This is a leverage point you need to be very careful with indeed. Whatever you do, read this segment well. Understand its context AND its position.
Let’s start with the context — here we are talking PRIMARILY about the written word. Please don’t take the heading here to mean that when you’re face to face with a customer, that you’ve got to do a lot of talking. NOTHING COULD BE FURTHER FROM THE TRUTH.
We’re simply trying to say that you must leave nothing to chance when you “speak” (meaning by letter, by advertisement, by phone, by letter, or directly) with a potential customer.
It’s a matter of always giving people reasons why such and such is so.
In a crowded marketplace, customers will reach a buying decision based on their rationalized evaluation of the alternatives, including the “do nothing” alternative. They can’t be expected to know why they should buy from you as opposed to another vendor. They simply do not have enough information to make a comparison. You must provide them with that information.
If you find yourself in the position of being overstocked and having to reduce inventory, then tell your customers and prospects why you’re able to give them a good deal. Give them a rational reason for the action you’re willing to take, and a rational reason why they should take up the offer – don’t just cut the price.
For example, tell them that the purchasing department ordered far too much. You now have twice as much inventory as you require. It’s taking up valuable warehouse space and you need to liquidate it to finance next season’s inventory. Tell them that the stock is in absolutely mint condition, but that it’s unlikely that it will be available at this price next week because there’s only enough for the first 50 customers.
People can’t appreciate value when you lower price without a reason that is plausible.
If you are going to lower the price:
§ Offer it only to the first 50 callers ‘because supplies are limited,’
§ Or as a specialoffer to only our existing customers ‘because most businesses spend 6 times more trying to attract new customers, whereas by taking special care of our existing customers, we’re willing to pass on our savings in the form of lower prices,’
§ Or as a special offer to first-time users ‘because unlike our competitors, we understand the value of a long-term relationship with customers, and we want to give you a good reason to experience just how good we are,’
Tell your customers what your competitors would normally sell your product for, and explain why you are willing or able to better that price. Make sure your customers can quickly and clearly compute the value they are getting. Show them the savings they’ll experience, or other demonstrable benefits they’ll enjoy, over the life of the product or service you’re offering, and make a comparison with your competitors’ offering.
People do not appreciate the value they are being given unless you clearly educate them on precisely how that value is computed, and why you can orare willing to offer that much value. Always give the reason why.
Make sure your customers know precisely what you have to do to meettheir needs – do not assume they know how clever you are or what goes into your service.
Tell the truth always. If you screw up, let your customers know quickly and tell them what you will do to fix the problem. If you have to, wear the cost yourself – do you think they would like that style of treatment? Underpromise but overdeliver. Customers do not likesurprises unless they are clearly in their own favor. This is a very good investment of your time.
One of the really big problems in service businesses is quoting low to get a sale, then being unable to really build in service that counts. You end up with a dissatisfied customer because long after the price is forgotten, the service failure is remembered.
If you are in an industry where competitive bidding is the norm, be particularly specific in your description of the way in which you provide your products or services. Remember that information can often be traded for price.
On the other hand, this will not always be applicable if you are in an industry that sells to sophisticated buyers because in this case, the buyers know exactly what they need and because of the knowledge they have they are able to negotiate strongly on price.
However, in most businesses, buyers are not sophisticated, and the only variable they understand is price. This does not mean they need the lowest price. It means they don’t know any other way to make a comparison between suppliers. In these situations, the vendor who is able to explain why customers will be better off to pay a little more will be significantly more profitable than his competitors because that additional margin travels straight to his bottom line.
Always explain clearly what it is that makes your product or service different … your unique core differentiator. It is made from superior materials, hand-crafted, painted five times, rust-proofed, edged with four layers of silicon, you only carry the products of vendors who meet certain minimum standards of service or quality, back-up warranty, etc.
Peoplecrave a rational reason for making an emotional decision – all buying decisions are emotional.
If you employ salespeople, emphasize why your sales and service team members are better able to serve customers than your competitors do. Is it because they all have a minimum of 10 years training, that there are 16 quality check points in the delivery process, that one month before warranty runs out they call their customers to verify everything’s okay and if for some reason they overlook calling, the warranty period is automatically extended to the time they do … etc.
The reason why must be plausible and believable from both your customer’s point of view and yours. That is, you are giving this level (standard) of service because you understand the long-term value of a satisfied customer, and you understand that if your product fails to do the job they expect of it, then they will not want to come back to deal with you. Tell them your job is to make sure, to the absolute best of your ability, that the product does not break down or fail to do the job they want.
A man named John Ruskin once said…
“It’s unwise to pay too much, but itis worse to pay too little. When you pay too much, you lose alittle money, that’sall. When you pay too little, you sometimes lose everything, because the thing you bought was incapable of doing the thingit was bought to do. The common law of business balance prohibits paying a little and getting a lot – it can’t be done. If you deal with the lowest bidder, it is well to add something for the risk you run, and if you do that,you will have enough to pay for something better.”
Someone else also said…
“There’s nothing in the world thatsomebody can’t make a little cheaper and a littleworse. The man who only considers price is this man’s legitimate prey.”
We say …
“People buy value. The key to success is to offer value to customers without resorting to price-cutting. This requires resolve, hard work, and an understanding that people will pay good money for value, but they often need to be guided in understanding the value proposition.”