The Business Book

266

must be kept high for a long and
happy marriage between producer
and end user. The founder of
Selfridges, Harry Gordon Selfridge,
advised: “Remember always that
the recollection of quality remains
long after the price is forgotten.
Then your business will prosper
by a natural process.”
In the early 1980s, industries
first quantified the impact of
product quality on profitability
through studies such as PIMS
(Profit Impact of Market Strategy).
Before this time, “quality” was not
usually a high priority for industry
leaders, but as research continued
to show the clear link to profitability,
product quality became an
essential factor in strategies for
attracting and keeping customers.

Paying a premium
Even though a company may not
have the biggest share of the
market, it can still generate the
biggest profit if its customers
perceive the product quality to be
so high that they are willing to pay
more for it. In the smartphone
market, for example, Apple’s iPhone
has a relatively small share but
garners around 50 percent of the
profit. Making a desirable product

and building an emotional

experience around it can be enough

to make customers love you—so

much so that they are prepared to

pre-order, wait, and line up. This is

demonstrated most clearly in the

fashion world, where customers

willingly suffer the indignity of

scrambling for limited-edition

handbags or shoes, or—in the case

of luxury brand Hermès—wait

years for a bag. However, for most

businesses this is the exception.

Customers expect providers

of goods and services to do

everything possible to win them

over and keep them happy through

MAKE YOUR CUSTOMERS LOVE YOU

Customers are willing to line up

for bargains, such is their loyalty to

particular brands. In Italy, shoppers

wait outside a Burberry store in Milan

on the first day of the sale.

The Likert scale, created by US psychologist Rensis Likert in the 1930s,
is designed to measure attitudes. The five-point scale offers responses to
a statement, and participants pick the response they most agree with.
Considered a good way to get customer feedback, the scale has been
criticized for giving skewed results due to its forced set of choices.

all the stages of the buying process.

Although acquiring new customers

is always an important part of

marketing strategy, more income

is usually generated by existing

customers. These customers

will continue to buy the same

product or service, or may begin

purchasing other products from the

same provider. The business world

has come to recognize that some

customers are more profitable

than others, and it pays to woo

profit-inducing customers and

entice them to spend more.

In online retail, repeat purchase

can be encouraged by email

campaigns tailored to the buying

history of the customer. In the

mail order or direct mail industry,

mailings with special offers or

cross-selling promotions for

complementary products serve

a similar function, while in a store

the astute involvement of the sales

staff can directly provide an

emotional rationale for an additional

sale, though they are also a cost to

Strongly

agree

Agree Neither agree

nor disagree

Disagree Strongly

disagree