Commoditization and Customer Service

The number of ways consumers can make a purchase today is amazing. The option I find most interesting are the Best Buy vending machines found in many airports since their introduction in 2008. Being comfortable spending a couple of dollars for a drink from a vending machine is one thing, but the fact that consumers are now willing to spend several hundred dollars purchasing electronic equipment from a vending machine is a true paradigm shift.

Consumers are placing great value on convenience and have demonstrated a willingness to spend large sums of money as long as sellers make the process easy. And it doesn't get much easier than a vending machine.

Another example, Redbox, is shaking up the video rental industry by offering video rentals via vending machines at the low price of one dollar for a one-day rental. I recently spoke at a company meeting for Family Video, one of the largest video "rentailers" in the industry.  One of their executives made a profound statement about why they place such a strong emphasis on exemplary customer service in their stores. He said, "Customers are choosing NO service over POOR service. They'd rather simply put money into a machine than having to deal with employees who either aren't knowledgeable or don't care." Family Video has been successful in differentiating themselves because of their service (record profits and continued expansion), but we all know companies whose service is so bad we'd just as soon not have to talk with anyone who works there.

The vending machine phenomenon is a symptom of the much larger issue of how businesses are commoditizing themselves more and more each day. A machine can take money and dispense a product quite efficiently, and at a much lower cost than a bricks and mortar location staffed by employees.

What machines can't do is make  customers feel welcome, valued, and unique. A company's employees are the only ones who can do those things. Employees are the only ones who can provide a truly personalized experience. But if a company's employees and service aren't adding value to the customer experience then why wouldn't customers prefer to just deal with a machine?

I do believe that having a variety of purchasing channels is a smart approach to business. Letting people buy things in the way they like to buy them is a good thing. However, when customers intentionally avoid dealing with a company's employees because the experience is usually poor, automating the purchasing process moves the company and its products one step closer to commoditization.

I think Best Buy's vending machines are cool, although I admit I haven't purchased anything from one - yet. The point, however, is the fact that they even exist. That fact should make any employee in any organization look over his or her shoulder to see if a machine is able to perform the same job function with no loss of value. And with the advances in technology today, value can't be based on completing a transaction efficiently; machines can do that. Value must be based on creating an experience that makes the customer feel valued.

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