Setting value doesn't mean lowering pricing
Recently I was at a place enjoying a really great experience and the bill arrived and, after I paid, the customer service person told me I got a discount. But that made zero difference to me. Selling by discounting can sometimes actually hurt your business.
Now I’m no Rockefeller or Bill Gates by any stretch of the imagination. It’s not like I light cigars with $100 bills only because I can’t find bills of larger denominations. So my not putting any value in the discount isn’t because of an overwhelming of lottery winnings that have become so annoying I just want to get rid of the darned money already.
I had already committed to things as they were so I was already a customer. The experience was solid, the service was solid and everything was going great. Literally the only thing the discount affected was the businesses’ bottom line - that’s it. And that’s why I was bothered by this.
Small businesses often operate on razor thin margins anymore. While starting a business used be a pathway straight into middle class, if not upper class, today a little business can struggle along and barely survive. So why would they think that a discount would do anything to make their relationship with the customer any stronger?
It is true that commodity products, the kind of things we shop for on Amazon, are so difficult to differentiate from one another that price becomes the major decision making factor. When I was in the entertainment/DJ business brides would almost always lead with “how much” only because they had no idea how different one DJ/entertainment company was from the next.
In the case of the DJ company, we would talk about training, experience, bringing back-up equipment and guaranteeing who their actual master of ceremonies was, all of which provided value to them and most of which differentiated my company from the rest. Suddenly the DJ company with the ad on Craigslist for $450 who would ruin your wedding seemed like an incredibly high price to pay compared to the $1500 we were charging which sounded like a huge bargain. It was.
But if you’re not in a commodity business it’s better to focus on what’s important to your customers and that may not be with discounted pricing. For example, whenever Disneyland raises their price, sales go up.
Apple sells computers and phones at prices that are much higher than those of the competition but their customer service experience creates enough value that people like me will go in and buy a $1700 notebook computer - I know that if I have issues with it there’s someone who can help me. Plus I get movie editing software, audio creation software, a brilliant word processor, a great spreadsheet and the class-leading presentation program as part of the purchase which carries a lot of value as well. HP and Dell just have to sell cheap computers because the tech agent, if they can even help you, may tell you his name is Dave but you know that’s not what his momma calls him.
An Airstream trailer will set you back about double what just about any other travel trailer costs. Yet they also have really incredible resale value. They’ve created an iconic brand, like Disney and Apple, and peoples’ experience seems to bear out this higher value.
If it’s not a discount or pricing that brings people to your place of business, it’s good to know what it actually is that people are seeking out and really work on marketing that. Whether it’s a particularly unique item, extraordinary service, great location, outstanding parking, or whatever. Find out why people are coming to your place of business and really shine that apple.
For example, the dry cleaner company I use is some 45 miles from my house. Seriously. But their service has always been fantastic so they should focus on the fact that they have never ever lost a button on anything. Not having to argue with someone over a missing button has more value to me than saving 50¢ on dry cleaning.
A restaurant my wife favors for lunch always provides a hot, delicious and consistent experience well within the time frame of her alloted hour for lunch. You’d think the nearly dozen other choices she has would understand this time constraint as she works for the largest employer in the area, but at lunch time most of the other dining places stumble with this fact.
The place I take my car to for oil changes is my first choice because they wash and vacuum the car. Frankly, an oil change is nothing exciting but getting a clean car back is. I don’t understand why no other place in my area gets this - I love this experience and the price is comparable to that of other places.
Creating value doesn’t necessarily mean offering any sort of a discount. A compelling reason to visit your business is a magical experience that creates a bond with your customers and makes them feel like they’re getting what they paid for, if not more.
If you’re finding yourself in a place where people are always wanting a discount, perhaps you’re not creating perceivable value to the customer. That might be the best place to focus rather than cutting your own bottom line.