Rock beats scissors … scissors beat paper … paper beats rock.
Remember this game? It’s like flipping a coin except with decisions and strategy.
This game decided many important issues in our family. For example, which team batted first, who sat in the front seat or what TV show we watched.
This seemed fair to me … at least half the time. The other half I wasn’t happy with the outcome.
Why? Because I lost.
We want to win, ALL the time.
Human nature is such that we always want to win. Right?
Here’s what I want.
I’d like to get my hands on a powerful weapon that virtually guarantees victory. Sorta like using a Nuke in the Rock, Paper, Scissors game.
Of course it has to be something my competitors don’t know about or think to use.
Good news … I’ve got just the thing … and will reveal it in just a moment.
But first, let me ask this.
Do you drop your drawers (not literally) for customers?
Is your “go-to” tool the same as many of your competitors?
It’s likely the same tactic I often used when selling multi-million dollar computer systems, years ago. Know what I did?
At the blink of an eye I would cut my price in the face of competition.
And I’m not alone. Price chopping seems to be the number one competitor-beating strategy companies use.
What’s the problem with dropping prices?
Nothing. If it’s part of a well thought out marketing strategy.
Otherwise, it could hurt the perceived value of your products and … splash red ink generously over your bottom line.
I’m NOT trying to be overly dramatic here. Just trying to make a point.
However …
There is a dark side to price cuts.
Face it, the likely reason you’re dropping prices is to attract new customers and drive new business. On the surface that seems to make sense, but …
However there may be some unexpected results too:
- You attract sale-hounds not customers. These folks ONLY shop price and will shop elsewhere for the smallest price difference. They are also the most difficult type of customer to please.
- Competitors lower prices too, so you no longer have a price advantage. If this happens you may never see the customer traffic you expected. You may even be seduced into a price war and lose big money on the whole deal.
- Customers and potential buyers become trained to look for your price reductions before considering a purchase. This sticks you into a downward spiral of continually lowering prices to attract customers.
How many of these gotcha’s have you experienced?
Okay, so what’s the alternative?
How to satisfy customers and earn more than ever before.
Simple. Give them what they REALLY want.
People often fool themselves into believing what they really want is the lowest price.
Not true.
What we all really want most is maximum VALUE.
Value is when you feel you’ve gotten a fair deal on a transaction. You exchange your money (or time or effort) and receive something of equal worth in return.
You see it’s not just about getting the lowest price.
What’s BETTER than getting value?
Getting a better (or best) value, of course. This occurs when you get something worth more or MUCH more than you’ve paid for it.
We’re talking about shopper Nirvana!
Value is a very relative measurement. And what’s good value to one person may be of little value to another.
This is where choice comes into play.
Would you like the Platinum, Gold or Silver model?
How many times have you been presented with this type of choice?
For me the answer is, “every time I walk in to a car dealer to buy a new car.”
Sure I may start out with the entry-level (silver level) car, but I never leave with it.
Why?
Because, if my salesperson is doing his or her job right, they’ll demonstrate the added value of the model one level up. Or even two levels up (Gold or Platinum).
They’ll skillfully explain all the benefits I get (comfort, safety, and higher resale value) of the “better” models. Furthermore the few dollars more per month is insignificant compared with the many benefits I’ll enjoy.
Plus they’ll also throw in free oil changes for life.
Wow. Now I’m sold.
But it doesn’t end there. After I’ve committed to buying the more expensive (I mean value-laden) car I’m presented with dealer-installed options.
If I choose I can FURTHER enhance the value of my purchase. Perhaps with a better stereo or a GPS system…
Here’s my point.
- Don’t compete solely on price. Instead compete on value.
- Give people choices: entry-level (few bells and whistles), mid-level (more bells and whistles) or premium-level (the whole enchilada).
- Understand clients’ real needs to guide them towards suitable alternatives. Then, let them choose the price point and associated value that best matches their needs.
Use this strategy to attract new customers. Then delight them with choices that meet their financial, emotional and practical needs.
Give real value and you’ll keep customers coming back again and again. Plus you’ll keep your own bottom line healthy too!
Let the other guys lose their shirts by continually cutting prices … Right?