- 47% of consumers buy from the lowest price seller
- 2010-06-21: Let's just talk about value for a minute. Let's forget what you think about your product, and let's get into the minds of your customer (because it's there that the idea of value is formed).
- Firstly, it's complicated. This isn't something you can just answer off the cuff. Each customer makes a calculation, taking into account a number of factors each of which is weighted differently. Those factors interact, too. If a product is cheaper but needs more work to install than another, that's a trade-off decision (time versus money) the customer has to make if they are to make a purchase.
- Product features are a start, but each feature has a value to the customer, think time and money. For many, mobile phones have too many features they will never use, leading to the idea that a simple phone has more value. It might even be more reliable and less desirable to a mugger.
- Mix in emotional value. Two t-shirts, exactly the same except that one's from a designer and a posh boutique in Chelsea, the other's a copy at a tenth the price from the market. Which will make you feel better?
- Even for the same person the choice can be different depending on circumstances. If they are buying for foam party at the local club on a £10 all you can drink ticket, probably the market copy is the best bet. If they are going into town and there's a rumour the local football team will be there .. the designer one is probably the only choice. If the goal is to become a WAG, and the price of the designer t-shirt puts the cost of the whole night out of bounds, a different strategy might be devised, maybe get a job working in the club. The t-shirt and the whole night out could be dropped for a consolation bottle of cider and a DVD.
- The point is, everything has an alternative, so value is assessed against those, and it's not necessarily just other, similar products, but other ways of achieving the same goal.
- Think M&S. Time-was you had four seasons of clothes punctuated by sales to get rid of old stock. Nowadays it's a continuum, you have trend spotters in the street taking ideas to designers and inspired clothes designed, made and on the shelves within a week and it's all to deliver value to the customer and make a profit along the way. To do that, you have to understand all of the above. Get inside your customers' heads. Understand the judgments they make.
- So for your product or service it isn't price, it's value as perceived by the customer. Get that right and you'll have sales, repeat business, and happy customers.
- Think of the complete online package: usability is key here, attractiveness, speed (of response, and of shipping), functionality, informative content, great products, the right price (of course), lots of help and friendly, informative, knowledgable service, and .. extra touches .. the equivalent of chocolates on the pillow, the entry to a prize draw, the £5 voucher off your next visit .. talking points. This isn't flim flam, this is real stuff. If you're not doing this .. what are you doing?
- Practice watching yourself making buying decisions.
- With all that taken care of, you might even be able to raise your prices.
By John Allsopp
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