How HR Can Tackle the Disappearing Profit Motive

March 27, 2018

 

Businesses are in a struggle right now to justify their price-value proposition to a world that increasingly expects things for free. We expect to pay nothing, or as little as possible, for movies, music, knowledge, advice and more. We're willing to watch advertising in exchange for free goods - but even this has its limits, as we've installed ad blockers on our web browsers now.

 

It happens to entrepreneurs and freelancers all the time. You encounter someone who asks you to perform your profession - whether it's consulting, art, a copy of your book, whatever - and they seem befuddled, or even insulted, when you let them know what you'll charge. It happens to me frequently. I write a blog, I answer questions on Quora, I post content on social media - all free advice. Then, people will contact me to review their resume or LinkedIn profile. I even do this for free, giving a thirty minute consultation at no cost. Once I mention that a re-write or other service will cost money, all of a sudden that person evaporates, or even gets annoyed.

 

Our economy has seemed to undergo a big change. The public may not be willing to pay for something that they perceive as being a thing they can do themselves. They feel that they can Google it enough, read about it on Wikipedia enough, they can make themselves competent enough to do the job. Those of us that have expertise garnered over many years know that I didn't get this smart with Google and Wikipedia, and that kind of education will only get people so far, but the consumer doesn't know that. They simply don't know what they don't know, and if they end up being successful using their own methods, then they're satisfied, even if they could have gotten much more had they gone a different route.

 

Put a different way, imagine an Ikea bookshelf. You buy it, you put it together, you have a bookshelf. Cheap! Ikea offers a service to have someone with more knowhow than you to put it together. It costs money. You decide you're just going to do it yourself and pocket that cash. You get home, you assemble the bookshelf. You have a screw leftover, but the bookshelf looks like the picture, and it's holding your books and DVDs and Hummels, so you're satisfied. What you don't know is that in six years, three months and two days, that bookshelf will fail, sending your Hummels to the floor, shattering them. If you move in three years, you'll never find out and you'll think you're good at putting together furniture. If you don't end up moving, you'll lose your expensive Hummel collection and you'll curse yourself for not getting the professional. Or you'll blame Ikea (but it's really you, you cheap jerk).

 

So, while it's getting harder to convince the public of the value of knowledge, it's easier to convince them of sweat equity. Chasing rock-bottom prices on consumer goods is balanced with a desire for fair-trade supply chains and minimum wage standards. Products, particularly personal health and wellness, as well as food and anything to express oneself, will sell. 

 

So, to the original question: how does HR help its companies position themselves for this consumer economy?

 

1. Make your employees experts. Taking the time to invest in employee development, especially around product, is key. The consumer wants to know that they got exactly the right product for what they wanted to do, so either make sure your employees can make that evaluation, or can teach it back to the consumer. That development needs to occur around all your products, and regularly. Your leadership will be thrilled when they see greater same-store sales and repeat business as a result.

 

2. Treat the consumer to a personalized experience. Self-expression is big nowadays, and where a product or service can help someone do that, it's a big win. Your employees can give customers a great in-store experience too, but this will start with an on-boarding experience that shows - not tells - what this experience should be. An experience isn't something that a person is told about. Think about the difference between going on a vacation and seeing the photos afterwards. Which would you rather have? Make on-boarding reflect the in-store experience for your client-facing staff.

 

3. Encourage employees to take ownership of the sale. Make sure your policies reflect a willingness to allow employees to take risks for rewards. Allow an employee to think a bit outside the box if it will close a good sale and ensure repeat business. Don't insist in forcing a by-the-book atmosphere if sometimes you need to accommodate someone who's a good customer. Make sure employees feel empowered to act like owners, and make sure you're hiring owners in the first place.

 

So, how did Ikea do it? They partnered with a company called TaskRabbit, essentially a handyman-matching service, to send someone to your home to assemble the furniture. It's far cheaper than their own service was, and is available for in-store purchases as well as online, whereas Ikea's service was only available upon delivery. A brilliant strategy, but the loser in this scenario is the gig economy worker. They get less money than they were under the previous model, so once again pricing is in a race to the bottom. It seems like we still haven't solved for this problem.

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