Short-term customer manipulation won’t lead to long-term success

The sales of a once flourishing, US automobile company, General Motors, were consistently dwindling from 1990 to 2007 and dropped from 35% to 24%. As a strategy to increase sales, the company offered cash back to customers who purchased their cars. While this increased the sales in the short term, the company was losing 729$ on every car that was being sold. Definitely not a sustainable option to retain customers and consistently grow sales. Over time when the cashbacks were discontinued, the company was not able to sustain it's business and eventually went bankrupt.

We see a similar trend in several other industries these days, including the diagnostic sector. With several new entrants in the industry, the sector has become extremely competitive. This has compelled companies to lower their prices by offering steep discounts instead coming up with differentiating features.

I recently came across a Facebook ad where a diagnostic company was playing “Kaun banega crorepati” (Who wants to be a Millionaire) to hook in customers to engage with their advertisement and were offering a high discount if they got the right answer.

Marketing strategies have reduced to offering more discounts and rarely focus on the values they stand for or for the contribution to patient care.

In an attempt to capture market share, many companies are resorting to very low pricing of tests and this has led to price wars. This is in turn leading to very low margins which may not be sustainable in the long run. Giving high discounts and cash back or other offers does not build customer loyalty and does not help differentiate one competitor from the other. Once the cashbacks and discounts stop, customers who are not loyal will move on to other competitors.

As an industry we must strive to focus on delivering exceptional services, creating novel products or services that ensure accurate results, with a shorter turnaround time, better customer grievance redressal, and follow latest international guidelines for lab quality and safety.

Technology can be an important facilitator to deliver these services and contribute to innovation in lab testing, access, ease of use, accuracy and precision. Creating a competitive advantage can begin with obsessing with answers to the question about what the customer needs and wants. Can we find newer innovative, quicker and more convenient ways to deliver our services? Can we add more value in some services that we are already providing? Can we assist healthcare professionals in taking better decisions, improving patient care and outcomes? Can we surprise the customers by delivering beyond their expectations ?

While we must aim to make services more affordable and accessible , we must also find a way to make and keep ourselves relevant in the long run. Any attempts to manipulate patients into using our services doesn't hold fort in the long term. We must focus on creating value - not just discounts.

#createvalue #noshortcuts #innovationinhealthcare