Everyone will tell you. If you want my business, you'd
better have the lowest PRICE. The second we
are in the market for a product or service, it becomes very clear
that PRICE is our major focus. This has business owners &
decision makers scrambling to reduce prices to remain
competitive. If the top line revenue can't grow, then the
bottom line of cost control has to be sharp to protect business
profitability.
PRICE - my Personal
Lesson
Many years ago, when I was a college student I needed a
desk. Being short of cash like many young people starting
out, I decided to look at the least expensive alternative - a
particle board computer desk. After spending $150, I thought
I was a pretty smart guy. After all, I had a great looking
desk that even had an adjoining side for a printer.
One week into the new purchase, I decided to sit on the printer
shelf & quickly broke through 2 levels. After a few
choice words, another trip to the store saw me pay twice as
much for a pine wood desk. Grand total? $450
for a pine wood desk & something that wouldn't even make good
fire wood.
Here's the
question…
Which desk was more expensive? If you
answered the particle board desk, you know where I'm
going. The first desk lasted 1 week. The second
lasted for years and I resold it for a few bucks.
PRICE is what you pay
- VALUE is what you get
Think about it. Do you really want a smokin' hot deal on a
piece of junk? While buyers will tell you PRICE is what
they're looking for, it's really VALUE that
attracts them. Shrewd negotiators will tell you that they
want BOTH. The lowest possible price for the
best quality product with great service. Sounds like
the making a good commercial, no? Seriously...no.
A formula for
Business Bankruptcy
Believe it or not, your LOYAL customers want
you to make a profit. If you don`t have LOYAL customers,
there`s a good chance you don`t have good BRAND
EQUITY. Claiming you offer the lowest prices for the
best quality & service is a promise you cannot afford to keep
on a consistent basis. Claiming that in your advertising
& then backing out with small print or special conditions is a
great way to build a reputation you don`t want. With the
increasing use of social media, your business will discovered to be
authentic or a
fraud quickly.
PRICE vs. VALUE
definition
It`s this easy to understand. When PRICE exceeds perceived
VALUE, there will be no sale made. Too
expensive, not worth it will be the words used. When
perceived VALUE is greater than PRICE, a sale is
made. Bang for buck & great deal put a smile on any
buyer`s face. The only exception to this rule involves budgeting.
If the PRICE is greater than the amount of money the customer
can afford to pay then no sale occures
regardless of VALUE. Budgeting can
definately be a factor.
Your Options - Lower
PRICE
The sales transaction completes and you the business owner are
forced to sell the product or service for a decreased
profit margin. Your operating costs seem to always
go up, so you have no choice to slash expenses
like advertising, pay increases, & renovations. This
creates less store traffic, poor employee morale & what appears
to be losing long term business proposition.
A Better Option -
Increase VALUE
Here`s the key point. VALUE is what the customer
perceives. Their perception is their current
state of reality. Increasing the VALUE through true
incentives that motivate people to buy can actually build
BRAND EQUITY. It`s easy to see how many
brands can actually charge a premium because of
their high perceived value relative to price. Look to find a
value add with a product or service that carries weight in the
eyes of the customer.
A Great
Example
A furniture store client of mine years ago offered its customers
free repairs on its high end sofa line. They would visit your
home, repair your chair or sofa for surface wear & tear.
If required, they would even pick up your chair, take it to their
store & repair it. All of this was done FREE OF
CHARGE! This family run furniture did this because
they were great operators & wanted to stand behind their
product for years to come.
THE LIFETIME WARRANTY
PROGRAM
That`s exactly what we called it. Radio commercials on the
target market station with an endorsement from the station`s
popular Morning Man announced the program. We interviewed the
store owner & used the sound bites for great commercials.
That campaign still airs 18 years later because it stands for
something - perceived VALUE.
How about your
Salespeople
Always remember. The product is not the product.
It`s experience of buying the product. Are
your salespeople adding perceived value? Are they asking
questions, listening to the answers & truly meeting the needs
of potential customers? Do they know as much about the
product as the educated internet savy customer does? Are your
salespeople trying to help people buy or are they trying to make a
sale? Don't assume or guess. Know. Many people
will pay a slight premium to find a respectful, knowledgable
salesperson who`s interested in repeat business & referrals by
earning them.
Training
If your salespeople are not expertly trained to know how to deal
with customers in this competitive social environment, you are
wasting your time & money in so many
areas. Think of the wasted dollars on advertising making
claims you aren't keeping.
If that`s your case, perhaps you should call or email me.
Check out my website. You'll find everything I blog
about to the basis of my training.
Thanks for reading!
Dave Warawa - PROSALESGUY
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