The Branded Pantry

Sometimes companies are faced with new process or technology decisions where the criteria for judging alternatives are difficult to comprehend and are made confusing by the propaganda offered by vendors.    This can be particularly daunting in the retail arena.   So many of the technical choices can offer slim feature/benefit differences.  Others offer real differences but the expertise of the buyer is limited and so the “claims” that each vendor espouses, makes the vying products “look” similar.     One tough example is online grocery marketing and commerce.  Retail IT has little expertise.  The vendor’s sites and propaganda are mirrors of one another.   The SAAS and the custom-builders all claim to be “silver-bullets.”  With Walmart* and Amazon coming on strong action needs to be taken!   So when decisions are in areas we have little expertise (because the offerings are new or because we simply do not have experience), to what criteria do we turn to drive our decision?  Why price of course! Let’s take a minute to examine a real world example where the promise of FREE led a retailer down the primrose path, not once but twice.  So far those decisions have cost this retailer millions and most importantly have cost them customers. This retailer, a regional grocer who was offered a set of online capabilities “just like” the ones he was very successfully using.  The only (supposed) difference was that the alternative service was FREE, vs. the fees that the client was paying the incumbent.  “Free” sounded SO good that the retailer did not even check out incumbent references that had experienced both service providers.    So the retailer changed services.  The result? Disaster!
The part of the chart above shows the building success of the retailer’s online volume with Vendor A.  When the switch was made to Vendor B sales plummeted and suddenly “free” had a cost.  A real cost.  Not just dollars (hundreds of thousands per month) but the most very loyal customers that retailer had.   Still the retailer persisted using the “free” Vendor B and listened to promised changes and improvements for well over two years.  The cost?  Millions of dollars, but more importantly the loyalty of customers who took their business to the “easier to use” technology offered through their grocer’s (coincidentally serviced by vendor A).   Amazingly the retailer asked Vendor A to take on the business again, which Vendor A did.  Vendor B tools had not improved volume at all over the two plus year gap, but after a short period back with Vendor A and the superior technology….sales began to pick up, soon eclipsing the old levels and creating new record levels of sales.   More amazing still is that the retailer listened to another “Free” offer from Vendor B again..and switched back again…and lost most of those hard won customers…again.    Millions and millions of dollars, (double the loss levels from the first switch)…and most importantly customer satisfaction, loyalty from very vocal online shoppers.   The moral of the story?-is not to thoroughly check your vendors references….although you should.  -No, it is not “there is no free lunch”….although there is no free lunch. In this case Vendor A did not love his customer enough to convince her not to leave in the first place and did not offer a compelling enough story to offset the winsome “Free”.  So in the case of the first switch,…shame on the vendor. In the second case… the grocery retailer did not love HER consumers enough to be able to resist the short term, easy buck.  The price for that mistake is huge….compounded by these times where consumers demand smart, resourceful retailers who value their customer’s time and business. For the rest of us….the right decision can be hard to make, is hard to research thoroughly and is almost certainly not free.   Whether we are talking about new technology that promises new benefits or current technology that is tried and true but…not in our wheelhouse…the safe bet in these times is to keep our head down and vote for “no” or vote for “free”.  Penny wise, and customer foolish.  How much do we love OUR customers?