How to Avoid Getting (Too) Greedy

If you’re an entrepreneur, you’ve spent time in “the red.” You’ve used money, earned or borrowed, and invested into your business. Buy for a dollar. Sell for two. Eventually, you land in “the green.” What happens then?

Some folks buy an Armani suit, slick back their hair with 3 pounds of hair gel, channel their inner Gordon Gekko by proclaiming, “greed is good,” and pocket the cash. However, greed and profit are not the same thing.

What do I mean? Check out this business slice before ethical bankruptcy causes literal bankruptcy.

Click to tweet this: Be careful not to let greed get in the way of profit. @DaveCrenshaw

Video transcript:

Have you ever worked with a company that got too greedy? For instance, Amazon switching its shipping from UPS–which is very reliable–to the less expensive and less reliable USPS; or the local restaurant watering down their soup.

Whenever businesses do this in an attempt to save some money, it often ends up hurting them in the end. Here are three things to avoid with your business:

  • Number one is never cut anything that is a profit-generating activity. You don’t make money by saving money. You make money by making wise investments.
  • Second, never pay less than a fair wage for your employees. Your employees must feel that they are being compensated at the same level basically the people around them are being paid. Otherwise, you’re going to have a huge problem with turnout.
  • And lastly, never diminish the customer experience. Your customers have come to your business and they’ve experienced something, and they keep coming back with the expectation that that will continue.

So my question for you is simple, name one company that you’ve worked with that got a little bit too greedy.

Also, if you have any questions you’d like me to answer in a future video, ask that below as well.

Thanks for watching and remember—greed isn’t always good.

Join the conversation: Name one company that you’ve worked with that got a little bit too greedy.

I respond to every question and comment. So, please, join the conversation!


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2 Archived Responses to “How to Avoid Getting (Too) Greedy”

  1. Chris F. says:

    starbucks – When they changed their rewards program, where previously when you’d make 12 visits, you’d get a cup of coffee. Obviously the cheapskate that I am, I buy 3 cups of coffee, I want to get 3 visits/stars. I feel like there is a general expectation, buy 10 get 1 free. Well when I asked employees why they changed, they said because people were scamming the system and getting a free coffee when they would buy 12 cups of coffee. Now you have to buy like 30 cups of coffee, and its rather confusing. I simply left Starbucks and go across the street. I didn’t really like the coffee, but was just buying stars. I am not offended either, as its totally their choice to do what they feel is right for their customers and company. I do find it odd though, since 2015 Starbucks had the highest revenue ever and to change a reward system when you are literally crushing it, seems a little greedy. My assumption is they wanted to “simply” keep revenue but take away customer experience and customer value. That logic is seriously flawed as a customer, if I dont get an experience or value, I wont buy.

    Strangely, they seem to be increasing revenue, and more people, according to them, are using the app/rewards system(http://finance.yahoo.com/news/starbucks-controversial-rewards-program-changes-210700951.html).

    So what I can conclude is they might be greedy, but regardless, they were very intentional in their actions, and while it impacted me negatively, it appears they made up for my loss quite well. I would give them super props for being intentional knowing they will lose customers, but in the belief it is better for their business and for the customers they are choosing to go after.

    Thoughts?

    • Dave Crenshaw says:

      Interesting case study, Chris. To me there’s a little bit of “Who Moved My Cheese?” going on here. As human beings our brains are hardwired to resist ANY kind of change. So even if it was a positive change, you’d still see people complain and see the Starbucks buzz score drop (as was mentioned in that great article, thanks for the link.)

      Changing policies to increase profits isn’t bad or even greed, per se. The question is, apart from the frustration of change, does this DIMINISH the customer experience? For some, yes. But for others, it appears it actually enhances the experience for the majority by removing the customer-side gaming that was taking place for splitting transactions or buying the cheapest item just to get a star.

      Comment from “Northernboy” at http://www.businessinsider.com/analysts-love-starbucks-new-rewards-2016-2
      “I don’t understand why anybody thinks this is a horrible idea. The program that Starbucks currently has set in place really is unfair. People who buy two dollar coffees, or a 50 cent newspaper get the same amount of stars as a person who enters the store and buys coffee for their whole office. This isn’t just an incentive for people to spend more money, its a way of making sure that each person who shops at Starbucks is rewarded fairly for the money they spend.”

      My take: Starbucks could have found a better middle ground here. Make the change in a way that didn’t feel like it cost SO much more to get a reward for the people who were doing it the old way.