Do you ever make business decisions affecting your customers without asking them what they think first?
I belong to a franchise system and have been very successful in my business for eight years. Last night, the corporate office sent an email to its 400 or so franchisees announcing that an important product was being discontinued because of high manufacturing costs. My BlackBerry began buzzing incessantly almost immediately with commentary from other franchisees that is mostly unprintable on this family-friendly blog. Ah, I thought, a teachable moment for entrepreneurs on how to make decisions when your customers are involved.
If you have a product whose raw material cost had risen, what would your options be? You could:
- Discontinue the product without prior research on how this would affect your customers and your relationship with them.
- Raise prices to your customers to cover your raw materials price increase.
- Ask your customers (or a subset of them) whether they would be willing to pay more to keep the product.
- Look for alternative sources of supply.
- Other (you fill in the blank).
As it turns out, the franchisor had not considered any of these except the first one. They skipped the analysis that a price increase of about 3% would solve the problem (an amount easily absorbed by customers and able to be passed along to end users without complaint). Instead, the franchisor, in aim-fire-ready mode, unleashed shock and awe on the very people who it depends on for its own life.
And the moral of the story, boys and girls: When you surprise your customers, who are your business partners, bad things happen. If there are hard decisions that have to be made, find a way to bring customers into the conversation (and your business obviously does not need to be a franchise to accomplish this). This is especially true in small business. We're not talking about GM and the Hummer here. Almost any problem can be solved when you ask customers to be part of the solution.
Did the franchise company recognize their error and raise the price?
Scott, after a huge uproar from the franchise base, they sent a “nevermind” email. Price increase probably to come. Funny how insular companies can be when they stop listening to customers.