Business Operations

Know When You’ve Overinvested in Quality

Know When You’ve Overinvested in Quality
 
  • 31 percent of midsize businesses that devote “significant time” to competitive strategy say they do so in order to meet or exceed their clients’ needs in relation to the competition.1
  • 40 percent of midsize businesses say quality is the primary focus of their competitive strategy; of these, 63 percent say they fulfill this component by offering a superior product or customer support.1

Investing in quality may be a key step to satisfy customers and improve products, but there is a point at which investing in quality ceases to have a tangible ROI. In fact, some business owners risk allocating capital in the pursuit of quality that would be better served elsewhere.

So how do you know when you’ve reached the point of lowered returns?

The first step in the process is simply recognizing that choosing to compete on quality comes with measurable financial expenditures, and these costs are subject to evaluation and reassessment.

You should objectively review past and current projects using customer survey results, market information or other data you may have on file. Which projects were of sufficient quality? Were there any of insufficient quality? Exceptional quality? If possible, review the investments made in each of them, and see what costs were most instrumental in delivering the quality metric.

Most importantly, continue to track all expenditures related to quality improvement efforts, including all those incurred during testing, as well as time and money spent during defect detection and correction. Only by quantifying these costs can you ensure you are investing the proper amount to stay competitive (and profitable).

3 Barriers to Competing on Quality

Quality has become more important than ever as online product comparisons and user-generated reviews impact sales across industries in both the B2C and B2B spaces.

Here are three common barriers companies face when trying to compete on quality, and what you can do to ensure a focus on quality enhances your competitive positioning:

Barrier: Lagging technology

Tip: As demand increases, you’ll be tasked with increasing output without sacrificing quality. Investing in the latest technology and equipment to improve productivity can help you stay ahead of your competitors.

Barrier: Insufficient personnel

Tip: A workforce that embraces quality as a core value is essential in order to bring high-quality goods and services to market, but identifying and recruiting new talent can be costly. Consider acquiring a competitor that boasts a workforce with the skill sets you require to foster sustainable growth.  

Barrier: Maintaining an underperforming division

Tip: Improve your focus on quality by selling a division of your company that is not a key component of your portfolio or essential for long-term growth.

For more information on competitive strategy, read our complete guide. Or contact your SunTrust banker today to learn more about the resources available to you to support your strategy and strengthen your market share.

This content does not constitute legal, tax, accounting, financial or investment advice. You are encouraged to consult with competent legal, tax, accounting, financial or investment professionals based on your specific circumstances. We do not make any warranties as to accuracy or completeness of this information, do not endorse any third-party companies, products, or services described here, and take no liability for your use of this information.

Related

What's New

 

Investment and Insurance Products:

Are Not FDIC or any other Government Agency Insured   Are Not Bank Guaranteed  May Lose Value 

© 2018 SunTrust Banks, Inc

equal housing logoSunTrust Bank is an Equal Housing Lender. Member FDIC

equal housing logoEqual Housing Lender. SunTrust Mortgage, Inc

SunTrust, SunTrust Mortgage, SunTrust PortfolioView, SunTrust Robinson Humphrey, SunTrust Premier Program, AMC Pinnacle, AMC Premier, Access 3, Signature Advantage Brokerage, Custom Choice Loan and SunTrust SummitView are federally registered service marks of SunTrust Banks, Inc. All other trademarks are the property of their respective owners.

Services provided by the following affiliates of SunTrust Banks, Inc.: Banking products and services are provided by SunTrust Bank, Member FDIC. Trust and investment management services are provided by SunTrust Bank, SunTrust Delaware Trust Company and SunTrust Banks Trust Company (Cayman) Limited. Securities, brokerage accounts and insurance (including annuities) are offered by SunTrust Investment Services, Inc., a SEC registered broker-dealer, member FINRA, SIPC, and a licensed insurance agency. Investment advisory services are offered by SunTrust Advisory Services, Inc., a SEC registered adviser. GFO Advisory Services, LLC is a SEC registered investment adviser that provides investment advisory services to a group of private investment funds and other non-investment advisory services to affiliates. Mortgage products and services are provided by SunTrust Mortgage, Inc.

SunTrust Mortgage, Inc. - NMLS #2915, 901 Semmes Avenue, Richmond, VA 23224, 1-800-634-7928. CA: licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act, IL: Illinois Residential Mortgage Licensee #MB-989, Department of Financial and Professional Regulation, 100 W. Randolph, Suite 900, Chicago, IL 60601, 1-888-473-4858, MA: Mortgage Lender license #-ML-2915, NJ: Mortgage Banker License - New Jersey Department of Banking and Insurance, NY: Licensed Mortgage Banker—NYS Department of Financial Services, and RI: Rhode Island Licensed Lender.

"SunTrust Advisors" may be officers and/or associated persons of the following affiliates of SunTrust Banks, Inc.: SunTrust Bank, our commercial bank, which provides banking, trust and asset management services; SunTrust Investment Services, Inc., a registered broker-dealer, which is a member of FINRA and SIPC, and a licensed insurance agency, and which provides securities, annuities and life insurance products; SunTrust Advisory Services, Inc., a SEC registered investment adviser which provides Investment Advisory services.

SunTrust Private Wealth Management, International Wealth Management, Business Owner Specialty Group, Sports and Entertainment Group, and Legal and Medical Specialty Groups and GenSpring are marketing names used by SunTrust Bank, SunTrust Banks Trust Company (Cayman) Limited, SunTrust Delaware Trust Company, SunTrust Investment Services, Inc., and SunTrust Advisory Services, Inc.

SunTrust Bank and its affiliates do not accept fiduciary responsibility for all banking and investment account types offered. Please consult with your SunTrust representative to determine whether SunTrust and its affiliates have agreed to accept fiduciary responsibility for your account(s) and if you have completed the documentation necessary to establish a fiduciary relationship with SunTrust Bank or an affiliate. Additional information regarding account types and important disclosures may be found at www.suntrust.com/investmentinfo.

SunTrust Robinson Humphrey is the trade name for the corporate and investment banking services of SunTrust Banks, Inc. and its subsidiaries, including SunTrust Robinson Humphrey, Inc., member FINRA and SIPC.