Too many companies adopt the mindset that they would rather fix an ailing situation than drop it and move on. Xerox, for example, should have abandoned computers years ago, and the same applies to IBM with photocopy machines. When they finally did drop the product, however, the damage was already done and the cost was great.

Take an example from the retail business. Delvita, one of the largest retail companies that operates supermarkets in the Czech and Slovak market with more than 100 shops with an annual turnover of more than 13 billion CZK launched a card-based loyalty program in 1996. This was in response to the entrance of Tesco (UK) and Carrefour (France) to the market, which threatened Delvita’s unique position as a top high-quality supermarkets. Management thought the answer would be to launch a point scheme loyalty card that gave discounts on repeated purchases over time. Using that thinking, 1.2 million cards were issued.

By 2001, however, it became clear that the card was not cost effective. Delvita had originally thought the card would be a good customer retention tool, not to mention the benefits of customer data mining. A number of problems, however, faced Delvita. It was difficult and expensive to process the data meaningfully and profitably, and further data protection regulations meant that to use the database effectively it would have had to get new forms and permission from all card-holders. Other options were available, such as changing the customer bonus structure or converting to multi-partner programs.

Over a period of five years, the company engaged in continuous arguments over what to do with the card and money was being lost in the process. Finally, Delvita’s management picked the simple strategy of withdrawing the card and focusing on maintaining good quality stores and service.

So what really went wrong with the five-year-old loyalty program? Delvita’s management team made their decision to withdraw the card based on customer research. The following was revealed:

Customers are shrewd and know when they are getting good value; and while they like playing the points game for fun, they didn’t care about the card’s 1 percent discount.

While many customers had the cards, it was not really improving their loyalty.

72 percent of customers didn’t regard the card as important.

44 percent thought that the discount was too small.

88 percent said that, card aside, they shopped at Delvita anyway.

82 percent said they would shop there if the card was withdrawn.

Only 12 percent said they would not like to see it abolished.

1 percent said they would defect if it was withdrawn, and these were the low-end customers.

After withdrawing the card from circulation, Delvita improved their services and remodeled 25 stores. By using the cards’ budget, it was also able to reduce prices on 1000 everyday commodity lines on a long-term basis, and give each card-holder a bonus of CZK 25. Delvita experienced a 5 percent increase in sales and only received 12 complaints.

The point is that even at the strategic level, where all of the years of experience of the marketers combine, things can go wrong even if top management doesn’t like to admit it.

A classic mistake is when companies attempt to be all things to all consumers. A company may one day be solely focused on a single product that is highly profitable, and the next day the same company is spread thin over many products and is losing money.

As management is often blinded by the strength of their brand, they always feel as though they can automatically launch an overnight success. “Full speed ahead” seems to be the corporate motto these days.

However, there is overwhelming evidence that this is not the way to go, at least when long-term goals are taken into account. More is less. The more products, markets and alliances a company makes, the more money it loses.

It’s a wonder that more companies do not adopt a less-is-more strategy. Knowing when to shed baggage isn’t a sign of a bad company, but rather the sign of a company that understands the market.