OPINION: Don’t cheapen your values to compete with online
Re-boot Your Business, with Jeremy Billett - DEX Columnist
SMALL business owners want to stay competitive but competing with online prices and services can be difficult to impossible. When the way we do business changes, we need to adapt how we compete in business too.
One of the most common tactics used to persuade customers into your store is to lower your prices. This is done to save the customer some money, and should increase the perceived value for the item; this doesn't work for small business.
Lowering prices sends the message that there is room, mark-up or inflation in the pricing of a product, extra cream for the business, when small business are usually operating on a very fine line of profit vs loss. When the customer comes back after a sale or price drop, they expect to spend less and less each time, while the product itself hasn't changed. Is that what we want?
Cost cutting also distracts customers from looking at the values and benefits of a service or product and encourages them to compare instead on price. Unfortunately you can never win on price; online business, big business and overseas markets can always do something cheaper.
Some customers see a relationship between cost and quality, for example many of us realise Australian made products are more expensive, but we understand Australian standards are usually very high and accept that as a reason for spending more. The opposite also occurs when a customer finds something cheap; do you really want to give the impression your products are cheaper and therefore lower quality? Why else would it be cheaper? Instead of cutting the end cost for the customer and starting an unsustainable cycle of pricing, look at ways you can increase the perceived value of a good or service. Add something more rather than taking something away.
It may be as simple as good old fashioned customer service. You can make the customer feel great about coming to you, and go out of your way to help even if it means they don't spend the most money. This is uncommon, so when it happens, customers take notice, enjoy the experience and feel great about giving you their hard earned money. Perhaps you provide value through fast turnarounds, exceptionally high quality, honesty, or problem solving for the little issues that big business can't see. Simple things like buying a new phone could be so much easier for the customer if it included transferring their data and contacts from their old phone. Can you buy that online with the $50 you saved?
Your responsibilities don't start and stop when a customer walks through the door, much like your reputation. In a world that is freely accessible and full of data and knowledge online, where everything continues to get cheaper and cheaper, what is your business doing to add value to the people that give you their money?
Jeremy Billett is Clarence Valley business guru with a passion for the digital world and the places it can take business. Tune in every fortnight on this Better Business page.