Beating the Pricing Pressure Blues
By Debra J. Schmidt
The owner of a small business was complaining to me that her sales are down. She told me that her customers are continually asking, “Why don’t you have more sales and discounted merchandise at your store?” To try to meet their demands, she held a two-week sale at the end of December where every item in the store was discounted. She offers her customers a 10% discount every Friday, and regularly sends emails to her approximately 5,000 customers to notify them of other special sale offers.
This woman is experiencing a bad case of the pricing pressure blues. She refers to it as the “Wal-Mart mentality,” where customers expect everything to always be the lowest price possible. The pressure to keep lowering and defending prices can be draining and demoralizing to business owners, customer service support professionals and sales reps. This creates a downward spiral that causes burnout and frustration. It can even cause a business to close its doors permanently.
There is no such thing as a pricing problem–only a marketing problem. If you are experiencing the pricing pressure blues, it means that you have not differentiated your business sufficiently to make people more willing to buy from you. Differentiation is what makes people want to buy from you rather than buying from the guy down the street. When a business is properly differentiated, it will stand out with the customers and create a situation where customers are willing to pay the higher price. Employees rarely have to defend prices when their company successfully markets the value of its products and the expertise of its staff. Business owners and employees need to focus on differentiating their business from their competitors.
Customers are willing to pay premium prices for products and services when the perceived value is high. For example, take a look at how much people are willing to pay for a cup of coffee at Starbucks. They don’t discount their products, they simply make sure each customer feels like they’re getting something special for his or her money. How does Starbucks do it? They customize every cup of coffee. The employees learn and use the customers’ names. They recognize that a customer’s time is valuable, so the employees fly around at top speed to honor that priority. They market their coffee as the “finest,” and they invite their customers to stick around and feel at home with fireplaces and wireless Internet services. When a customer walks into Starbucks, they are buying an “experience,” not a cup of coffee.
Price is one of the most dangerous ways to differentiate a business. It’s a lose-lose proposition because there will always be someone more desperate who will lower their price. Wal-mart does it successfully because it’s huge and has access to considerable resources. Rather than fighting the Wal-mart mentality, you need to discover what makes your business, products or services unique.
Find out what matters most to your customers. Is it status, convenience, saving time, your expertise or measurable results? You need to find out how your customers are making their buying decisions for the types of products or services you offer. Ask your current customers these questions:
“What did you like about doing business with us?”
“What other companies, products or services did you research?”
“Why did you decide to buy from us?”
“How did we help you to meet your objectives?”
“What would you tell others about our company, products or services?”
Business success is all about being different in ways that provide greater value to customers. Every person and business has a WOW factor. In order to differentiate, you need to know your WOW. It’s comprised of those unique characteristics that will set you apart from your competition. It gives your customers and prospects something to remember you by. When you discover and learn how to market your WOW, you can add real power to your marketing efforts, boost your sales and overcome the pricing pressure blues.
You can learn how to differentiate your business on the Teleseminar CD: What’s Your WOW? How to Set Yourself Apart From the Competition.
Debra J. Schmidt, a.k.a. “The Loyalty Leader®”, helps companies boost their profits by leading them to greater customer, employee and brand loyalty. Learn more at: TheLoyaltyLeader.com
In business since 1991, Terry Green is the founder/CEO/President of BizEase Support Solutions, an American-based, online marketing support company comprised of a team of talented professionals from around North America. BizEase excels at providing speakers and business coaches worldwide with seamless online marketing solutions, from setting up shopping carts and editing video, to writing blog posts and managing Social Media and PR campaigns. BizEase clients (who span five continents) take great joy in allowing the BizEase team to take care of the details so they can get back to doing what they do best! Click here to get our weekly tips ezine delivered to your inbox every other Friday, with tips on plugins, apps, and tools to make you more productive today!