As little kids, we learn about promises. As a kid I learned the Brownie Promise:
On my honor, I will try:
To serve God and my country,
To help people at all times,
And to live by the Girl Scout Law.
But, almost as soon as we learned about promises, we learned to cross our fingers negating any promise.
As teenagers, we give or get promise rings, but they didn’t mean anything. And most promise rings never led to engagement rings or marriage.
While this may be perfectly harmless as children — it can be devastating to your business.
Sometimes businesses forget this. They get caught up in the challenges of making a sale. If I could just offer consumers one more thing — I might be able to take their business. So you promise consumers a little something and it works. Your business expands. But then your competitors promise something more and it works again. Soon you’re promising consumers all kinds of special things to get their business.
Soon, you find your bottom line doesn’t look as good as it did. You’re making more sales, but your bottom line stays stubbornly flat or maybe it even goes down. Keeping your promises is costing you more than the additional sales can bring in.
Skimping on Promises
Your plan is simple — you’ll just skimp a little on your promises. You water down the free liquor — a little. You promise a free appetizer, so you make the free appetizer a little smaller. You make sure any changes are below the Just Noticeable Difference, that magical difference that is small enough that consumers can’t tell the difference under casual inspection. It helps. A little. So, you think, why not skimp a little more. Soon, consumers suspect something is going on.
Next, you think, I’ll just put a few conditions on my promises. You get a free month with the purchase of a month. You get some free product, if you pay shipping and handling.
Breaking Your Promise
Soon, you stretch your promise so thin you’ve hidden conditions and exceptions where even diligent consumers have a hard time finding them. Now your business is growing and your bottom line is looking really good. And keeping your promise isn’t costing you too much because many people don’t get what you promised because they failed to enter the right promotional code you hid in small print or didn’t buy the right combination of items to qualify for the promise. You’re a hero — asked to speak on your success in bigger and bigger venues. Political candidates call for your advice on spurring the economy. The money is rolling in —– then it happens.
Your bottom line looks a little anemic. Your management team assures you it’s a temporary hiccup — nothing to worry about.
The next month your bottom line looks a little worse — still nothing says your management team.
After a few months, your management team suggests it might be something and maybe you should do some more advertising — put your wonderful promises of free stuff and big discounts in even bigger typeface. Make it so no one can overlook your great promises.
That helps a little, then your bottom line goes into a tailspin and before you know it your company is struggling to stay alive.
Death may hold off for years, but without some serious life support — this business will ultimately fail. Why? Breaking promises.
Timeline of Collapse
- Consumers loose confidence in your business because you don’t keep your promises.
- Consumers don’t buy from your business anymore or buy from you less and less.
- Loyal customers become less loyal or there are fewer of them. Loyal customers defend you when people accuse you of failures. Without these loyal customers, your reputation starts to get a little more tarnished.
- Customers start telling their friends that you cheated them. Negative word of mouth travels 5 times faster than positive word of mouth so your fancy reputation management company can’t keep up.
- Word of mouth escalates and amplifies negative stories about you and not giving consumers what you promise. If you’re unfortunate enough to piss off someone with some influence things accelerate even more.
- Your firm dies and its employees are out of work — your creditors are weakened because you never paid them back.
- Multiply this enough times and the entire economy tetters. The economy is one big ecosystem. As firms die, the firms feeding on these firms die, employees who don’t have jobs, don’t buy things and don’t pay their bills …