Does growth come at the cost of maintaining a high level of service?
It’s commonly thought that expansion often comes at the expense of service quality. This is common among supply chains and some businesses we’ve worked with. When growing a team, it comes with an equal demand to look after the team and manage their responsibilities, often it can have a detrimental impact on the level of service offered. The clients who notice this most are often the early adopters, or longer-standing customers.
Take for instance Tesla, they are renowned for entering the car market with electric cars that cost more than a house. You expect a quality service and product. Initially this was high, however as the company grew and the supply chains demand increased, the product and service started to suffer. A flood of issues coming back to Tesla, which they have since resolved, but it came due to their quick expansion. Tesla’s are being seen everywhere and EV cars have now become the norm? They’ve recovered from the drop in quality due to exceptional innovation in their industry. Also, management of consumer demands for high level of service. They took a backwards step and built strong supply chains and a team to be responsible for quality. Who would have thought that doing too well meant you might fail, it’s all about managing expectations and demands? Or else too much success becomes a burden of failure. Read more here.
A good example of this is when a small, family-run business grows from its humble roots and then is bought out by a big corporate investment group. Immediately clients begin to wonder if this new change of ownership and size will impact the service they get. In my own experience, it certainly has. The priorities of the original owner’s vs the large investment groups are stark but understandable when trying to make vast ROI for stakeholders. However, this isn’t always the case when understanding the pitfalls of what could potentially cause you to fail. The leading example across the world is Walmart, a family run business turned supermarket giants. This is because of careful planning and expansion within their means across the years. This is something they are proud of, keeping the business in the family and its appeal to customers with trust and integrity. An example of how becoming a big investment group can start from humble beginnings, if the core values remain the same and are integrated throughout the brand from day one. “To save people money so they can live better” Sam Walton main aim was to sell at low prices to all, so everyone can enjoy life. Read more here.
However, one misconception is that it’s IMPOSSIBLE to maintain the same standards of service while growing.
- If growing a customer base causes a strain on your businesses service levels due to demand, invest in more people.
- If investing in more people causes more HR headaches and difficulties with ensuring the same standards of training, invest in more management or external support.
- If an increased coverage of service causes inefficiencies in getting work done, invest in better technologies to support your staff.
We completely disagree. It’s not impossible – it’s just expensive! Well, initially.
When looking at the example of a corporate buyout, what often causes drops in service levels is a shift in priorities, which includes reducing costs and increasing profits.
Businesses are not charities, so it is understandable as they expand, they may like to make more profit. However, it’s important for them to remember one of the very REASONS their customer base expands is the level of service they offer. Dropping this down the priority list, and therefore lowering the investment ratio on this, is a surefire way to see a noticeable drop in QoS.
To us, drops in service levels due to expansion are an active choice, not an unfortunate consequence. It is crucial that businesses who wish to grow sustainably continue to invest revenues back into the business, to keep their client satisfaction at the heart of everything they do, and not let it become just an afterthought. Equally, chasing the profits of your business can cause your direction to prioritised poorly, you should always be chasing a high level of service and clients will appreciate your effort in maintaining them for years to come.
So, does growth come at the cost of maintain a high level of service? No, it doesn’t but it does cost money. If you re-invest you will re-invest into a higher level of service. Humble beginning’s can grow and remain humble, some of our leading corporate companies, once started out from not much more than ourselves. Tesla, Walmart, Amazon, John Lewis are all major companies but historically kept come from their core values that have changed very little over time.
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