slow sales cycles. Simply put, it costs more to convince someone to pay more for a service on the basis of quality, than to ask someone to “try” a cheaper offering. Based on this you should guard your existing customers well, because the cost to convert new ones is much steeper than the cost to retain existing customers who should be well aware of what differentiates your service.
The time to draw comparisons to your competition or draw attention to the value of your differentiated approach is not when the customer is in the midst of making a buy decision. It should be happening every day as they use or experience your product or service. Quality competitors shouldn’t have clients or customers shopping their business, and repeat business should be a given. This is an explicit activity. Marketing to existing customers should occur with the same intensity and MORE frequency than that to new customers. In particular, I think packaging of quality differentiated offerings is important. I have often been told that a client package is ready to go. Then when reviewing the deliverable before it goes across to the client, you find that colors are not complementary or that the document is dull and lacks graphics. This is unacceptable, in our case having the answer to a complex management issue is only part of the solution. It is critical that the solution be packaged in a manner that enables it to be communicated to an executive team and then acted on. It is one part solution, one part communication piece. A technically acceptable solution that does not inspire action is simply not good enough. Quality in this case means having the answer and presenting it in a manner that inspires the client-side outcome. When this happens, the client can easily evaluate the value proposition you deliver because you have provided real worth to their organization. The final component of messaging for quality is that in order to differentiate on quality you have to message it and live it internally, message it externally, and finally have it be accepted by the client as being a product or service that is differentiated on quality. If you can get to this final step, you will rarely lose a client to a price competitor.
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