My wife bought a new clothes washing machine the other day. Nothing earth shattering about that – people buy appliances everyday for their home. I paid attention though, to how her decision to purchase from a specific store was made.
She had already decided on what brand and model she wanted to purchase from research on the Internet. She also found a list of re-sellers that offered the model she wanted. So off she went in search of the new machine.
She went to three places. The first place she went to she had trouble finding someone to help her so she left.
The second store she found someone to help her but the salesperson did not know anything about the product so they sat down together and looked at the same information my wife had found online. The salesperson then quoted her a price but told her their price would be a little higher because of the ‘Value Add’ they offered. My wife asked about the value add however it was not all that clear.
The third store she went to had the same machine on sale for 10% less. She bought the appliance from that store.
Later that day though, she got a phone call from the salesperson at the second store asking if my wife had decided. My wife broke the bad news to the rep that she did not get the sale. The rep asked why? My wife told the rep that their price was too high. The rep hung-up.
My wife then said to me that she would have paid more for the machine if someone had actually, really helped her with her decision. Made her feel welcome and valued. Knew their product line. Had asked her what was important to her in her decision. None of that happened so she went with the cheapest price.
If you do not have a value proposition that is different from everyone else’s out there, you will only be able to compete on price (low margin, poor profitability price).
American comedian Steve Martin once said:
“Be so good they cannot ignore you.”
Here is my list of strategies to win against price competition:
Recruit, hire and train people that get it. They are aligned with your values and your strategy. They understand your target customer. Make sure they are the very best. When they fall short, make sure they know what good like.
