Page 76 - 100 Great Marketing Ideas (100 Great Ideas)

34 CHARGE WHAT THE
SERVICE IS WORTH

It’s very easy to think that competing on price is the most effective
way to go. In fact, competing on price only cuts profit margins,
especially since there is always somebody else who will be prepared
to undercut you—even if they go broke in the process. It is generally
much better, more profitable, and safer to compete on some other
aspect, for example on service level.

In many cases, customers are prepared to pay a great deal to be given
a top-class service, and nowhere is this truer than in business-to-
business markets, where a service failure can be extremely costly.

The idea

Merchant ships are expensive items. They cost a great deal to build, a
great deal to run, and a great deal to park in harbors. Having capital
tied up is expensive—the ships are only really making money when
they are at sea. Having the ship waiting around in harbor while
customs officials clear the cargo documentation adds greatly to the
cost of operating a shipping line—a fact that three friends (Adrian
Dalsey, Larry Hillblom, and Robert Lynn) noticed.

In 1969, the three friends set up a courier service, delivering
ships’ documentation by air from San Francisco to Honolulu.
The difference was that one of the founders traveled with the
documentation, taking it by hand from the shipping company offices
direct to the agents’ offices in Honolulu before the ships arrived. In
this way, customs officials could clear the cargoes before the ships
docked. Dalsey, Hillblom, and Lynn became (of course) DHL and
rapidly expanded their personal delivery service worldwide.

100 GREAT MARKETING IDEAS • 67