I had a meeting today with a man who owns a rental property in Nags Head, NC. He commented to me the property management firm he used had done a nice job, but the changed the way they offer their services from a turnkey bundle to an a la carte menu of services.

For this reason alone, he switched property management companies.

Interesting… This property management company decided to give control to its customer - to allow him to customize their service to his own needs. I would guess their motivation was to retain customers. But it produced the opposite result.

He valued the assurance of the end result more than the ability to craft for himself a better deal by manipulating variables and weighing risks that he did not fully understand.

I expect that many of you who read this blog have struggled over how to price a product or service. To bundle or not to bundle… These are tough decisions.

Like this property management firm, we’re often guided by the idea (rule???) that customers prefer control and customization.

With this story reverberating in my mind, I joined a conversation about consumer directed health care – the increasingly popular notion of shifting the financial responsibility for health care (along with the burden of choice) to the consumer through cheaper, high-deductible insurance policies coupled with health savings accounts (HSA).

Imagine that you wanted to have a truly thorough physical exam, and you were willing to pay for it.  Would you want to approach the doctor with the simple request for a thorough physical exam for someone of your age and gender?

Or would you rather that the doctor hand you a catalog of all of the available tests, labs, and procedures, with prices for each and you build your own physical exam a la carte?

In the latter case, you certainly have total control of the investment, and you can completely customize your purchase.  You enjoy the economic transparency of the transaction. Every price is presented for you to consider.

Yet, if forced to choose between these two extremes, the overwhelming majority of us would prefer that the doctor dictate the service bundle.

Now think about the last time you paid to have your car washed.

Did you tell the attendant at the car wash, “I want my car REALLY clean – whatever the cost?”

Or did you review a menu of services (or service bundles), assess the relative value of each in the context of your car and its needs at that moment, and make what you felt to be the best choice?

Of course the experience was closer to the latter than the former.  And we wouldn’t want it any other way.

So how can we explain this inconsistency?

In the case of the car wash, we insist on the ability to customize/control our own purchase. But when we purchase a physical exam, we prefer the service bundle be dictated to us by the vendor.

The answer is obvious.  When we believe we understand what we are buying well enough to easily break the purchase into its component parts and assign a value to each in light of our own needs, we generally prefer the a la carte model.

However, when we don’t fully understand the component parts of what we are buying, a la carte decisions are intimidating, and we search for an alternative that relieves us of the pressure and responsibility of choosing from a position of ignorance.

The next time you are confronted with the issue of handing control to your customers to customize their own purchase of your products or services, ask yourself the critical question.  Are you a doctor or a car wash attendant?

If you aren’t certain that your customers have a FIRM grasp of the component parts of what you sell, be VERY cautious about assigning them the responsibility to customize their own purchase.

Sometimes control and customization are NOT appreciated by the customers you aim to please.

If you’re heading in this direction with a shadow of a doubt, be DARN sure that as you hand the reigns to your customers, you give them a way to hand them back without embarrassing themselves.

This entry was posted on Friday, June 29th, 2007 at 4:26 am and is filed under Sales & Business Development, Marketing Principles. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.