The other day a business man was complaining to me that certain buyers were not recognising the difference in value between his product and those of his competition. He was providing a much superior level of service but it was failing to register on the buyer’s radar. All they seemed to be interested in was price. He was an accomplished sales person and yet this one had him stumped. He wanted my advice on how to get the buyers to value the extra services.
It was clear these buyers were not prepared to pay extra. They had proven this in the past by going with the competition rather than pay extra. Other customers, however, seemed to be perfectly happy to pay more for the service.
I recommended he introduce service levels so that the buyers can compare the services with competitors on more of a like for like basis. They would know that they have the option for higher levels of service if they want it – albeit at a higher price. They still may go for the option without the services but at least it would mean that the profitability would be restored to acceptable levels for the business man.
Normally I am recommending that people differentiate their products and services and this is still the case. It just enables you to deal with different groups of customers that place a differing value on your extra levels of service.
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on Mar 18th, 2010 at 10:42 am
Thanks, Richard. Great advice. I particularly like how this keeps the exchange clean, by reinforcing value exchange without forcing the point.
The same principle should show through on websites – and often doesn’t.
on Mar 18th, 2010 at 10:50 am
I have used this technique to great effect for many years. It all started when I had quoted a fixed price for a “new computer system” and the one remaining competitor had also quoted a fixed price for a “new computer system”. We were about to lose because we were too expensive so I presented the prospect with a menu of the main components that made up our solution along with a break down of cost by component. I got the prospect to ask the competitor to tick which components they were providing and how much they were charging for them which made them look expensive and a bit devious.
Result – we got the business and a long term committed customer becuase we were honest and open.