Leaders take charge and control the market and therefore tend to be the stronger more dominant player in any market. Lemmings are little creatures that follow one another, often to their demise.
Market leaders are not price followers and lemmings never lead. The seasons, the weather, the economy, the political landscape, or market conditions may dictate that competition do something rash, dumb, extreme or unconscionable. The competition may be desperate…Are you?
That does not mean you should follow suit. If you follow suit, you give the competition’s price-investment-value paradox credibility, which validates their price and incriminates your price-investment-value paradox.
So what is the price-investment-value? First we must understand each term…
PRICE = The amount you pay out, a cost, loss, sacrifice, expense, fee, or penalty.
INVESTMENT = The amount you spend or use for future advantage, yield, return, payback or benefit.
VALUE = What you realize or gain immediately and long-term as a result of making the proper investment and paying the RIGHT price.
A low price or cost typically is a small investment that yields little or no future advantage or benefit and minimum or low value, which may result in a future or sooner than expected cost to maintain, repair or replace. You may pay a low initial price to acquire, but will usually pay a much higher cost to own and operate this system, and in the long run the cost is ALWAYS MUCH GREATER.
The proper initial investment for long-term benefit and ultimate happiness is typically a little higher, but the value realized over the life of the purchase is ALWAYS MUCH GREATER and in the end the overall cost of ownership is ALWAYS MUCH LESS. You may pay a little more initially to acquire, but the long-term value, low cost of ownership and overall benefits will far exceed price, and is ALWAYS MUCH GREATER.
Why lower yourself to your competitors' standards or play the price-cutting strategy, thereby devaluing the very products and services you claim to be more valuable (even more valuable than your competition's) to potential customers?
In fact, by lowering your price in an attempt to increase the value of your offering to your customer, you actually devalue it.
It's one thing if the price of a product or service is inherently low and the benefit is high. However, do not make the typical mistake most salespeople make and lower price in an attempt to increase the benefit ratio and thus the value. While theoretically the equation holds true, the reality is that value goes down as does credibility, trust, integrity, belief and confidence, and as a result so will average tickets, future sales, referrals and profits.
Instead, seek to increase the benefit and value by reducing, eliminating and reversing risk. This will yield the desired impact with customers, sales, future business, referrals and profits.
Lastly, you can also find no cost or low cost ways to increase benefits without significantly increasing price if at all. This is a more desirable strategy as opposed to decreasing price since when you decrease price you give away dollar for dollar from the bottom line. When you give away something that has high perceived value and no or low cost, the impact is dramatically less to revenues and profits, and the customer benefit and value is much greater, as will be their satisfaction.
Trust, respect, confidence and rapport will stop shoppers in their tracks and overcome higher prices, lack of features, and other sales shortcomings. When a prospect feels you are "with them" and on their side as opposed to trying to sell them, they will want to do business with you. Trust will get you on their side and them spending their money with you and your company.
Talk to a prospect in their words (terms they can understand and familiar phraseology), tone, etc. Talk of their personal payoff and ultimate benefits they want and you offer.
Why not hold the line on price, and increase or enhance the value of your offering and mandate that your competition raise their standards to compete with the value your company offers? If you follow your competition down into the cellar on pricing, will you compromise your integrity and that of your products and services and lower your value to match the competition?
Tell prospects you cannot explain why the competition's prices are so low. They obviously know what their products and services are worth better than you, and you cannot apologize for their lack of value or their lack of belief in what they offer.
Rather, explain your value proposition fully and state that the bitterness of poor service and quality remains long after the sweetness of low price. State that many years ago, your company made a very important choice, when it was decided that you would rather explain the price one time, than to apologize for poor quality, service, and value forever.
Point out that "our customers tell us they are glad we did and I'll bet you will agree as well. We don't want to win your business today only to lose you as a customer tomorrow because we could not deliver the quality, value or service your deserve for the price you paid."
Be a leader, not a lemming!
Drew Cameron, president of HVAC Sellutions, the residential contracting industry’s premier marketing and sales support organization that works with contractors to implement effective lead generating marketing and build multi-million dollar profit-generating sales forces. Drew's 33 years of experience in all facets of running a residential contracting business helps HVAC Sellutions serve contractors as "Revenue Resultants Driving Profit Performance." For more information contact Drew at 1-888-621-7888 or [email protected] or visit HVAC Sellutions online at www.hvacsellutions.com.