If You Don’t Clearly Communicate Value
Your Customers Will Choose the
Lowest Perceived Price!
Have you ever price shopped on the internet before you made a large purchase?
When I was car shopping in 2003, I walked into the dealership knowing the wholesale, retail and resale value of the car I was interested in.
Now did I buy the lowest priced car? No – I bought the car that I felt was the best value and from the dealership with the best customer service. But I knew what the range was before I stepped foot in the door.
How many of you are dealing with something like this in your business?
In the States, Wal-Mart launched $4 prescriptions about 3 years ago. That’s right – $4 for a 30 day supply of most common generic medications.
It caused a ripple of fear in independent pharmacies throughout the country. How were they going to compete with $4 prescriptions?
Many pharmacies launched their own generic pricing program comparable to the Wal-Mart program.
But the answer is to NOT compete on price alone!
Wal-Mart’s business model is to advertise low prices, which creates a perception that they are the lowest price on everything – and they often are not.
There was a PBS Frontline special Wal-Mart and its business model in November 2004. An example is that Wal-Mart advertises a microwave oven for $25.
$25 for a microwave? Wow! Does this create a perception of the lowest price? Absolutely!
Now here is the rub – most people want more bells and whistles on their appliance than the baseline model. If you are thinking you need a new microwave and you see the $25 ad you head to Wal-Mart.
It is the bait to lure you in. But as soon as you walk past the advertised model to the model you do want, the ticket price is probably more than what you would pay at another local retailer.
The assumption is that your model is also a lower price than the competition – and it usually is not!
A couple of pharmacy owners I have worked with did a price comparison with several patients, where they reviewed all of their medication.
The results were if some of the patient’s medication were not on the $4 plan, then the total cost of their monthly medications were more expensive at Wal-Mart than at the independent pharmacy.
What? Then why did the $4 program have such an impact?
Because by advertising $4 prescriptions Wal-Mart created the perception they were the lowest price for all medications…
…and people made their buying decisions based on that perception.
Doctors recommended patients take their prescriptions to Wal-Mart hoping that if a patient could afford their medication, they would take it as prescribed.
So how do you compete with that?
The answer is NOT to compete on price.
That battle will put you out of business, plus it is not a level playing field. Wal-Mart’s opening price-point is more of a loss leader to bring people into the store.
The answer isn’t in the Price – the answer in the Perception!
Wal-Mart and other chains create a Perception of the Lowest Price – You need to create the Perception of the Best Value.
How do you do that?
Find out why your customers choose you. Why do they buy from you? What do they value most? What differentiates you from the rest of the herd?
Do you want to know the easiest way to uncover this?
Talk to your customers! They will tell you why they “shop” with you… and why they keep coming back.
The challenge with defining the value you provide to your customers is we tend to take it for granted. It is not necessarily WHAT you sell but it is what you DO to sell your products or services.
For example in a pharmacy that the pharmacist is available for healthcare questions and concerns; that the staff knows the whole family and can advise of how to simplify managing their medications for better physical results.
Or a carpet cleaning company is so well trusted that they have the keys to the family home with a set schedule so that the family never have to worry about maintaining or cleaning their carpets.
Every single business owner reading this article provides tremendous value with their business. You provide tremendous value to your customers.
The problem is if you are not communicating that value, if you are not communicating why to choose your business – your customers may go somewhere else.
If you are not communicating it – your customers may not perceive the value enough to include it in making a purchasing decision.
It is your job to clearly communicate the value that you provide to your staff and to your customers – otherwise I guarantee you are losing business that is yours for the taking.
Have you ever had a customer come back to your business because the service, wait or experience was so bad at your competitor?
Ever heard the comment “It just wasn’t worth the difference in price”?
If you have, it is just the tip of the iceberg – most customers just leave or come back and don’t announce it.
This is a critical, and yet it is also something that most business owners struggle with. Identifying what sets them apart and then how to clearly communicate that value so people make different buying decisions.
This is one of the core components of The Profit Generator Program and a step you absolutely must do to position what you sell as a solution.
If you are not clearly communicating the value you provide with your business, your customers will choose the lowest perceived price – and that is the game Wal-Mart is winning.
Applying This to Your Business:
- Have your front line team members keep a journal or record and capture what your customers say about your business. Write down with the words your customers use to describe your business – what they appreciate or value; what they thank you or acknowledge you for.
- Approach some of your best customers and ask them what they think the value your business provides is; why they choose to do “shop” with you.
- Pay attention to feedback you hear repeatedly and brainstorm with your team to capture the core value and then discuss how to communicate it.
- This is a process not an event. It will take time to identify the core value you provide and more time with feedback and refinement to be able to clearly communicate it. What is important is that you start the process and involve your team and customers.
Want to accelerate the process with support and training? You may be ready for The Profit Generator Program. Click Here to Get Started Now!
What Did You Think?
Let us know your thoughts on today’s issue.
Post your comments below
