by Ross O’Brien
In part 1 and part 2 of this series, we began looking at Porter’s value chain as a useful tool for business people seeking to maximize the value they deliver to customers while also seeking to gain a competitive advantage as they execute their strategy. Beyond the traditional use of the analysis, we also sought to use the tool as a way to help a follower of Jesus steward the resources of God’s company. In this third part of the series, we examine marketing and service, the final two primary activities in the value chain.
Dinesh Pratap Singh’s visualization for Porter’s Value Chain: CC BY-SA 3.0
Marketing Through a Traditional Lens
Marketing covers a broad spectrum of activities including branding, selecting a target market, product development, pricing, promotional strategy and distribution. A recognizable brand can add significant value to a firm. You can go almost anywhere in the world and people know the Coca Cola brand. According to statista.com, Apple’s brand was worth almost $235 billion in 2017. That number is not Apple’s market cap, it’s the value of their brand, an intangible asset. Ensuring the quality of the company’s products and services, creating effective advertising, and extending the geographic market are three ways to improve the value of a firm’s brand.
Establishing a price for a product or service can be daunting. Overcharge and customers will not buy. Undercharge and either risk failing to cover costs or failing to communicate the true value of the product in the minds of customers. Setting the price that best reflects the true value of the product or service for the customer adds value to the firm. Promoting products and services in ways that communicate value without misleading customers also adds value to the firm. Social media can be an impactful and cost-effective tool for marketers. While it is certainly less expensive than many traditional media channels, it is not free. Further, finding the right social media outlet and the right way to use that outlet is not as easy as it sounds.
As in all retail businesses, location is perhaps the single most effective (or ineffective) dimension of a firm’s marketing strategy.
Determining the best sales channels depends on the nature of the business (B2B or B2C, for example) as well as the industry and location in which the firm operates. Finding ways to market and sell products and services that effectively communicate a firm’s unique differentiation, or that establishes the firm as a cost leader by cutting costs, adds value to the firm.
For our coffee shop, selling takes place completely within the context of the shop. An app for pre-ordering can add value, as was stated before. However, the coffee will be picked up at the shop even if the transaction took place outside the shop. In addition, such an app is expensive to develop for a single coffee shop. For a small, local retail store, marketing outlets and formats are somewhat limited. Television and even radio advertising is expensive and often includes too broad of a geographic territory to give a good return on investment. Mailing advertisements (both snail mail and email) to a targeted geographic area is less expensive, but many people don’t look at unsolicited snail mail or email. Social media advertising can be very effective as the shop can identify traits of their target market and narrow the advertising to those individuals who meet the description.
As in all retail businesses, location is perhaps the single most effective (or ineffective) dimension of a firm’s marketing strategy. Further, signage that is visible and inviting can make a big difference. A physical location that is clean, easy to access and facilitates an easy buying experience is also important. While it might be more expensive for our coffee shop to rent space that is in high-traffic areas, easy to access and to see, the extra cost will make the chances of survival much better. In addition, it will reduce the shop’s marketing budget as visibility is a good marketing tool in and of itself.
Finally, word of mouth advertising plays a critical role for our little shop. Satisfied customers invite their friends to join them at the shop and post good reviews on various mobile apps such as Yelp, Trip Advisor and Google review.
Marketing Through a Spiritual Lens
Like lawyers and car salesmen, marketers often get a bad rap. I have been known to call marketing the “dark side” of business and marketing professors “professors of the dark arts.” All joking aside, marketing plays a critical role in the success of a business. You can make the very best product that customers truly need, but if they do not know about it or why they should buy it then you do them and yourself no good. However, like all business activities, marketing activities can lend themselves to ethical challenges. Recognizing the risks and proactively addressing them can help the BAM business owner avoid obstacles before they hit them.
As with all the value chain activities, when marketing and sales activities are performed in a way that honors God and reflects his glory, his excellence and his purposes, it is an act of worship. When a firm effectively and creatively develops products and services that people need they obey God’s command to steward creation. When they identify a specific target market that will best benefit from these products and service, communicate honestly and effectively the value of the products and services, and then sell and distribute them in an efficient and cost effective way, BAM businesses demonstrate love for their neighbors.
You can make the very best product that customers truly need, but if they do not know about it or why they should buy it then you do them and yourself no good.
The fact that we live and work in a fallen world forces BAM business owners to be intentional in their integration of faith and work. For example, sales quotas can help motivate and reward effective sales people. However, unrealistic quotas and a lack of accountability can lead salespeople to misrepresent facts and manipulate customers in order to get the sale. Advertisements must capture the customer’s attention above the cacophony of ads with which they compete. However, giving unrealistic and simply false claims regarding product features or availability can lead customers to make buying decisions that are not in their best interest. A follower of Jesus must be mindful of these risks and ensure that all involved in the marketing of the business avoid them.
For our little coffee shop, claiming to use top quality ingredients but substituting inferior quality goods can save money but is deceptive. It does not honor God. In addition, if customers learn of the deception it could be the end of the shop. Training employees to “upsell” customers with add on products can be an effective way to increase sales and profits, but can also be seen as manipulative if done for the benefit of the shop alone and not for the benefit of the customer.
Customer Support Through a Traditional Lens
Customer support is important throughout a buying experience. Unfortunately, many companies support the customer through the purchase, but ignore them after the transaction is complete. Good businesses provide customer support after the sale because they know this promotes customer loyalty. It typically costs a company less to retain a customer than it does to gain a new customer. Therefore, keeping past customers happy so they continue to buy from you is less expensive than finding new customers to replace the ones who don’t return.
Companies like The Container Store establish policies that put authority in the hands of employees, even part-time employees, to make decisions that foster incredible customer service. They hire capable people, provide great training and encourage employees to help each other make wise decisions. Not only do their customers appreciate the level of support they receive, but the employees themselves feel empowered and engaged in their work.
Providing great coffee and related products is not sufficient to keep customers returning. The shop must also provide excellent service during the customer’s entire experience.
Maintaining information about customers so that you can offer them new products or services that fit their past buying patterns can be a helpful service. Storing credit card data to facilitate future purchases helps customers with future transactions. However, as we have seen in the news over and over, protecting that information is far more difficult than it might seem and carries with it huge responsibilities. In addition, business models that drive revenue through the sale of customer data can easily slide into unethical practices when the customers are unaware of how their information is being used.
In the case of our coffee shop, providing great coffee and related products is not sufficient to keep customers returning. The shop must also provide excellent service during the customer’s entire experience. In addition, a clean shop is essential for food and beverage service. However, in the rush of morning or afternoon service, it’s easy to forget about the unseen locations, such as restrooms. Dirty restrooms and empty soap or towel dispensers are not only unappealing, but also make one wonder about the cleanliness of the workers. How do they wash their hands if there is no soap or towels available? The entire customer experience brings customers back or keeps them from returning.
Customer Support Through a Spiritual Lens
How do we show our customers that we love them? Does that sound like a strange question for a business? The second of God’s great commandments is to love your neighbor as you love yourself. Therefore, as followers of Jesus showing our customers that we love them should be second nature. But how do you do that? Giving them a hug when they walk in and telling them you love them probably won’t go over very well!
We demonstrate love in many ways. Developing valuable products and services that customers actually need and want is a start. Doing so in ways that keep the costs reflective of the true value of the product or service is a second way. Treating them with dignity, respect and even hospitality communicates the love of God. Chef Emeril Lagasse recommends giving customers at his restaurants “a little something extra” – or “lagniappe” in Creole. For followers of Jesus, the love that is infused into all that we do is that lagniappe, the something extra.
How do we show our customers that we love them? Does that sound like a strange question for a business?
But loving your customers does not mean that you give away the shop. As one wise person told me years ago, you can’t do good unless you are doing well. Providing discounted pricing to the detriment of your business might feel good in the short term, but does not sustain a company in the long term. Further, if a low price is the only point of value a company can provide for a customer then the company is destined for trouble. Even the classic low-cost leader Walmart provides more than just low prices. They provide a wide variety of items and locations relatively near their customers’ traffic patterns making shopping convenient. They also utilize technology in ways that keep their costs low while also make shopping easier and faster for customers. What value do you deliver to your customers that demonstrates your love for them?
This series will continue in early 2019, when we will move on to looking at the support activities of the Value Chain.
Read Part 1 >> Value Chain Analysis Through a Spiritual Lens: Introduction
Read Part 2 >> Operations and Outbound Logistics Through a Spiritual Lens
Ross O’Brien has been teaching at Dallas Baptist University since 2003. Prior to that time, he started and ran a small Internet firm in Birmingham, Alabama after working for AT&T’s Business Network Sales division as an Account Executive. Ross’ Ph.D. is from the University of Texas at Arlington in Business Administration and his MBA is from Dallas Baptist University. He began the undergraduate entrepreneurship program at DBU as well as the Center for Business as Mission, in which he serves as the Director. Through the Center, Ross teaches undergraduate and graduate classes in Business as Mission, has taken students on travel study courses to learn about business practices in Israel, Chile, Sierra Leone and Bangladesh, and helps host The Lion’s Den DFW event each spring.