Magic formula and key to commercial success

Magic formula and key to commercial success

S = VP / E. I learned this formula some time ago and since then I have not stopped remembering it. The result of this quotient summarizes the key to commercial success.

Last week I went to buy an appliance at a department store. When paying for the purchase the seller asked me if I wanted to install it in my house, to which I agreed positively. Then he informed me that he had to pay an additional amount for that concept. My reaction was outrage, until recently the shipping and installation were included in the amount of the purchase.

Business strategyWhat has happened? Before, these well-known stores did not charge for these concepts, they have used as a competitive advantage these additional services and phrases such as “I buy on this site even though it is more expensive, because they give me …” they stop being heard. We have created some expectations around an added service that we do not receive now. Our perception at the time of acquiring a certain product is lower than what we expected to obtain at first and that translates into dissatisfaction.

A similar example happened these past Christmases. Many employees expected to receive a Christmas basket from the company, but since we were in a crisis and costs had to be reduced, the gifts did not arrive. The employee expected as the rest of the years a present from the company (expectations = E), were not received and much less perceived (perceived value = VP), the result was a satisfaction (S) less than 1, is say, it caused dissatisfaction.

To differentiate ourselves from the competition, we add services to our basic product. There comes a time when the customer can even buy us for those extras we offer. Who has not bought a publication (magazine or newspaper) for the gift they gave that day?

The added value, as a set of additional features in a product, allows us to differentiate ourselves and compete with the rest of increasingly similar goods and services. This additional value has a cost and therefore must be profitable at some time. The difficulty lies in finding out what the client values and how much he would be willing to pay for it.

With all the above, I can only say that be careful with what we offer and be careful with what we stop offering. We are looking for satisfied customers and not expressions like “this is not what it used to be”

About author

Leave a reply

Your email address will not be published. Required fields are marked *