During my university days, we were taught in business school the meaning of ‘opportunity cost’. More or less it means willing to fork out a price to earn the customer’s favor and to win the business over. The goal is often to build long term relationship.
This practice has long been in place even during ancient times, long before names and labels were being attributed to them. I know especially Chinese people always do business that way. During those olden days, how uneducated Chinese immigrants who migrated to other countries were able to become millionaires is because they have constantly practiced this concept of ‘opportunity cost’.
They treat the potential client to expensive wine and dine or they cannot afford it, they offer to solve a customer’s problem for free.- sometimes long before the deal is closed. From there, trust is won and one day when the chance comes, the customer chose to do business with them. They know that building up trust would take time and it is not overnight- even though the potential clients may not sign up with them, but he will have them in their minds- either the potentials would want to help by recommending or would swtich to do business with them when the time is right.
Remember, people are particular about who they recommend because it would also reflect on their choice and taste. No one would want to recommend a lousy and unreliable contractor to their acquitance and friends, rite?
The practice has become a dying trend
Sadly, this practice has become a dying trend. Corporations now are so profit orentiated that they have forgotten what is the meaning of opportunity cost. they would charge and bill customers for every single thing, and may not even adopt much flexibility. even within their own staff are being squeezed dry- and what can a tired, burnt out and dissatisified staff have left to give to any customers?
In short term, profit may rise because cost are being cut. But in long term, it cannot continue to increase because people are going to know about the company’s practice and spread the news to their friends and family. We can never be too calculative with our customers or they would be calculative with us. Sometimes, we may earn the RM50 from service charge impose on them- when we refuse to accommodate, they would no longer have a good view on us and will move their business elsewhere.
So we would win the war but lose the battle. What’s the point in this?
Leaders in any industry that can hold on to the place for a long time either:
- monopolises something that no one else could do
- invest in staff development and service (the staff never leave because they are happy and know they could never get such a good job elsewhere, and in the process, they also make customers happy)
Because no one wants to do this anymore, any company that puts priority to long term gain and invest in building long term relationship with clients would stand up and wins the race in the long run. The choice is ours…