Consumer choice can hurt sales when it doesn't make economic sense and instead achieves higher costs to consumers without adding much value. Keep it Simple Stupid not only applies to the economy, it applies to us business owners, marketers, communicators, product designers, consumers and everyone looking to create, sell or purchase goods.
Henry Ford was a champion of simplicity. He understood niche marketing and creating affordable products that offer value at a fair price. His statement saying "his customers could have the $825 Model T in any color -- so long as it was black" was and remains the essence of meeting customers wants and needs with a valuable and affordable product.
But Ford and GM lost its way and forgot that the keys to success are:
- Understanding customer's wants, needs and desires;
- Creating products and services that meet those wants, needs and desires;
- And then selling those products and services by offering value at an affordable price.
What happened instead was that the American Auto Industry began offering options with no customer in mind. Instead, they began producing and marketing for and to everyone. And even the most rookie marketing and sales specialists understand that if everyone is a potential customer, than no one is an ideal customer. And that is a recipe for losing market share and going into the red.
On Sunday (March 30), a Reuters article entitled U.S. car companies go back to black, Ford Chief Executive Alan Mulally says "he was amazed by the number of variations Ford offered when he arrived at the No. 2 U.S. automaker from Boeing Co in 2006.
"'I was looking at the (Lincoln) Navigator console," Mulally said. 'We have 128 different options you could choose on the console. That's just the console.'
"'With so many variations, a customer inevitably will want a vehicle that is not in stock, leading to a frustrated customer and pressure on the dealer to offer a discount.
"'They're unhappy and we're losing money,' he said of Ford, which posted losses of $2.7 billion in 2007 and $12.6 billion in 2006."
Much of that unhappiness evolves around too-expensive cars perceived as offering less value than their foreign counterparts. For when options are out of control, the results are "higher production and inventory costs and headaches for customers and dealers in sorting through a complex matrix of choices."
After four decades of misunderstanding the marketplace and building cars for themselves instead of their customers, Ford and GM are going back to black because they are meeting and sometimes exceeding their customer's wants, needs and desires--affordable and reliable cars that represent good value at a fair price.
What are the lessons to be learned here? Why do industrialists forget what made them great in the first place? Why do business executives get lost in functionality instead of customer value and benefits? We see the same things in every business, from software with bells and whistles that consumers neither want nor understand at a price higher than the software's value to them, the customer. We see it with advertising and marketing firms that offer everything but specialize in nothing.
Keep it simple stupid applies: It is not about us, our agendas; it is about them (customers), and their agendas. Why can't we get that right?
