Published on: January 24, 2012by Michael Sansolo
One of my favorite business quotes of all time came from Willie Sutton who, when asked why he robbed banks replied, “That’s where the money is.”
We’ve all heard this thousands of times: success in today’s competitive marketplace demands a difference. Every product, store, service and individual needs a point of distinction to help them stand out from the crowd. You need to understand the value proposition of that niche and serve it with excellence. Fail to deliver on those factors and success is hard, if not impossible to come by.
But let’s add an important corollary: a niche doesn’t matter unless it’s big enough to warrant your attention. Otherwise you might simply dominate something that won’t sustain your business or, as Willie Sutton’s might put it, you’d be robbing something with no money. Somehow companies fail to heed this lesson, and now we can add to the list the quirky Swedish automobile maker Saab.
Unless you missed the news, Saab is going under. The company - originally started by an aircraft company and later the property of General Motors - has been hunting for a buyer for the past few years. There were endless rumors of a Chinese suitor, but those have turned out empty, which matches the totals in Saab’s bank accounts.
As might be expected, blame is flying in all directions over this. Saab devotees blame GM for making the cars less special, even as some auto writers say GM actually did everything it could with the company.
You may be thinking, “Why does this matter to me?”
The answer is simple: in the death of one company we can find important lessons for other businesses. And in this case, I feel qualified to comment because I’m the owner of an 11-year-old Saab 9-5. If it were up to me, Saab would have gone under 12 years ago.
A number of people who have seen me with the car have asked if I would recommend it, leading me to respond this way: Would you like to buy mine?
But here’s the irony. The car has a really sweet and powerful turbo charged engine that gets decent fuel mileage. The body integrity provides excellent safety. What’s more, it’s 11 years old and still running fine. I should be one very satisfied owner.
Yet, like all customers, I have a complex and nuanced value equation. And in most areas, my Saab never delivered. My car was exceptional only in its issues. Strange smells have constantly emanated from the engine, stumping an endless array of mechanics. They assured me there was nothing wrong with the engine or the odors, but that’s small comfort when you have to open windows in the dead of winter.
My headlights blow out almost annually, again for no reason. And the car’s fabulous information display started deteriorating years ago. Instead of the flow of information on the engine, weather, fuel economy and more, now I just have an abstract group of five to 20 dots. When I looked into this problem on the Internet I found groups of Saab owners dedicated (unsuccessfully) to finding a single 9-5 owner who didn’t have this problem. Since it costs more than $500 to fix this problem, I do without the information.
Then there are those quirky Saab features that some owners love - like the ignition and window controls being located where no other car maker would ever put them—that made every repair on the car a nightmare, due to extra costs, hard to find parts and long waits.
Yes, there are Saab enthusiasts who hate everything I have just written and gladly went from one quirky model to the next. Only there weren’t very many of them. Even in its most popular years Saab never sold enough cars to drive the cost efficiencies the business needed. Perhaps that’s the biggest lesson of all in Saab’s demise. Having a devoted niche is a wonderful thing, but the niche has to be large enough to sustain that business. And the bevy of problems turned me (and my Internet friends) from potential repeat buyers into demon customers, steering others away with our stories.
Niches are great, but only when they matter.
Michael Sansolo can be reached via email at email@example.com . His book, “THE BIG PICTURE: Essential Business Lessons From The Movies,” co-authored with Kevin Coupe, is available by clicking here .
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