Stop whining about big box stores: Custom service is the new commodity for entrepreneurs

Dogwalking service

Dogwalking service (Photo credit: Wikipedia)

Every generation since the Baby Boomers has had a nickname. I am 40, that makes me a gen-Xer. I was raised by Baby Boomers who were the mainstream adopters of the VHS, microwave and Atari 2600.

Grand Junction, Colorado, where I was raised, is a suburb without a nearby metropolis. The town is large enough to be self-sustaining without a metro economy, but small enough to have a quaint downtown with parades on the appropriate holidays.

In a vin diagram with one circle representing my socioeconomic status and the other representing my generation, the point where the two circles merged would be called Walmart. I grew up in a generation of families with 3+ children in an geographic area with just enough market demand to support stable healthcare, retail and education employment opportunities. People were employed, but the era of the lifetime career and the gold watch was ending.

The economy went through booms and busts and local industries came and went as the entire country (and probably planet) seemed to suffer through an identity crisis. Technology advanced, the Internet replaced everything, experienced mechanics lost the ability to work on cars without expensive diagnostic machines, and every mid-level or bottom-rung employee was afraid of company down-sizing.

Walmart. All commodities, sold cheap, under one roof. The shopping mall had brought the retail culture to a single 4-walled venue. Walmart made shopping efficient and less expensive. It wasn’t pretty, but it wasn’t Kmart or Woolworth’s and it all but killed off the thriving indoor shopping mall model.

Today, Grand Junction has two Walmarts and a Sam’s Club within 5 miles. In fact, the Sam’s Club is across the street from one of the Walmarts. Nearby communities have blocked Walmart from setting up shop for fear that they will threaten local small businesses and syphon money from the community.

Charles Fishman’s bestseller The Walmart Effect documented the impact that Walmart had on both the local and world economies. Every American has probably had a conversation over Thanksgiving dinner about the pros and cons of the impact Walmart has on communities, families, and the economy. Some praise it for creating jobs or providing low cost products allowing for a stretched budget. Others criticize the company for destroying local mom-and-pop stores.

The Walmart Effect was written in 2006. Now that almost a decade has gone by, it is possible the effect may be more of a pendulum than a wrecking ball. Walmart sells goods at lower prices than most of their competitors. But, do they really kill off local industry? I prefer to make the case that custom service, not mass-produced goods, are the new commodity for small business opportunities. It’s very likely that Walmart has actually enhanced the value of both skills and education in the local workforce.

For seven years I owned and operated a one-man computer business. It was very successful as local businesses go. I had very little overhead, no inventory and I ran my own schedule. Best of all the demand was constant and the customers were willing to

pay $35-$120/hr for what I had to offer.

I didn’t actually repair computers. I carried a screwdriver with me and a few cables and connectors, but most of my jobs were centered around helping people adapt to their computers. I would frequently remove viruses, install software, setup new machines and teach my customers how to get the most out of their mass-produced machines that they had purchased from big box stores. I could have built machines and added revenue from mark-up on wholesale systems, but why do that when Dell, Gateway, HP and others had mastered the art of assembling personal computers that were cheaper, had warrantees and had gone through expensive R&D.

Walmart, Costco and other big box stores were just the beginning. Soon Amazon neutralized the local markets faster than any previous brick-and-mortar franchise. Suddenly the local retailers, no matter what size, became window shopping destinations – places for shoppers to see, feel, and touch products that they would later buy online for less money.

With automated shopping came automated “support.” It’s not called help or assistance. It’s called support. Tech support, product support, customer support. The word support implies that someone will sustain customer in his or her efforts to fix the problem him/herself, not help the customer by resolving the problem or guiding him/her through a problem.

The employees at Walmart, Best Buy, Barnes & Nobel, Costco, etc. are happy to offer you friendly service, as long as that service involves walking with you to the product that you are purchasing, helping you exchange for a similar product of similar value, or return a defective or unsatisfactory product for a full refund on a gift card. However, once you’ve brought the computer, car stereo, or puppy home, that friendly support ends somewhere between 7-21 days, depending on the policy. After that you have to take-up any problems with the manufacturer by calling their support hotline.

Given that the problem is simple, the manufacturer’s support line should be able to provide guidance that leads to a resolution – after the customer has pressed one, two, five, six, four and three and listened to a three song rotation of Return to Pooh Corner, Chuck Mangione’s Give it All You Got, and the Neutron Dance for 45 minutes. But, what if the problem doesn’t have a simple fix. What if the hardware company claims that the problem is actually the responsibility of the software, or vice versa. Worse, what if support claims that the problem is the result of misuse or mistreatment?

When shopping for a product, customers tend to look for the lowest price for the best quality and the most features. However, when a customer has problems, they are looking for an efficient and thorough solution at a reasonable price. The worse the problem gets, the less price matters. If a company can’t operate, a student can’t study, or a crafter can’t get on Pinterest, the time lost becomes more valuable than the currency.

Service is the new commodity. Theory must be supported by skilled practice. Art can only be created by someone with experience in the craft. Practical knowledge combined with a pleasant attitude have a value that exceeds the cost of the product. The Walmart effect has been offset by small businesses that understand where their true value lies. A company that invites customers to purchase the product anywhere they want, but come to their establishment for service and support, should not fail if it is executed by caring and knowledgable operators.

Originally posted as LinkedIn article: Adam Cochran

21

08 2015

How to save the movie theater business while lowering popcorn prices

English: The impressive Egyptian-themed entran...

English: The impressive Egyptian-themed entrance to the Cinemark Egyptian 24 movie theaters located at Arundel Mills Mall. (Photo credit: Wikipedia)

The cost of going to a first run movie is roughly the same as tickets to the nosebleed section of a professional sporting event – especially if you get popcorn and soda. The high cost of movie tickets is a better small talk conversation topic than the weather. Some people like rain, some like the heat, but everyone feels that movie tickets are too expensive.

For well under $1500, you can get a great home theater system, including the 65″ television. The subwoofer will shake the house, the floors aren’t sticky, and you can can pause it when the baby cries or you need to pee.

Those of us who pay extra to see a movie in the theaters do it because we love the experience. The smell of the popcorn, that moment when the lights dim, the bad red robot moving through the grass – often the movie itself diminishes the experience. Nobody wants to see the end of theaters. In fact, we want the ceremony of the theater experience to be greater than what it is.

Over the past 20 years, theaters have increased efforts to make the experience that is worth the premium price. Megaplexes have added stadium seats, cup holders, cuddle seats, and even tables with group seating in some hipster venues. The results have kept the industry alive, but they have also muted the nostalgic red curtain experience.

When discussing films, friends often provide opinions of a given movie by declaring it to be worth seeing in theaters, a rental, or wait for it to come on Netflix (or worse television). This is a confession that the theater experience still offers something significantly more special than all of the the amenities of home viewing.

The problem with the current movie theater business model is that it is too rigid. The most avid Adam Sandler fan will pay $20 (including the snack – maybe) to see Grown Ups 6 on opening day. After that week goes by, Sandler begins competing with Avengers 9. Avengers will likely be well attended, even on week nights, for two or three weeks while Grown Ups will barely fill 50 seats all day on the weekends.

The solution could be a tiered pricing model based on seats sold. Once a film fails to fill 50 percent of the seats, the price should drop by 20 percent. Opening night or weekends could also have premium pricing – which could include popcorn and soda. Most die hard Hunger Game fans would find a way to come up with $35 for an opening night ticket, even if they knew the price was going to drop to $20 two nights later and $10 two weeks later.

Why would someone pay full price if they knew the price would drop a few weeks later? Who knows, but they do. The video game and home video markets have been doing this for years. Theaters do it with second run films, but there should be something in between.

Imagine paying $20 to see a movie opening week, but then realizing that for $5 you could stay and watch an older film before it leaves the theaters. Normally, that $5 film would be empty, but by lowering the price, theaters could be filling seats. Selling 25 $5 tickets is better than 5 $10 tickets, right?

Every time I pay $30 for my wife and I to see a film that has been out for four weeks and there are only eight people in the theater, I think about how my tiered pricing model would have left me some money for a $10 popcorn and enriched the experience of watching the movie with an audience.

08

08 2015

Owning a business is not necessarily entrepreneurship

Photo Credit Flickr.com https://www.flickr.com/photos/wlscience/2143293439/

Photo Credit Flickr.com
https://www.flickr.com/photos/wlscience/2143293439/

I am about three days into Peter Drucker’s book, Innovation and Entrepreneurship. It’s a good read provided you skip the introduction that consists almost entirely of understated 1984 prophesy’s about the future of the tech space.

Drucker approaches entrepreneurship as a science centered on confronting new frontiers rather than establishing a new businesses or owning a business. The argument is that a person starting a new hamburger stand where there is a market need for a hamburger stand is not an entrepreneur. The entrepreneur would open a beatnik hamburger bar that plays old movies instead of sports in a part of town that already has hamburger stands, coffee shops and sports bars.

He goes so far as to make the point that companies like DuPont, 3M and Apple (I added Apple to his list) have proven that well established companies can be entrepreneurial. Whenever a person, partnership or company takes a risk by forging into a new frontier, entrepreneurship has taken place. Read the rest of this entry →

08

07 2015


Creative Commons Attribution 3.0 United States
This work by adamc is licensed under a Creative Commons Attribution 3.0 United States.