Operations

How To Overcome The Consumer Price Challenge

Linda Jagiela
Posted on September 13, 2013

“Can you do any better?” I’ve been hearing it a lot lately. After you’ve given your pitch on why your service is the best around and your price, the client asks, “Can you do any better?”

If you are like me, you are tempted to say, “For you or for me?” But we all know that will only get us dead air or a click at the other end of the phone. Blame it on the economy, but lately consumers feel the need to negotiate more and more and they expect a discount.

Savvy price shoppers
Technology has made it easy for them to shop prices. Low price alternatives are gaining in our industry, which is changing the appearance of chauffeured transportation. Consumers are willing to forego the assurances and quality of luxury pricing in order to take chances with cheaper but potentially subpar alternatives.

Why should your price even be negotiable? Do you think the airline agent on the phone hears, “Can you do any better?” Today, they might. Let’s all personally thank William Shatner and the crew at Priceline for starting this phenomenon. News and magazine stories are abundant with techniques to negotiate price from everything from retail to travel. Picture going into Macy’s and asking the sales clerk for a better price on the dress or shoes you want to buy. It may seem far-fetched but it is happening much more than you would imagine.

Put yourself in the potential client’s shoes. In his mind, he is thinking, “What is the worst that can happen if I ask for a lower price? The answer he could get is that you will say no and you will forget about him if he moves on. If he is fortunate, you will be a motivated seller who will give him a deal.

Value Vs. Discount
How do you respond to potential clients who feel the need to negotiate price? Do you negotiate or hold firm? Part of this answer depends on your business model. Let’s start with the corporate model. If you discount your service out of the gate, you are on a course for failure. Chauffeured transportation is a luxury. The alternative is not so luxurious — think taxi or shared ride. Consider explaining to the client that you do discount based on volume and will be happy to reassess the rate in 30 days after you see how many trips are taken. Depending on the client, you may want to offer a discount for the first trip to get him to try the service. The problem with this is that once a client pays a certain price, he will want that price forever. Good luck getting it up the next time.

Value-added selling only takes you so far when clients are price sensitive. You will have an easier time selling value to a CEO or Chairman of the Board than you will to a middle level manager who needs to be more cost conscious in his spending. Although taking car service will be less expensive for the company when you add the mileage and the parking, his accounting department only sees the bottom line price of his $100 ride. Savvy accounting departments understand this, but not all are savvy.

On the retail side you may think differently. Discounts here should be a matter of supply and demand. If you only have three limousines and you are being asked to discount a June wedding when it is May, you probably don’t need to do this. On the other hand, if it’s Wednesday and you have three vehicles available for that Friday, you may want to get them rolling. This is what is called the “bird in the hand” philosophy. You are less likely to sell the vehicle at this point and you’ve got a live one on the phone who is willing to buy. Sometimes it is better to take less to get the vehicle rolling and cover its costs. Haggling can be a win-win for both parties. You may rather sell something today at a discount than have it sit around when it could be making something.

Non-Negotiability
Be careful. Don’t get a reputation as a negotiator. Your service has a value and that is why you set the prices you set. Operators are asked for discounts all the time. It’s a normal, everyday part of doing business. You can’t take it personally and you need to be prepared for it. The more you do it the easier it should become to explain that price should not be the only reason to use your service. When discussing your service, never lead with the price. In fact, the price should be the last thing you discuss. You can often win a client with your outstanding customer service to the point that price won’t matter. People buy from people. The relationship that you are forging when you are speaking with them can make all the difference.

Try stating that you don’t negotiate on price but let the buyer know that your service is the better value. You always want to close the deal while the client is on the phone. If you lose them, they probably won’t come back even if your price is the best. Give the client the benefits to pick you despite your price.

For example, you might say, “We don’t negotiate price but we do have value-added service that you won’t get from other companies. Our company has been in business for 25 years. Our chauffeurs are background checked, drug tested and motor vehicles checked. Our professional chauffeurs are dressed in tuxedos for weddings and proms. The limousine is stocked with ice, water and soda. Our price starts when we pull up to your garage not when we leave ours. Many companies charge garage to garage which adds up to an hour to your bill.” Give the client the tools to stop shopping or to ask the right questions of your competitors so they will always come back to you.

When To Let Go
Don’t be afraid to let a prospect go. If the caller is too aggressive, or just a pain and has beaten you down to your bottom line, cut bait. Your time has a value and the cost of this sale may have just gotten to be too much. Remember that if the prospective client is this aggressive now, think of how aggressive he may be if there is even the slightest hiccup in your service. We have all dealt with the guy who wants a free ride because a chauffeur hit a pothole and he spilled his beer in his own lap.

Another popular haggle is, “What would you take if I paid cash?” My answer has always been the exact same price. If you are a legitimate business, paying cash is the same as any other form of payment. Granted, there is a cost of processing credit cards, but at most, that should be the only amount that you would discount for cash.

Never let your reservation agents say she is not authorized to give a discount. This only leads to the aggressive shopper attempting to get to the person who is authorized. Consider empowering everyone to give up to a certain percentage discount at their own discretion. This way they won’t ever say they are not authorized and you won’t lose a sale that potentially may lead to additional business because you are out of the office.

Take the time and practice with your staff how you want them to handle price shoppers. Consider role playing with them, or if you know there is a particularly slow time, have someone you trust call in and shop the deal. If you have a voice logger system in place, play it back and let them listen to themselves in the situation. Work with them to show how they can be more successful in such situations. Your goal always should be to turn the price shopper into a customer who is a raving fan.

Related Topics: customer contracts, How To, profits, rates, service pricing

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