A BUSINESS IS A PERSON

“People buy people first, then goods and services”

                                                 –Joel Johnson

You may manufacture and distribute the best widget or service since sliced bread, but did you know you can lose customers and potential income by thinking that the product and price is the most important thing? 

I hear this argument all the time.  “Customers don’t care about you!  They just want the product available when they want it and they want to buy the product at the lowest price possible.  It’s all about convenience, availability and price.  It is not about sales people.  If people were so important, why don’t Wal-Mart™ and other big box merchants pay more attention to that?  You’d think they would go broke if people were so important.  It is not about the people—it is about finding the product you want at the best price—that is the most important thing.”

Very logical argument—it seems.  Makes one wonder why Wal-Mart™ bothers to place a greeter at their front door.

What is often overlooked is that businesses themselves take on the persona of the people running them.  The business has its own personality and it is the people within that business that create the feeling of humanness or non-humanness.

I digress.

Naturally, some people think price is the most important thing and are willing to give up a little quality to get it, while others believe quality is more important and expect to pay more for better products.  There is a wide variety of customers and products.  That is one of the reasons for choosing the right business model to begin with.  It is the model that helps customers know what to expect when they come to the business.  When they see the golden arches on top of the pole or on the front of McDonalds™, they know what they sell, what service they can expect and what their prices are.  Even a two year old child knows that. 

McDonald’s™ is a great example of a company that has learned to use human psychology and indirect sales techniques within the quantity and price model that has fostered their growth. With close observation, however, you will note that recently there has been an ever so subtle change in their business model.  But, that is a subject for another article.

The new business owner can choose to offer quality, quantity, service or price.  If he is wise he will choose only two of these.  He can choose to offer quantity and price—like Wal-Mart™ or he can choose to offer quality and service—like Neiman Marcus™ or Mercedes™ or any combination—quality and price, quantity and service. What he will learn, in the planning process, is that the model will determine the future of the business itself.  He will also discover that he cannot be something to everyone and will be wise in choosing his targeted market and targeted customer.

If he offers quantity and price, that means he plans to have lots of merchandise and sell at very low margins.  The idea of course is to capture as much market share as possible with this model. He believes the most important thing to customers is convenience, availability and price.  Naturally, he will want to make a profit on his efforts, otherwise why bother? 

When operating within the quantity and price model he will have to operate with very low gross margins (below competition) therefore, something has to give.  In determining what will have to go, where do you think he will cut first?  You are right; he will cut services, which of course means payroll.  He will have to find people who are willing to work for less and he will hire fewer of them.

He will try to make up the lack of service and margins by creative merchandising and bargaining with vendors for lower prices.  He will do this in such a creative way that the customers will be able to find the products they want with no problem and they will be able to buy them cheaper because his hungry suppliers have chosen to reduce their margins.  Of course, now the hungry suppliers have to cut quality.  They will do this by using plastic gears instead of metal, inferior fabrics and outsourcing to third world countries.  They will also cut their payroll.  In addition, they will have to bargain with their suppliers in order to meet requirements and increase margins as much as possible.  Once they have done this, they have established their future, which often does not look so good, especially when so much is depending on one customer.  What happens when the suppliers other customers find out they are cutting prices to get the business from the XYZ Co.?  What happens when the customer decides to drop the vendor.  Yep, you guessed it.  

Back to the main topic.

No matter the model, the business itself becomes like a person and develops its own character and personality.  We recognize these people, even though we may not know them personally, by what “they” do.  They are known by their actions.  What “they” do makes a louder noise that what “they” say they do.

How often do you avoid a business; restaurant, auto dealership, attorney, insurance salesman, bank, dentist, etc. because you do not like them or they way they conduct their business? 

How often do you avoid a business because the service was horrible, the advertised product was not available or because of an ‘I could care less’ attitude?  Maybe you had to wait in line too long for checkout, couldn’t find anyone who could answer a simple question or could not tell you where something is located within the store?  How often do you stay away because some sales person tried to pressure you into buying something you did not want? 

Without realizing it, “they” (the owners) have established in your mind why you will not shop there anymore.  You tell your friends, “I don’t shop with “them” because “they” don’t care about “their” customers.”  And so, in your mind “they”, the people who operate those stores, do not meet your personal expectations.  Therefore, you will not return. 

Lost sale! Nothing happens until something is sold.  People buy people, then goods and services. A business is a person—it is a fact.