Monday, August 13, 2012

Right now consumers tolerate your trash, but the day is coming where your products could cost you

Last week I spend a day helping two friends to mount their new LCD televisions onto the wall.  Both of them had taken my advice and purchased themselves a LG television.  One was smaller and well suited for the corner of a bedroom, while the other larger and to be mounted on the wall of a living room.

Using my smartphone as part of numerous activities which I get involved in is becoming more and more frequent.  For instance I needed to purchase a number of cables for one of the televisions to connect a DVD player, SkyTV decoder etc.  I took a photo of the back of the TV and the various devices to remind me of what I needed while at the electronics store.  If I had any questions, I was able to show the shop assistant my photos.

The use of mobile technology is making it increasingly easy to get things right.  I don’t know about you, but I make a lot of purchases and typically misplace the receipt.  With the ability to use the camera on my SmartPhone, I’m now able to take a photo of the receipt and upload it to the Internet.  A few days ago, I purchased a new ironing board, which came with a 15-year guarantee.  The great thing is that I still intend to have a copy of the receipt in 15 years.

As a consumer my problem has been solved.  It wouldn’t surprise me if that ironing board breaks in less than 5 years, I’ll be able to replace it for free when it does!

As a manufacturer or retailer, your problem begins.  Business models are often prepared based on the value consumers place on the length of a warranty verses their ability to actually return the goods.  Price is often associated with quality, but the majority of 1st world consumers will pay a lower price with the view that if it breaks they’ll throw it away and buy another one.

With the ability to electronically recall proof of purchase, it’s my view that this will change.  A couple of drivers for this are tougher economic times and the environmental cost of waste.  Here are some keys areas, which companies will need to watch out for:
  • Higher amount of defective product returns
  • The need to improve product quality
  • Possible drop in sales due to a lower requirement for replacement items due to better quality.
  • Market leaders will potentially increase sales through greater market share.
Timing is everything.  We still live in a throwaway society.  Consumer behaviors haven’t changed this yet.  But they will.  The choice is to sit tight and cream it while you still can, or become a market leader and start to make the relevant changes.  The market will change and when it does you’ll need to be taking a lead.

Now is the time to engage your customers in innovative dialog.  By learning to listen to your customers, you then need to refine your internal process to accommodate the changes.  Is your company nimble enough to make these changes?

Companies that have gone through the process of Social Business Transformation already have the required behaviors embedded into their organization.  They have the ability to leverage both internal and external social capital to ensure that innovative initiatives are prioritized and funded accordingly.  Both financial and human resources can be assigned to drive better outcomes in line with business goals.

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