Your Company’s Extra Tax

Posted by
Kevin Oakley
Date
 October 28, 2015

What if at your next management meeting your company owner sat down in the conference room, and announced to everyone that in 30 days every customer would have to pay an extra $500 “experience tax” that would be tacked on to the bottom of every contract… How would you react? How would your other managers react – or your sales team?

No one likes taxes, so instead how about we call it an “experience fee.” This fee is going to be rather substantial, perhaps up to several percentage points of the final sales price – now how do you feel? Probably no different. My guess is that most people in the room would say that it would lower customer satisfaction, and that it would increase customer expectations, slow down construction time, and increase your costs (because you’d have to offer something extra to justify it). Here’s the reality – your company already has an experience tax, and it’s built into your current price.

Now the question is are you delivering a good enough experience to justify your higher price? If not, there is always another company down the road that is willing to cross out that experience tax (or substantially lower it) and offers a similar product for a lower cost without any promise of a great experience. This other company may start out as the “bargain alternative” – but if you do not truly offer and deliver on something they do not have then they may quickly simply become the best overall value. Yikes.

If profitability is a chief focus of your organization (and it always should be) then now is when the light bulb should be going off in your head. On many McDonald’s menus they used to say “smiles are free.” Smiles are free to produce, but they create an experience and emotion that cause people to buy more or pay more.