“Don’t build roadblocks out of assumptions.” – Lorii Myers
If you’ve been following the news in Australasia – you may have seen the maelstrom created by Cadbury’s recent decision to reduce the size of their family sized dairy milk block to offset rising costs in the industry. TVNZ News Article
This situation itself isn’t unusual, it is something businesses everywhere encounter on a regular basis. Cost rises occur. Yet, all business don’t have the brand following of companies like Cadbury so it doesn’t always become newsworthy.
What are their customers upset about?
Assumption and choice. Increasing the price or reducing the volume are, in accounting terms, ‘net zero’ options. Either would work. In fact, increasing price would be easier to implement as opposed to re-engineering processes.
The customers are upset about being told, rather than being asked.
If you have fantastic brand loyalty and, obviously, such vocal customers, surely you would use them to resolve this problem. You would pose a question to your customers along the lines of:
Dear valued customers – it pains us to do this but unfortunately we can no longer absorb the rising costs in our manufacturing process. We have to make an incredibly difficult decision – do we increase our prices or do we reduce the size of our bar. We can’t do this without your help because it affects you as much as it affects us. We’ll be running a survey to see which option you would prefer. We appreciate you would rather see neither happen, yet we hope you recognise that in order to maintain the quality of product you expect from us, it is unfortunately unavoidable
What happens here is your customers choose. They own the answer. Sure, some will be in the minority but participation in the outcome is still positive. You are in a no lose situation if you ask your customers in this situation as it is either about cost recovery or cost reduction. Both options fix your issue.
The best part is that this then becomes your marketing campaign once the decision is made. You can then ‘sell’ this something similar to:
Dear valued customers, we recently told you about our rising costs and why this was occurring. We posed a question of you as to whether you would prefer us to increase the price per bar, or reduce the size. Your response was a resounding 67% in favour of increasing the price. We listened and from X the price of our bars will be increasing. We hope you continue to enjoy Cadbury and thank you for helping us with a difficult situation
What they appear to have done wrong is made a decision unilaterally. They appear to have made the decision internally, without consulting those most affected. Their customers. The issue here for Cadbury is their customers aren’t silly. This is a household brand – their customers own it in their minds. Not consulting them (or telling them they were consulted) suggests to them you don’t care. They are reacting due to this, not because the volume reduced.
This is an extreme example – but we can be guilty of this in sales. We make conscious and unconscious decisions for our customers on a regular basis – often without them ever being aware we’re doing it. We make decisions not to call them because we don’t think they’d like a cold call. We assume they are focused on price. We assume they won’t refer us to someone so we don’t ask. The list goes on.
Choice is a powerful sales tool. The ‘New Coke’ issue is a great example. Coke executives decided to introduce a new recipe assuming their customers wanted it. They didn’t market test the product. The didn’t ask their customers which receipe they preferred. The unanimous response was ‘don’t change Coke’. Coke survived, but a lesser company wouldn’t have.
We can underestimate the value our customers have in helping us solve our business challenges. We can also underestimate the issues associated with making a choice for our customers and getting it wrong. We can be guilty of assuming we know the right option to select – but sometimes our customers surprise us. I assume Cadbury ‘decided’ price was more important to their customers that bar size. It could be that they got it wrong. But they’ll have to wait to see at what cost.
Like the Coke situation, it’s not a lost cause. Apologising that you got it wrong can win back sentiment. However, permission is always a far more compelling road that forgiveness in sales.
Sometimes, like the Cadbury customers, they tell us we got it wrong. Other times, they just leave. The opportunity cost is dearest when when the customer doesn’t even know the choice exists. In order to make the right choice, you have to know your clients extremely well – do we?
Next time you’re making a decision or assumption that affects a customer – ask yourself if they should be helping you in making the choice. What’s the harm in asking? We do it with our staff – engagement and consultation are a significant part of employee management. How about our customers?