Do you think price is the most important thing potential customers consider when purchasing what you sell? If you answered “yes” I’d like to challenge that idea. When I ask small business owners this question, about 70% of them say “price”. That means the majority of business owners believe price makes or breaks a sale.
Here’s the truth: customers will shop on price if they have no other way of differentiating you from your competition. Which means if you believe your customers shop you on price, it’s because you have trained them to do so by NOT setting yourself apart from the competition. Yes, it’s your fault – not theirs.
Don’t believe me? Consider this:
Recently I needed a new phone. I had 2 options; go through the Verizon website and pay $150 or go through a 3rd party broker who came highly recommended and pay $99. Of course, I went with the broker.
After several phone calls, emails, and texts over the course of three days, my order got placed and confirmed, and put on hold and finally flagged for questions, resulting in a 30 minute online chat session with the broker company during which there was no resolution and the order got cancelled. So, after 3 days and over an hour of my time dealing with them, my phone was still not ordered and I was told by my representative that I’d need to get on yet another 20 minute call with him and his company to sort it out and re-place the order. This was 20 minutes I just didn’t have.
Since he and I had already been through all this on our initial 30 minute call to place the order I asked him to re-place the order without me, explaining that I didn’t have 20 minutes to spare anytime soon.His response was: “No, they’ll need your information.” Me: “But I already gave you all my information, can’t you just place the order for me?” His answer: “No.” My response: “I’ll go to Verizon.” He lost the sale.
At 11pm that night I logged onto the Verizon site (and discovered that the special was over and I now had to pay $200 for the phone instead of $150) and within 3 minutes I was done; my order was placed and in 1 business day I had the phone in my hands. Three minutes of my time… well worth the extra $100.
And The Point Is…?
So what is the moral here? The moral is I paid double for the convenience of not having to deal with another phone call and 3 more days of waiting. So, was my main consideration for making this purchase price? No, it was convenience. My rep made the mistake of thinking it was price… and lost the sale.
Did he provide me lousy customer service? Not at all. But he failed to recognize my real pain: my old phone was on its last legs, I needed it to conduct business, and I didn’t have the time to jump through hoops to buy a new one. Price was irrelevant and convenience and timing were everything. I paid double for convenience – and I don’t think I’m the only one who has ever done that…
What do your customers pay for? Believe it or not, it isn’t the widget or the basic widget service you provide. They pay for a solution to a particular pain or problem.
And I’ve said it before; if you can find the REAL problem and effectively solve it you can pretty much charge what you want (within reason). Think your business is different? Think yours is more competitive or a commodity? Think again – I bought a DROID – a commodity that I could have purchased in 15 different places… so regardless of what you sell, you do NOT have to compete on price!
Who has time these days to shop around for the cheapest? I know I don’t, I‘d much rather know that I’m going to get value for my money – and that means finding companies that somehow demonstrate or prove their value before I part with my money. How does a company do that? By figuring out who your target market is and how you uniquely serve them. Whether it’s your process (like Verizon – easy process), your follow up, a guarantee, or super speedy service with that little something extra (Verizon – FREE overnight shipping), it’s about doing something special – and better – and grabbing on to that differentiation and not letting go!
What do you think? I’d love to hear your thoughts on this!! Leave your comments here.
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