No More Holiday Bonus

What does 99.6% accuracy mean in distribution centers? To the casual observer, it would mean that on average, 1 of 250 orders have errors. In market research, however, we have to look at the sample frame, or the source of the data compared with the total census of all instances. In this case, the sample frame is often customers (or other ship locations downstream of the DC) who complained or otherwise adjusted the order when it arrived.

Customers who did not complain could have been of three types: 1) customers who did not notice or otherwise care about the error; 2) customers who got the right amount of product, or 3) customers who got too much product and kept the overshipment for themselves. There might be lots of reasons for customers to keep over-shipments, including the cost of sending them back, the desire to make up for lost profits elsewhere, or even good old-fashioned five-finger discount (aka shrink). Nevertheless, the fact that these customers don't complain means that actual error rates are likely upwards of 1 in 250.

Hence the story my lead generation guy tells about a checking in on a customer who implemented Vocollect(R) Voice: his DC's downstream customers were very pleased with the improved accuracy, but they asked the DC manager, "What happened to all the extra stuff you used to send us?" The answer: the DC didn't mean to send it in the first place.

Improving accuracy means decreasing largesse for the downstream parts of the supply chain. In this case, that's a holiday bonus that isn't good for business.

Steve Jobs Revisited

Okay, I might have to take back some my earlier post on Steve Jobs. Although he is still reportedly a poor people manager, this story about Apple's legendary customer service does change my view. Look in particular at the very end of the article.  Are you listening, Andrew Mason?

"Cell Phone" Pricing

Think about your cell phone plan for a moment.  Do you have a fixed-price, all-you-can-eat type of plan, or do you have separate and confusing charges for every different type of call (international, domestic, in network, out of network, standing on your head) and service (text, data, text-to-data, data-to-text, video, videos with text, blah blah blah)?  Do you get warm, fuzzy feelings about your phone company when that bill is super confusing?

I am constantly astounded as to why business-to-business companies think that their pricing should be more confusing than their cell phone plans.  There is a reason consumers flocked to the Verizon flat-fee plans: they are easy to understand. Businesses selling to businesses should remember that their customers are, ultimately, human beings.  The more confusing we make our pricing, and the harder we make it to work with us, the less likely that those humans will want to do business with us in the future.

"But my company is the industry leader!" I hear you say. "Our customers will still work with us because we have the best products and services!"  And may I retort, "Do you really want to give your customer a reason to entertain 30 minutes with that new start-up because you are an unpleasant company with whom to do business?"  Why give the start-up competitors an opening?

This problem confounds me as I work through a new partner pricing program currently. I just hope our customers won't be more confused than I am already.