One of the most frequent issue business owners raise to us is the issue around pricing.
They seem to believe their industry is a “price-competition-only industry” and NOTHING ELSE matters to their customers.
However, when we ask them a few questions:
1. Do you have a lot of competitors?
2. Are ALL OF THEM more expensive than you?
3. Are ALL OF THEM cheaper than you?
4. Are you winning ALL THE BUSINESS away from those more expensive than you?
5. Are you losing ALL THE BUSINESS to those cheaper than you?
The answer they give to question 1 is always “Yes” while the answers to questions 2-5 are ALWAYS “No”.
The critical question, question 6 is then:
6. If you are not the cheapest and not the most expensive, you don’t always win when you are cheaper and you don’t always lose when you are more expensive… why then do you insist your industry is a price-competition-only industry and nothing else matters?
(A more blunt version of question 6: Are you simply too lazy or too complacent to figure out what your customers really want and choose to compete on price instead?)
Here are a few more questions for you to reflect on over the weekend:
7. First, can you adjust your mindset and your beliefs around how customers make purchase decisions?
If you cannot overcome your own beliefs around customers and price, you are already stuck, you will automatically be focusing on price-focused strategies, which will result in price-sensitive customers.
8. What are the main frustrations customers have with the products and services in your industry in general?
9. Are you able to address the frustrations in previous question better than your competitors? Are you able to articulate or explain why you are better? Are you able to put some guarantees or assurances around some of them?
Having said that, there is one situation where price-competition is a VALID strategy… If you have developed your back-end program to increase the lifetime value of each customer you acquired and you able to profit off the back-end.
Having a back-end program is not the same as throwing price then give ‘good service’, hoping customers will stay and buy more… a back-end program is a carefully developed, multi-step process to increase customer loyalty and repeat purchases in a predictable and consistent matter.
To know more about how to move away from price-competition and develop your back-end program, Register NOW for our FREE Business Optimization Clinic, valued at RM699. We guarantee you will get at least 1-2 ideas you can implement immediately, even if you do not engage our services.
Have a profitable week ahead!
ps: Only 10 sessions every month for qualified business owners. Claim yours today!