Enough

Trying to wring every last nickel out of every single deal may feel good in the moment, but is a long-term losing strategy.

At some point the person across the table will decide that regardless of how wonderful your widget is, the process is too painful to continue.

Pick a margin where you both win, then calculate the five year value of that relationship. That's the number you should be focused on.

Peter

Appearances

Some things are bought because of what they are. Some things are bought because of what we think they will make us.

There's more margin in the latter.

Peter

Transparency

The best part of great customer service is that it is often transparent to the customer. They don't know how it happens, they just know it happens.

Like a great restaurant, there can be all chaos in the kitchen, but as long as everything is smooth int he front of the house the customer goes home happy.

This can require a lot of very unsexy work to build back end capacity that is well tested and engineered. The folks working "in the kitchen" have to be team players, willing to set their egos aside to ensure a quality experience for the customer.

It sounds so easy you would think everyone would do it- which is exactly why it is so rare. It is presumed to be both easy and free (or at least cheap), when it is quite hard and involves some amount of cash flow to be successful.

When margins get tight, you know exactly what gets cut first: the things the customer may not experience directly, but keep the whole thing moving forward. The result is a leaner operation that can do the job 80% of the time, and probably drive better numbers int he short run. But in the long term that 20% failure rate will chase away all of the customers who are discriminating enough to know the difference between what you used to give them and what you do now. Ironically, they are the customers you need the most.

But you increased margins for a couple of quarters. Bully for you.

Peter