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25 cents to a better business model

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In the absence of rules there is chaos. We guide our customers to act the way they do because of the business rules we put in place.

As business people, we're often reluctant to put strict rules in place to support our business models for fear of upsetting our customers. Yet, clarity of rules allows us to focus on the most value-adding activities of our businesses, and simplifies the experience for our customers.

Consider:

"I only want one tube of toothpaste."

Ever walk into a warehouse club and try to buy a single tube of toothpaste? It can't be done. Why? Business rules. You know the moment you enter these types of stores that if you want toothpaste, you'll need to buy a case of them. If you don't want a case, there's always the corner drug or grocery store happy to sell you a single tube. Different set of business rules.

"Thank you, Sylvan Goldman."

Ever since 1937, when Sylvan Goldman introduced the shopping cart in Oklahoma City, the supermarket shopping experience has been both more convenient and more of a pain for retailers and shoppers alike. The experience was more convenient in that shoppers could easily stroll through a store collecting the items they wanted to purchase without having to carry them along the way.

However, a simple visit to any local Walmart Stores parking lot will demonstrate the darker side of shopping carts and of human behavior. Even with many central locations to store the carts, shoppers often do not return them. The result is carts strewn over the lot, dents in my car and added costs for retailers, as they need additional staff to collect and return the carts to the front of the store.

"Business rules to the rescue."

Down the street from my local Walmart is an Aldi store. Aldi has a simple business rule that requires shoppers to deposit a coin into a slot to unlock a shopping cart from the rest of the carts in front of the store. The coin, usually a quarter in the U.S., is returned when the cart is put back. When the customers complete their shopping and pack their bags into their car, they face a decision: “Do I leave my cart here or do I walk the cart back to the front of the store and retrieve my quarter?”

In my experience, most customers put the cart back and collect their quarter. If not, another shopper is happy to do it for them and collect the 25-cent bounty. It's a simple business rule that clears the lot of shopping carts and helps to keep costs down.

"Rules make for better customer relationships."

Any experience in life can be made easier once you know the rules. At Dow Corning, we created a new b-to-b brand and business model firmly grounded on clear business rules. That brand is called Xiameter, and in a very short amount of time it became the world's largest online portal for the purchase of high-quality silicone materials.

Randall Rozin is global director-brand management and marketing communications at Dow Corning Corp. (www.dowcorning.com). He can be reached at randall.rozin@dowcorning.com, or via www.linkedin.com/in/randallrozin.

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