We've all heard the saying...
Since the early age of business, the phrase "the customer is always right" has been uttered thousands of times across the globe. This attitude has shaped the service industry. With the dawn of the internet and immediate reviews, it only takes one disgruntled customer to completely destroy the reputation of a good business and they can do it almost instantly. In this uncertain environment, deferring all responsibility to the vendor seems logical. But is it truly beneficial?
In 2007, a new concept reached the best-seller list for the New York Times. Tim Ferriss wrote about selectively servicing customers. He realized that 80% of his service time was being spend on 20% of his customers who consistently has difficulty with his products. After some forethought, he devised a plan, and passed that 20% on to other suppliers or vendors. Upon doing this, he realized he made significantly more profit in far less time. Who doesn't want to work less for more money?
However, the perk of Tim's business was an almost infinite buyer pool. Because he sold directly to the public, Tim had millions of potential customers and a lot less to lose. In the industrial world, buyer pools are a lot smaller, and connections a lot tighter. At what point is it worth the risk of customers being upset? Some, like Starbucks, who recently passed an open-storefront policy, will tell you that it's never worth the risk. The negative review of the one outweighs the positive reviews of the thousands.
Still, there's something to be said for the opportunity to increase output while decreasing costs. Because the opportunity cost for each supplier is different, ultimately the decision has to be made on an individual level. There's no cookie-cutter solution to such a problem because, let's face it, people are messy.
Will you choose your customers?
About Northwest Etch
Since 1978, NW Etch has provided precision photo chemical milling services in Tacoma, WA., working in a wide variety of metals. Creating custom metal parts for a wide variety of industries allows us to proudly state:
"We machine components for the coolest projects, on and off the planet."