The rise of the “on-demand service” model is proving a challenge for traditional product companies.
“The bitterness of poor quality remains long after the sweetness of low price is forgotten” – Benjamin Franklin.
Consequently, focusing on quickly delivering quality is overtaking the need for the lowest cost. In fact, and in contrast to the last decade, low price is now often seen as being suspicious and reason to avoid regardless of the product or service offered.
This visualisation beautifully illustrates the dichotomies of buying services.
Although slightly contrived, it shows that if you want a service cheap then it must be either slow or crummy.
Rather depressingly, selecting a service based on high price doesn’t guarantee that it will be either fast or good – take a look at Southern Rail or Vodafone!
Most digital companies exist in one of the circles, either by choice or, more commonly, by default. Often, they may not even know where they sit and why, as few really spend any time working on their service/price proposition and as a result can even sit outside the diagram.
There are possible exceptions to the rule, these are the disruptors.
For example, some might say that Uber is fast, cheap and good – however, if you were really honest as to why you use Uber it comes down to cost and convenience. And if you’ve Uber a lot then you’ll no doubt have been hammered by surge pricing and terrible “estimated arrival”, sometimes making Uber both expensive and slow.
The challenges for new companies entering any service-based sector is to work out where they sit and not, as many do, mindlessly adopt a “we’ll be cheaper than X”. Longer term, increasing prices can be painful for those organisations, especially as the kind of clients that gravitate to low-cost suppliers often don’t value quality or speed.
Note about Connected: We unashamedly sit in the good, fast and expensive corner – and as a result, we tend to only attract clients who value quality over price. Our challenge is then not to beat-off the low-cost providers, but to ensure we provide the best service possible, quickly.
However, we naturally exhibit confirmation bias, so we also have to be careful to avoid automatically dismissing cheap supplier and ensure our service offering justifies our price point.
Diagram by Lauren Panepinto