Do You Recall Economics 101 by Father Guido Sarducci on Saturday Night Live?
I remember most of the skit like it was played this morning. Father Sarducci would explain how he was able to master four years of economics theory by learning one principle: The Law of Supply and Demand. He said it was the only law anyone who studied economics remembered.
The Law of Supply and Demand is easy to understand. If you lower the supply and keep the demand constant, price will rise until the demand equals supply. Father Guido Sarducci successfully explained this principle in about 5 minutes to a Saturday night crowd up late and heavily influenced by recreational medication and alcohol. Even with those most challenging environmental factors, most of the audience in the studio and in front of their TV sets learned more about economics in those five minutes than in any economic classroom.
Many economic theories are hard to master. The law of supply and demand is relatively easy and it works. The notion that complexity is required for something to work is wrong in most cases. I see countless examples every week of companies working to make business hard? Here is another recent example:
USA Today reported on the disastrous test results experienced by passengers boarding Southwest Airline’s flights originating in San Diego. What Southwest was testing is the procedure already perfected by nearly every other airline which of course is assigned seating. Southwest decided to came up with their own definition of assigned seating. They literally assigned you a seat and it didn’t matter when you made your reservation, showed up at the gate or where your preferred to sit. Apparently some people arriving early and preferring a window seat in the front of the plane were assigned middle seats in the back of the plane. In summary, Southwest pissed off a lot of people and as a frequent flyer of Southwest and other airlines, I could imagine not being a happy camper.
So what does this have to do with Father Guido Sarducci? The lesson is keep it simple and do what has been proven to work. I am astounded that the leadership of Southwest Airlines could not have copied the already perfected system of assigned seating developed by other airlines and tested that. I am even further amazed the CEO of Southwest basically downplayed how rattled some of the passengers were by this stupid test. I noticed he was not part of the test group. I also notice Southwest employees flying Southwest board before all other passengers. I believe if the executives and other employees were automatically put in Group C or in middle seats of their assigned seating test things would change fast at Southwest.
There is another important item about Southwest as report by USA Today. Southwest has raised prices nine times in the past 12 months and their stock price has hardly budged. I just checked fight availability on a midweek flight from the Midwest to Florida. Looks to me like it is nearly empty a week in advance. I wonder why?
Let’s bring this back to your business. The simplest thing to do is look at your business from the perspective of your customer. If you have a retail store, shop it or hire a mystery shopper. If you have a customer service center, call them. If you develop information products that you sell on line, ask your customers 90 days later how they have benefited from the product and what else they would like to have seen included. If you have a membership program, and someone drops out, stay in touch to find out what it takes to get them back. Recently I discontinued a membership program where I was paying a lot of money each month – much more than $100. I have not received one call or even one email asking me why. This is really amazing considering how much money it takes to get a person to sign up for the basic plan yet alone the plan I was in.
Now here is a big bonus for those who have read this entire rant: Follow Your Instincts! I have said this before and will be saying it in many articles in the future. Every client I have worked with knew the fundamental solutions to the issues they asked me to help them with. For a whole host of reasons they didn’t act and accepted inertia. In nearly every case the solutions were obvious and intellectually simple.
Right now list the top 3 issues that are holding you back from making breakthrough profits in your business. Then starting right now, spend at least 80% of your time solving those three issues. Once solved, do it again and keep doing it. Simple stuff.