It is essential in every small business to retain customers whenever possible.
The top 3 reasons, that you can influence; why customers do not return to your business. This is blog #2 of 3 on Customer Retention
- You, your team, your product, did them wrong
- For more information and background see #1 “Is the Customer Always Right”
- Someone else gave them a lower price
- They don’t think they matter to you
Time to cover #2
Should You Price Match
Most of us will look for the best deal we can find on a common commodity.
Our society has a sales mentality. Major retailers, car dealers, etc. have taught us all to wait for the sale. What that also has taught us is that everything is overpriced. How else could retailers afford the sales they offer?
Most businesses in the United States are not large retailers. They are small, main street based businesses trying to survive one year to the next. Sales done right can find give new customers a sample of what is available and lead them to become lifelong clients. Sales done wrong can kill a business fast.
A great example is the recent mobile phone commercials asking if you would pay 50% more for 1% improved phone service. Whether their statement is accurate or not doesn’t matter. They have made their point. Mobile phone service is no longer a luxury item, it is a commodity that everyone uses and getting the best price makes sense for most customers.
So how to some competitors manage to charge significantly more for the same products / services you offer? Are they really that much better?
Sometimes there is a significant difference in the quality or value being offered. More often it is the marketing and positioning that makes the difference in the price. Not the actual value of the product or service.
Communicating value is marketing’s job. It starts with being crystal clear on what you offer, and who benefits the most from what you offer. When you are talking to the right crowd, there is less push back on pricing.
Consistency, consistency, consistency. Deliver what you promise every single time, when possible add a WOW effect. Consistency is more important that a WOW. Your customers feel cheated if you do not deliver what they expect to receive. That is when they are most likely to feel they overpaid.
Pricing can be a complicated matter, including
- What does it cost to produce the product or service?
- What does the market bear?
- Can your ideal customers pay what you are charging?
PLEASE always make a profit on what you do.
It seems obvious but this can sneak up on you, especially when you are feeling desperate and making price reductions or special offers. If you do more work at a lower rate you will put yourself out of business real fast.
Train Your Team
Your sales team needs to meet their goals. AND If they feel you panicking, they are likely to offer more discounts than needed to make the sale. The more you discount, the less value your prospects see in what you offer.
What are your competitors charging?
If you are selling a commodity, something they can get anywhere, you need to be in the ballpark. Be aware of this but don’t let it dictate everything.
Know your unique selling proposition, USP. What makes your business, your product, your delivery unique and worth more to your ideal client? You want to sell on value not price
Pay attention to who you are marketing to. Whether you are high quality, high price, or lower quality, lower priced, there is a market for you. Are you telling your message to a market who will see value in what you offer, and can afford it? If you find yourself continually offering discounts because a prospect really wants what you have you may be marketing to the wrong market.
Quality + Price = Value