Com­pet­ing in a lo­cal mar­ket

Adding value to a com­mod­ity pur­chase

The Amherst News - - CUMBERLAND COUNTY - Cham­ber Chat Ron Fur­long Ron Fur­long is the ex­ec­u­tive di­rec­tor of the Amherst and Area Cham­ber of Com­merce.

You’re sell­ing the same prod­ucts as other re­tail­ers so why should peo­ple buy from you? This month let’s look at price.

There will al­ways be some­one who will sell for less than you do. Or who will sell a prod­uct “just as good” as yours for less. There are valid times and rea­sons for re­duc­ing price. If you have a sale on a se­lec­tion of items as a strat­egy to get peo­ple in the door so they can learn about your busi­ness and your of­fer­ings, that’s rea­son­able. Just note it’s a good idea to record that lost rev­enue against your mar­ket­ing ex­penses. You should know what you in­vested in dis­count­ing those prod­ucts. You should also have a strat­egy to move in­ven­tory that be­comes stale or loses its value over time, and re­duc­ing the price is one part of that strat­egy. For the most part if an item or ser­vice is priced fair, sell­ing it for less than its value isn’t a good busi­ness prac­tice. Dis­count­ing the price is es­sen­tially pay­ing some­one to pur­chase from you. Or buy­ing the sale. It’s far bet­ter to add value than it is to re­duce the price.

For years I’ve taught “help­ing the cus­tomer buy” is sig­nif­i­cantly eas­ier and more prof­itable than “sell­ing” and it sel­dom in­cludes low­er­ing the price. In­stead, it’s based on help­ing the cus­tomer dis­cover the value to them of pur­chas­ing the item from you at or above the listed price. There are no tricks or strate­gies to it. It sim­ply re­quires learn­ing enough about what your cus­tomer val­ues to be able to show them how their pur­chase from you pro­vides what they value.

I started off this col­umn by say­ing some­one will al­ways be will­ing to sell for less than you. With that said and a fairly priced prod­uct, there are things cus­tomers value that ei­ther don’t add to your costs, or if they do, you can charge for and the cus­tomer will pay. The big­gest is trust. The cus­tomer has to trust they are get­ting what they think they are. That’s what guar­anties are all about and why you will al­ways be able to beat on­line sales on trust.

Then there’s con­ve­nience and con­fi­dence. Con­ve­nience is about what ef­fort the cus­tomer is ex­pected to put into the pur­chase and use of the prod­uct. A drive through win­dow or callin or­der ser­vice are ex­am­ples of con­ve­nience. Con­fi­dence is more about de­liv­ery time ac­cu­racy and all com­po­nents ac­counted for. The cus­tomer who can’t move for­ward in their project be­cause there is a com­po­nent they don’t have doesn’t care if it’s their lack of un­der­stand­ing of what they needed, or your staffs’ as­sump­tion that if they needed the ad­di­tional part they’d have known or re­mem­bered to ask for it.

Some­times clos­ing a full priced sale is as sim­ple as re­mov­ing cus­tomer con­cern by be­ing able to tell a cus­tomer where they can get the com­plet­ing com­po­nent. I’ve gone so far as to call the other ven­dor, con­firm part cost and avail­abil­ity and asked them to hold it for the cus­tomer who’s stand­ing in front of me. That cus­tomer then in­evitably com­pletes the full priced sale with me and heads off for the rest of what they need. Yes, there’s a risk that the other ven­dor may try and “sell” them if they also stock what the cus­tomer has al­ready bought from you. How­ever, there are two things in your fa­vor. You al­ready pro­vided value to the cus­tomer in help­ing them solve their prob­lem, and they will feel they owe you for that. And se­condly, you have built some level of a re­la­tion­ship with the cus­tomer through the con­ver­sa­tion, re­spect­ful ques­tions and lis­ten­ing you used to de­ter­mine the cus­tomer’s need and what was of value to them in solv­ing the need.

If you start with a fair mar­ket price, un­der­stand where the value in the pur­chase is for the cus­tomer, and help them con­firm that value in pur­chas­ing from you, you’ll sel­dom find your­self pass­ing your pay­cheque back to the cus­tomer.

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