Anyone in business who says price doesn’t matter is fooling themselves. Price means more than ever since customers view most stuff as a commodity sort of like soybeans. In fact, price is the ultimate commodity, and the lower the better. Wanting a lesser price is not necessarily logical. Think about people who drive a mile to save 5 cents on a gallon of gas but wouldn’t drive 5 miles to save $20.00 on an $800.00 computer. If you ask them why, they’ll say, because twenty dollars isn’t enough savings.
Consider a computer on sale for $399.00, it is a decent price but many will say, not that good. If it’s marked down from $1999, then it begins to seem like a bargain.
How do customers determine what something is worth? The printed tag tells them the value of the product. Notice I said what’s printed on the tag—not handwritten on the tag. It’s fine for the discount to be handwritten, just not the original price. In fact, it’s more believable.
The point is that consumers don’t know anything about price. They have an arbitrary idea of they think things should cost. It may be based on what they have to spend, what they would ‘like’ it to cost, or something they saw that was cheaper. Years ago businesses set the prices and the customer had to believe what they saw. Now the internet adds another dimension to what the customer knows.
Low price is a victory for shoppers and women are the real hunters. Many are willing to ‘shop until they drop’ and get the right price. The high end shopper understands fashion and real pricing. She may shop the outlet stores where she’s happy to get a cheap Coach bag just because it says Coach. When it comes to shoes, she knows a magnificent, unusual pair of shoes will cost and she’s willing to pay for it.
What does this mean to the salesperson? As a salesperson you must understand how today’s customers think is. On one side, they want things to be a bargain or good buy and on the other side, they can be swayed by certain buzz words and real value. The brands, such as Coach, are killing themselves with their own, cheap outlet stores. If you just want the Coach name, why pay full ticket? In fact, how do you tell the customer that your outlet products are fake or of lesser quality?
Remember, price is what you pay and cost is the price over time. It’s often said that only the rich can afford to buy cheap. Why, because they can afford to buy it more than once.
Let’s think for a minute what customers want. Customers want ideas, solutions, things that are unusual and purchasing items that make them look smart and savvy. No one wants to think they made a bad deal or purchased something that is obviously of terrible quality.
As a salesperson it’s your job to understand how to make your customer feel like they’re smarter, better or cooler having bought your product. If you can’t satisfy my cravings for having made a smart purchase and satisfied my ideas, than your price will become the only differentiation.
Lisbeth Calandrino has been building customized training programs for retailers, manufacturers and distributors for the past twenty years. Her mission is to help businesses build loyal relationships and profitable relationships with their customers through customer service and sales training. Her book, Red Hot Customer Service is in its second printing.