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The Disappearing Profit Margin
Author : Connie H. Deutsch
Submitted : 2011-11-07 Word Count : 993 Popularity: 1
Tags: business, Profit, Shopping
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During boom times a company didn't have to worry too much about their profit margin. Give the customer a good product and he will keep coming back. A lot has changed since then.
In the old days, a label that said "Made in the USA" represented a standard of excellence. It meant that the product would last forever. Today it means very little.
Does anyone remember the Maytag washing machine repairman in the TV commercial standing around looking bored and woebegone because the Maytag washing machines were built to last without repair problems? Those are fond memories and whenever one of my newest, greatest, most up-to-the-minute pieces of equipment breaks down, I dredge up that wonderful memory and wish for the good old days.
Nowadays, most of our manufacturing is done in foreign countries and our products are built with planned obsolescence. This is just a nice way of saying they are planned to break down a day after your warranty expires. Mine seldom last that long and most stores give you a very limited amount of time to exchange or return the item. I've had to get into the habit of saving the packaging that comes with every item because if I have to return or exchange something, I am now being held responsible for it being returned in its original packaging along with my receipt. After that small window of opportunity to deal with your neighborhood store, you are then having to deal with the manufacturer.
Is it any wonder we have turned to Internet sales for buying our merchandise? If we can't build a relationship with the salespeople and store managers of the businesses close to us, we might as well purchase our goods online where we can at least get it cheaper before having to deal with the manufacturer.
I was always a strong advocate of bringing my business to local stores and supporting the neighborhood in which I live. But things started changing several years ago. Too many employers and employees have stopped seeing the customer as a real person. They started seeing him as a way of meeting their financial targets and their discussions are more about metrics than about customer satisfaction. Not that metrics aren't important. They are, but without satisfied customers keeping you in business, metrics are a dead issue.
During last year's holiday season, one store was particularly busy. One of their employees was telling me that there was an angry man on the phone who complained about being put on hold for twenty minutes. He wasn't abusive and he didn't yell at her. He only expressed his frustration with having been put on hold for twenty minutes while waiting for customer service to answer his call. She was annoyed with this man for his attitude and she let him know it. When I asked her what her manager had to say about that she said that he felt the same way and would have expressed the same attitude. I was shocked. This was during the worst economic downturn we had seen in years. I couldn't resist telling her that the next time something like this happens, she might want to say, "I'm sorry you had to wait so long. How may I help you?"
I remember shopping in this store many years ago and there were so many customers that the salesclerks ran their feet off trying to help all of them. They were pulling merchandise off the shelves so quickly and rushing to the checkout lines as if afraid that their purchases would be snatched away from them. This past year, by comparison, there were hardly any customers and very few were rushing to the checkout lines to part with their hard earned cash.
A large part of the shrinking profit margin has to do with the failing economy but since there are many companies that are still thriving, we have to look to the attitudes of employees as a possible reason for companies not meeting their projected sales targets. The next time you go shopping, look around you. See how many of the employees look like they want to be there. See how many of them smile at you and ask you if you found everything you need, and if you say that you didn't find what you need, see how many of them offer to track it down for you.
There is an enormous chain store that is always in the news in a negative way, yet whenever I go there, I am always greeted by someone at the entrance who smiles at me and welcomes me to the store. This must be a recent addition in the last several years and whoever was responsible for that customer service training, did an excellent job. If employers realized how their customer service training was directly related to their profit margin, they would make sure that everyone from the ground up was retrained and received extensive follow-ups to monitor their progress. These soft skills will be the heart of a company's ability to survive a failing economy.
After hearing about the terrible attitudes of employees and business owners, I heard another story that was its polar opposite. The CEO of a medium sized company was hiring the best people he could get even though there were no job openings and business was slow. He wanted time to train them properly and his theory was that these new employees would be so grateful for being given the opportunity to work for a good company and be paid top dollar at a time when unemployment was at an all time high, he would have their undying loyalty and they would give their all to the company. My guess is that this CEO's company will survive and thrive no matter what life throws his way because he knows the importance of building good business relationships and making his employees feel valued.
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