Since the dawn of commerce, the playing field has always been a bit tilted in favor of the seller, because sellers almost always have better information than buyers have about whatever products are being sold.
In economics, this is known as "information asymmetry," and to avoid being taken advantage of by unscrupulous sellers, or perhaps just unpleasantly surprised by incompetent ones, buyers will usually rely on a seller's reputation, often encapsulated by the brand. If you're thinking about where to have a quick lunch, for instance, you can either take your chances with a restaurant you never heard of before, or you can have a reasonably dependable and predictable customer experience at Olive Garden, or Panera, or Outback, where you know what the experience is likely to be on account of the brand.
Because of digital technology, however, information has become increasingly easy to obtain and share, which levels the economic playing field by making it more difficult for any party to profit from information asymmetry. Completely new business models, in fact, are being built on the idea of making information about buyers and sellers more freely available. When you hail a ride from Uber, you have immediate access to the driver's reputation based on the reviews his or her previous passengers submitted, quite easily, on their smartphones. And the driver also has access to your reputation as a passenger, based on feedback from Uber drivers who have picked you up in the past.
When Amazon reminds you that you already bought a book you're about to purchase, or when USAA cautions you that you don't need as much property insurance as you're asking for, these are examples of using information asymmetry to benefit the customer, rather than to take advantage of them.
If you sell mobile calling plans, why not use your information asymmetry advantage to tell a customer when they're paying more for their plan than their data and usage pattern indicates would be necessary? Or why not caution a customer who is signing up for your service from an area where your coverage isn't the best (maybe offering them a discount until the coverage is upgraded)?
If you provide credit to customers, why not use your information asymmetry advantage to send a text or email to them a few days in advance of a late fee being imposed?
Whenever you know something your customer doesn't know, you have two choices:
- Use the information asymmetry to boost the amount of short-term profit you can take from your customer today, or
- Use it to provide a more trustable customer experience today, which will improve your reputation and increase your profit forever.
Which option you choose will communicate to customers a great deal about your true value to them. Do you want to be the kind of seller that constantly has to persuade and entice customers to buy, or would you rather be the kind that has customers watching out for more opportunities to buy?