“Why yes, I regularly purchase products from mail order catalogs” said no one in the last 20 years.  Yet 20 years ago, most catalog retailers were thinking to themselves “If only we could improve our operations and reduce our cost of delivery, print, and call centers, we will outprice the competition and really rake it in!”

This line of thinking is obviously absurd in the face of Amazon’s success and the Internet commerce imperative every surviving retailer has now embraced.  However, this “internal operations is all that matters” mindset is still rampant in commercial service contracting companies today.  Like the retailers of the 90s, commercial service contractors are focusing their systems upgrades on internal operating efficiency and accounting when instead they should be girding themselves for the internet shootout that is going to occur in the war over customer engagement.

Efficiency ≠ Growth

So why did catalog companies believe that operational efficiency and outpricing the competition would provide them with the edge? Much like commercial service contractors today, they focused on tactical, cost saving goals that were easy to understand.  For example, it’s not difficult to calculate that reduced windshield time for technicians will result in fuel and vehicle maintenance savings, increased availability for billable calls, and decreased price for the end customer.  The math seems pretty simple right? Reduced costs = Increased profits and growth

This equation is WRONG.

What the equation is missing, and what catalog retailers failed to recognize, is the eroding demand that occurs when customers inevitably switch to a competitor that provides a better customer service experience.  Amazon, eBay, and the hundreds of other online retailers provided shoppers with a simple, online experience that resulted in the downfall of the old-guard catalog retailers. Commercial service contractors are at risk of the same demise if they don’t provide their customers with an engaging and enduring online customer service experience.

Step One: Demand, Step Two: Efficiency

This is not all to say that commercial service contractors should neglect operational efficiency. For example, Amazon has one of the largest, most efficient distribution models in the world. However, the distribution model was developed well after their ecommerce platform released to the public. Amazon understood that an efficient distribution model didn’t matter if they could not engage and retain customers.  By first building the ecommerce platform that shoppers enjoyed, Amazon drove demand that later supported the construction of their distribution model.

How to Avoid the Catalog Trap

How can modern commercial service contracting companies avoid the catalog retail trap?  Stop obsessing on operational efficiency and cost reductions.  These are important, but hardly matter to your customer when another company provides much better customer service.  When you lose all your customers to an internet savvy competitor, no amount of operational efficiency will lead to profits on zero revenue.

Take a page from Amazon’s book.  Focus on generating demand by engaging customers online and providing them with an amazing customer service experience that keeps them coming back for more.  Strong customer engagement and a reputation for amazing customer service will yield robust revenue that offers the possibility of perpetual profit.  You will have the privilege of focusing on improving operational efficiency for many years to come if you survive the internet gunfight that you will inevitably face in the next few years.