3 ms·

If they were customer focused they'd focus on cutting their profits to give lower prices to consumers. Did you hear about the CEO that told institutional inves

by avar 3y ago

If they were customer focused they'd focus on cutting their profits to give lower prices to consumers. Did you hear about the CEO that told institutional investors that the company missed projections, but that they shouldn't worry about it because he'd help them order a pizza? Me neither, but it shows how absurd this sort of story is if the shoe were on the other foot.

mynameisvlad 3y ago
Disagree. Customer support is not free. Good customer support is not cheap. Whether you agree or not, good CS is one of the Zappos differentiators. There are outlets for cheap shoes (in this case) without overhead from support and other sources.
- blagie 3y ago
  Quite often, higher-profit higher-margin businesses are more robust. If you have a 1% margin, and costs increase by 2%, you're bleeding money. If you have a 50% profit margin, you're not sensitive to small (or even medium) fluctuations. That's not a universal. I can give a half-dozen counterexamples (including Walmart) which, for example, operate with extreme efficiency, or achieve massive scale. But it's a good rule-of-thumb. Running a business, there are sometimes more important things than profit. Robust businesses are more pleasant to run and to work in than ones with razer-thin margins (even if bigger and more profitable). As an entrepreneur, if I were to pick: 1) Guaranteed income of $200k for the rest of my life (inflation-adjusted) with fun work and reasonable work-life balance 2) A $20M payout with 50% odds I think I'd pick #1. Ergo, we see a lot of lifestyle businesses, businesses which don't try to grow, or otherwise. Yes, one can make a lot of arguments about fiduciary duty, shareholders, etc. Some of those are even correct for a large, public corporation. But most don't apply to a founder-owned founder-run business.
al_borland 3y ago
Low prices are not the only thing customers care about. They are a factor, but not the only factor. A company that has the lowest prices, but does so at the expense of customer service, and various other factors, will likely be hated by consumers. They might get some business, but customers will curse them while handing over their money, and the second something better comes along, the customers will leave. Costco shareholders were very vocal with the founder of Costco, wanting him to do things that were against the mission of the company, all in the name of making a quick extra buck in the short term. He told them to get bent, and Costco has a lot of die hard fans who will defend Costco until their dying breath. You can't buy that kind of loyalty with some extra profit after treating customers like shit. And obviously, if a company is going to spend extra for excellent customer service, the business needs to be able to support that. Operating at a loss, thinking they'll make it up on customer service, is not a business plan. That isn't what we're talking about here.

by avar 3y ago

mynameisvlad 3y ago

Disagree. Customer support is not free. Good customer support is not cheap. Whether you agree or not, good CS is one of the Zappos differentiators. There are outlets for cheap shoes (in this case) without overhead from support and other sources.

blagie 3y ago
Quite often, higher-profit higher-margin businesses are more robust. If you have a 1% margin, and costs increase by 2%, you're bleeding money. If you have a 50% profit margin, you're not sensitive to small (or even medium) fluctuations. That's not a universal. I can give a half-dozen counterexamples (including Walmart) which, for example, operate with extreme efficiency, or achieve massive scale. But it's a good rule-of-thumb. Running a business, there are sometimes more important things than profit. Robust businesses are more pleasant to run and to work in than ones with razer-thin margins (even if bigger and more profitable). As an entrepreneur, if I were to pick: 1) Guaranteed income of $200k for the rest of my life (inflation-adjusted) with fun work and reasonable work-life balance 2) A $20M payout with 50% odds I think I'd pick #1. Ergo, we see a lot of lifestyle businesses, businesses which don't try to grow, or otherwise. Yes, one can make a lot of arguments about fiduciary duty, shareholders, etc. Some of those are even correct for a large, public corporation. But most don't apply to a founder-owned founder-run business.

al_borland 3y ago

Low prices are not the only thing customers care about. They are a factor, but not the only factor. A company that has the lowest prices, but does so at the expense of customer service, and various other factors, will likely be hated by consumers. They might get some business, but customers will curse them while handing over their money, and the second something better comes along, the customers will leave. Costco shareholders were very vocal with the founder of Costco, wanting him to do things that were against the mission of the company, all in the name of making a quick extra buck in the short term. He told them to get bent, and Costco has a lot of die hard fans who will defend Costco until their dying breath. You can't buy that kind of loyalty with some extra profit after treating customers like shit. And obviously, if a company is going to spend extra for excellent customer service, the business needs to be able to support that. Operating at a loss, thinking they'll make it up on customer service, is not a business plan. That isn't what we're talking about here.