Continue reading »]]> I’m confused.  Isn’t one goal of a business to adapt to its customers and their expectations?  Isn’t the goal to produce happy, content customers?  And, ultimately, isn’t the goal to retain your customers you spent so much to gain, and maximize your return on investment?  

It appears several large corporations are taking the path of least resistance.  Rather than rising up to meet the expectations of their customers, they are forcing their customers to reevaluate their expectations, and lower them.  First Time Warner and now Comcast is rolling out metered internet connections.  This means if you use the internet to download large amounts of data, you either will be capped, or pay extra-ordinary charges for your usage.  This policy is directly attributable to the slowdown and ‘fill-up’ of network capacity of internet service providers, and rather than upgrade their systems, they are taxing the use, and in some cases limiting the use of the internet to provide a better overall product.

Everything I have ever learned about customer service, retention, and loyalty points to changing your business model to meet the expectations of your customers.  Which reminds me of a customer service story I heard once (maybe I read it, I’m not sure anymore).  However, the story went something like this.  A busy candy shop in a popular tourist destination was continually being approached by customers and asked if they had ice cream.  The employees repeatedly got frustrated and said, “No, we don’t sell ice cream, we only sell these fine candies.”  In fact, the employees became so frustrated, they posted a large sign near the front door that said, “WE DO NOT SELL ICE CREAM.”  It wasn’t a few months before their business began to tail off.  The employees couldn’t figure it out.  But you see, it was simple, the decline in business was directly tied to the ice cream shop that opened up a few doors down from the candy shop.  Customers continually expected ice cream from the candy shop.  However, the candy shop continually said no, and forced their customers to reevaluate their expectation for ice cream from the candy shop.  

The moral of the story: “If you find yourself continuously saying no to your customers, first, you may be saying no to your next big revenue stream, and more importantly, you likely are driving your customers to someone that will say yes.”

Continue reading »]]> I work within the real estate and auction industry.  As a part of our business, we sell a respectable amount of real estate at auction.  Real estate sold at auction has the ability to achieve maximum value for the property because there is not a top price in place as in a traditional listing.  This translates to the true market value of a property being determined.  Often the high bid is lower or higher than for what the property would have been listed.

In Shanghai, residential real estate is scare and demand is high.  As a result, the laws of supply and demand dictate the price should be high.  However, the Shanghai Housing and Land Resources Bureau has issued new rules governing real estate sold at auction.  Any land that is sold for at least fifty percent residential use may not be sold at open auction.  Rather, it may only be sold by sealed bid auction.

Bidders will be required to complete their bidding forms on-site, seal their bids and then submit them for notarisation [sic] on-site. Once all the bids have been submitted, they will then be unsealed on the spot.

The land will be sold to the highest bidder at the price offered in its bid, unless the highest bid is lower than the reserve price, in which case there will be no sale. If the two highest bids are the same, those bidders will be able to submit second bids in writing, and the land will be sold at the price offered by the higher bidder in its second submission.

The rationalization behind this method is to slow the escalating prices of residential real estate.

Shanghai has experienced significant increases in land prices recently, which has had a flow-on effect on the affordability of residential housing. The Circular is intended to slow down or reverse this trend, on the assumption that bids submitted via a one-off written bid will not be as high as those that would eventuate in a highly competitive open auction.

This policy will limit the return on investment for owners of residential property in Shanghai.  I presume the intention is to affect the speculators of large tracts of land.  However, the public will be hurt by this policy, as the value of their property will be artificially low.  Potential buyers will submit lower than normal bids in hopes of getting a deal.  Remember, a seller wants to sell as high as possible and a buyer wants to buy as low as possible.  An open auction allows both parties to reach a mutual middle ground based on the principals of supply and demand.