Alt text image of a knob turning to higher risk from medium

Lowest Price Comes at a Cost That Is Too High

The resort where my family and I recently stayed has a contract with a transportation company. The transportation company mainly moved people from the resort to the theme parks and back, but they also transported them to shopping malls, restaurants, and other stores. It is a nice idea.

The first van that took my two daughters and me to Target to buy supplies had a problem. As we were driving on a three-lane highway in the fast lane, the anti-lock brakes deployed for no reason. The van started to bounce violently as the driver did her best to cross two lanes of traffic.

The next day I asked for an SUV, but was given a different van. This van had suspension problems, and the check engine light was illuminated the entire time.

For a couple trips, I was given the newest SUV. The engine light was on in this vehicle too, but it felt safe. Then, the transportation company sent the van to pick up my family for what was to be our last trip using this transportation company.

The final van we were given had only one working seat belt in the second row of seats. Being polite, I had volunteered to sit in the back, leaving my wife and my daughters in the middle seat, only one of them wearing a seat belt.

I complained. I called the resort to tell them the transportation was unacceptable, and they would have to do better. I was promised a call back, but that call didn’t happen. I called the transportation company. The manager said, “Why are you making a big deal out of this?” I forcefully (and rather colorfully) expressed my feelings.

Then I called another transportation company. I asked if I could have a relatively nice, relatively safe vehicle to transport my family. This transportation company charged a higher rate.

The price for the dirty, rundown, dangerous vehicle and the accompanying horrendous experience was $35 one-way. The price for the new, pristine, seatbelt equipped, comfortable, leather chaired vehicle was $45 one way.

The first transportation company isn’t making the kind of money they need to deliver for their customers, whether they think they are or not. The resort awarded them an exclusive contract, surely in part based on their prices. Bu there is no attention to detail. There is no caring. They aren’t delivering the right experience.

The second transportation company charges significantly more money. Over the course of 14 trips, using the second company would cost $140 more. But the experience is easily worth the additional money. It eliminates certain unacceptable risks that can’t be measured in financial terms. And this transportation company pays exceptional close attention to the details. It is clear that they care about delivering an experience.

As soon as the first transportation company has an accident carrying the resort’s passengers, it’s likely they will lose the negligent resort as their client.

You are wrong to believe that people want the lowest price. You are wrong to believe that people won’t pay more for a better experience. You are wrong to believe that people won’t invest more to avoid certain risks.

People want to pay more, but they need you to create greater value.

Questions

Are you capturing enough value to deliver the real outcomes your clients or customers expect?

What risks do your clients avoid by paying more?

What investments do you need to make to execute for your clients?


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