Focus On Value Instead Of Price

Posted on September 4, 2013 by LCT Staff - Also by this author

Red Bank Limo in Red Bank, N.J., a six-vehicle operation, just finished up with a 35% increase for August compared to the same month last year. Says owner Bill Atkins: “The economy doesn't matter. What you do matters.”

Do customers care about your price in relation to your production costs, profit margins and competitor's prices? I can answer this for you — they don't care.

Sure, customers have concerns about price, but that comes after their concerns about value. Are you clearly differentiating the benefits of your offering relative to your prices?

Comparative pricing is often a horrible way to frame your prices, and numerous additional studies on “context pricing” reveal that perception of value is far more important to customers when accepting higher price tags.

Occasionally, a prospect may tell you service is too expensive, and they can find another service that is cheaper. Remember that price also connotes brand and value. We know that a Stay at the Four Seasons Hotel in New York City isn't going to be cheap. But why is that a good value to some? How do you differentiate? Why should a customer pay your Four Season prices at your business?

You first have to find out what the customer wants and seeks. Some people may know and appreciate the value of a top-tier business, but may also want to know what they will be spending.

This valuable knowledge is easy to obtain. Who knows better what your customers want than your long-term, repeat, best customers?

Here's what you do: Make a list of your best customers. Then reach out to them by phone. No generic e-mail surveys or staff making these calls for you. This information is too important for you not to be the one who makes the call.

Get a piece of paper out and write down some information about your top 20 customers. Be prepared before the call. Some information you may already have is: name, address, how much they spend with you and how often, when they first started doing business with you, and personal info on marital status, family members, likes and dislikes.

The idea here is to know and write down in advance as much as you know about them. Then dedicate some uninterrupted time and call each of your top 20 customers.

Relax first. Have a bottle of water next to you. Make sure you are away from anything that may distract you. This has to be time that you are focused only on the conversation.
Then make the call.

Here's an example of the call to Bob Jones (your customers name for this example).

Bob: (phone rings) Hello?
You: Good morning Bob, this is Bill (your name) from (name of your company).
Bob: Oh hi, how can I help you?
You: Bob, you've been doing business with me for over two years now. I wanted to know if you can help me? You are one of my favorite people I do business with. If I had more people like you, things would be even more awesome. I was thinking. As I am always trying to grow my business, I am looking for more people just like you.
Bob: Go on.
You: Can you tell me the top reasons you do business with me? (Then be quiet and listen.)
Bob: Well I would have to say …
You: That's great to know. Why is that the most important thing to you? (Then be quiet and listen. After Bob tells you what his reasons are, make sure you thank him).

Now take time to look over the top reasons and write them down. Go to customer number two and repeat the conversation, customer number three, and so on.

After you have all 20 top customer reasons logged, spot the similarities. Write down those top three reasons of why prospects should consider doing business with you.

When the next inquiry comes in and they are seeking a cheap price, instead of giving away your service, mention that many of your customers who have been with you for many years say the top reasons that they do business with you are: 1, 2 and 3. You have changed the whole conversation from cheap price being the subject to why you are the best choice for the prospect in the prospects best interest.

Important: Share this with your staff or anyone who answers inquiries. The other big benefit is that you have a valid reason to reach out to your best customers. Ask them for their valuable opinion, and thank them. What's better than that?

— Bill Atkins, owner, Red Bank Limo

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