One of my favorite vendors…

I’ve had my cellphone with the same provider for close to six years.  Yes I’m a late adopter when it comes to new technology. What can I say; I’m a dinosaur.

I’ve always been pleased with the friendliness and helpful attitudes of the people at the local store.  In those few instances when I’ve had a problem I received quick, no-excuses resolution of my problem. They’ve also guided me well in terms of the type of phone that would best fit my needs – until now.

During my last upgrade I moved to a PDA that allowed me to keep my contact list and calendar with me at all times in electronic format.  I do not, however, wish to retrieve emails or surf the net via my phone.  I’d rather use my time away from the office to mentally replay my client and prospect meetings to learn more effective ways of helping them.  Or use that time to consider new markets and marketing approaches.

Fortunately, with my last upgrade I didn’t have to purchase the internet access services.  I’ve been told by my supplier that, in the future, I will have to purchase the plan to get a PDA.  Hmmm.  Do I want to continue with a supplier that is forcing to take and pay for things I don’t value?  More importantly, are you establishing offerings that are causing your customers to question whether or not they want to do business with you?

It’s counter-intuitive, but in every business there are customers who desire different levels of quality, service, et cetera.  If you provide what they want, in the form they want it, they’ll pay a higher price to get it.

I would pay more for the PDA device than someone who purchases internet access and still feel good about the purchase.  Why?  Because I’m getting what I want and I understand that people who buy bundled offerings often end up paying less for any given component than they would if they purchased that component separately.  It’s a concept with which most buyers are familiar.

Recognize that your customers’ needs don’t always evolve at the same rate.  Offer options that makes sense for where they are in that evolution and they’ll buy the higher end package when they’re ready. Mandate that they purchase something they don’t want and you lose that potential sale.

To discover how you can break the industry pricing and keep your loyal customers, call Dale at 314-707-3771.

How are your policy decisions…

…affecting your ability to get higher prices?

I’m sure that you can recall a buying experience so exquisite that you drove out of your way and paid higher prices to gain that experience again and again. That’s the experience you want your customers to have.  That’s the loyalty you want from your customers.

What isn’t so obvious are all the factors that influence the customer’s experience.  Here are a few of those factors:

It’s counter-intuitive, but pricing is more than quantifying value and establishing a price.  Any operating practice you employ has the ability to enhance or diminish the customer experience as well as your ability to gain or maintain premium pricing. Today, we’re going to look at the policy decision-making process.

How do policies get set in your organization?  Are they established by the owner of the business, the CEO in larger organizations, by senior leadership within the organization or by senior leaders each of whom have the right to establish policies within their area of operation?  Regardless of how the policies get established here’s a common problem – the policy is reactionary.

Customer payments slow so we install a “no ship” policy for customers whose receivables are over 60 days old.  We also set our credit and collection people about the task of bringing down the average age of the receivables.

Returns are increasing so we initiate a “no return” policy or tighten an existing policy.  But that’s not something we want to publicize, so customers find out after they make the purchase rather than prior to the purchase.

We’ve been providing a free service and now realize that it costs us more than we thought and we being charging for it.  Think airline baggage handling and bank service charges.

Each of the examples above happen everyday.  You can tell from the policy that no consideration was given to the impact the policy would have on the customer’s experience.  So what’s the solution?

Establish a policy-making process that looks first at what your company is doing that causes your customers to behave the way they do.  We live in a reciprocal world which means that if your customers are frustrating you, you’re doing something to frustrate them.

When crafting a solution (policy) make sure that serious consideration is given to the question “How will this impact our customers’ experience?”  If it doesn’t enhance the experience, keep searching for a solution that does.

Establish a policy-making group made up of representatives from each of the major operating areas of your company, who also possess a customer orientation.  That may or may not be the senior leader in that area.  The key is to have people who can effectively evaluate the impact a new policy decision will have on their operations and the customer – with greater emphasis being placed on the customer.

Pricing for Profit is available at Borders.com, Amazon.com and BarnesandNoble.com.  If you’d like to break the bonds of industry pricing call Dale at 314-707-3771.

Marketing messages must be great stories…

…about the true hero.

I wish I could remember the source of this elegant language for the person certainly deserves the credit for this incredible bit of wisdom.  I’m paraphrasing, but after reading a marketing piece, the individual said ‘that’s a great story, but it’s the wrong hero’.

The marketing piece had discussed the company, not its customers.  That’s why it was about “the wrong hero.”

If you want your marketing messages to translate into sales at premium prices, tell stories in which customers and prospects can experience the joy of your offerings – even if they haven’t tried them yet.

One of the fascinating aspects of the human mind is that we can experience emotions as vividly today as when we first experienced them.  Tie your offerings to an experience that everyone has had that elicits joy.

Remember, there are only three things that any of us sells – image, innovation and time-savings.  So when you’re selling image, help them experience the joy of having others admire and emulate them.

With innovation, make the story about the fun and excitement of playing with the latest, greatest toys or our childhood curiosity when everything was fascinating.

For time-savings, the story highlights the joy of spending more time with family and friends, traveling or just kicking back in a hammock on a beautiful spring day.  If you’re selling business to business and the time savings translates into greater revenue-generating capabilities, make the story about the joy of growing a successful business – one that’s the envy of their competitors.

It’s counter-intuitive, but the less said about your company and what you do, the greater the likelihood that your marketing messages will bring buyers through the doors.  More buyers, mores sales, at your price.  Now that’s an experience that’ll bring a smile to your face.

Discover how easy it is to command higher prices for your products and services, call me at 314-707-3771.

You can get Pricing for Profit online from Borders.com, BarnesandNoble.com and Amazon.com.

Walmart has reverted to lowering prices.

Walmart’s recent price cuts indicate that its attempts to change its business model aren’t faring well.  For decades Walmart has enjoyed tremendous success with its “Always low prices, always” strategy.  The length of its run has far exceeded that of most businesses for one simple reason.  Walmart has a passion for cutting costs.

Unfortunately, as is always the case with a low-price strategy, Walmart has hit the floor on cost cutting. You need no further evidence than the change in its tagline from “Always low prices, always” to “Spend less. Live Better.”

To its credit Walmart realizes that it has hit the cost floor and it has been attempting to change its business model. However, it is discovering just how difficult that is.  Walmart’s customers have become accustomed to thinking of “Walmart” and “low price” as synonymous terms.

Any attempt to change a company’s business model, whether it’s Walmart or any other business, involves the creation of a clear, new direction and equally clear communication of that new direction. Otherwise you simply confuse buyers.  It’s counter-intuitive, but clear communication of your new strategy will allow you to minimize the revenue losses you experience during the transition period.

Walmart has not created a clear strategy as evidenced by its recent price cuts in the face of declining sales. It has also has failed to acknowledge that it’s going to lose sales during the transition from its old low-price strategy to its new, albeit ill-defined strategy.  Until Walmart can define and communicate its new direction clearly and concisely, I’m afraid that it will continue to be the victim of its own strategy.

Discover how easy it is to command higher prices for your products and services, call me at 314-707-3771.

You can get Pricing for Profit online from Borders.com, BarnesandNoble.com and Amazon.com.

There are lessons to be learned from bankers…

…unfortunately, it’s from their failings.

In fairness to bankers, and you, I have to admit I’ve been a very vocal critic of the banks for decades. Now that I’ve admitted my bias let me share with you why. There are typically two comments that I hear when talking to bankers:

• Money is a commodity.
• Our customers don’t value a banking relationship.

Let’s deal with the commodity comment first. My experience has been that there are many commodity products out there, but very few commodity businesses. There are very few things to which we can’t add value through enhancements or service. Those bankers who feel that money is a commodity aren’t seeing those opportunities. If you’re one of those bankers, or you feel that you’re selling a commodity, bring someone in from the outside to help you add value to your offerings. You won’t be able to do it alone.

To those bankers who feel that their customers don’t value relationships I ask “What kind of relationship are you providing?” The reality is that most banks, at least most of the larger banks, have three operating units – the deposit group, the lending group and the wealth advisory group. Typically these are separate operations so that there is little, if any, collaboration among them. There is also little, if any, bundling of the three group’s offerings to tailor the offerings to the customers’ needs.

Finally, the compensation for those who generate sales in each of these areas is based on gaining new deposits, making new loans or managing new portfolios. Once the sale is made, the account is transferred to the back office for processing. There is little, if any, reason for the person making the sale to continue visiting the customer. Hence the question “What kind of relationship are you providing?”

It’s counter-intuitive, but organizational structure and compensation programs can enhance or diminish the customer’s experience and your ability to command higher prices for your products and services. If you’re not getting premium prices, determine whether or not you’re using a page from the bankers’ handbook – viewing your offering as a commodity or touting a non-existent relationship as a value proposition.

Discover how easy it is to command higher prices for your products and services, call me at 314-707-3771.

You can get Pricing for Profit online from Borders.com, BarnesandNoble.com and Amazon.com.

If you want leverage in a sales call…

…quit selling and start assessing.

At some point in the sales call I’ll say “My experience has been that my clients and I enjoy our greatest success when…(I list the four criteria above).”  I can’t tell you how often I’ve had prospects ask “Do I qualify?”  Talk about changing the dynamics of the sales call!

The prospect learns that they aren’t the only ones who are involved in the decision.  That I am evaluating them as a prospective client as much as they are evaluating me.  That’s as it should be; it should be a joint decision.

It’s counter-intuitive, but the key to closing more sales quickly is letting buyers know that they aren’t in control of the decision-making process.

How do you decide what price to charge?

How well is that working?

Most of us know the shortcomings of our offerings and immediately ascribe higher value to our competitors’ offerings – even though we know that there are aspects of our offerings that outshine theirs.  A better alternative is to look at businesses who target the same market you do, but who don’t compete directly with you.

For example, if you’re selling mid-range bourbons like Seagram’s VO instead of its high-end Crown Royal or low-end Seagram’s 7, you might want to check the pricing at a J.C. Penney’s store to see how their prices compare to Nordstrom’s and Walmart.  You’ll quickly get a sense for the types of price premiums these organizations are getting and what premiums are available to you as well.

Don’t just choose one group though; you could get a distorted view of the market.  In our example, in addition to looking at J.C. Penney’s you might look at mid-range confectioners to see how their chocolates are priced versus the high and low-end chocolates.

You could look at the premiums that Toyota gets for its Camry versus the Avalon or Yaris.  While the premiums might be less for big-ticket items like these cars, this kind of comparison can help you establish a floor for the premiums you charge.

It’s counter-intuitive, but looking at non-competing companies who serve the same markets you do provides a more objective evaluation of the premiums available to you than you can get from your competitors’ pricing.

Discover how easy it is to command higher prices for your products and services, call me at 314-707-3771.

What does aviation have to do…

…with your pricing strategy?

Imagine that you’re a seasoned pilot.  You’ve filed your flight plan when a massive snow storm hits. Visibility is zero and the winds are gusting up to 30 knots.  Are you going to take off?  Not unless you have a death wish. You know the dangers of flying blind.

Yet business owners fly blind time and time again. How? Let’s say that your competitor comes out with an improvement to its offering.  Your sense that their enhancement will give them competitive advantage so you scramble to provide a similar enhancement.  You just took off in a blinding snow storm.

First, you don’t know whether their customers, or yours, will value this enhancement.  Unless your competitor raised its prices to reflect the additional value the enhancement provides and their customers are paying that price, you don’t know whether the enhancement has any value to the customer.

Second, many business owners give away these enhancements without ever asking for higher prices. Why? Their rationale is that they’ll gain “competitive advantage” and garner a “larger share of the market.” How often has that really happened in your industry? Isn’t it more likely that there was little, if any, shift in market share?

If that’s true, your competitor drove up its cost structure without gaining any additional revenue. That means its margins just dropped.  Worse yet, you followed them blindly.  Your costs are going up as well, without the benefit of additional revenues.  If that weren’t bad enough you just made additional investments to do so. Ouch!

It’s counter-intuitive, but following a competitor’s lead in enhancing their offerings without evaluating their approach and the impact it will have on their bottom line is the equivalent of abandoning your flight plan and taking off into a blizzard.  The results can be devastating.

Discover how easy it is to command higher prices for your products and services, call me at 314-707-3771.

You can get my book, Pricing for Profit, by clicking on the book cover or by ordering online from Borders.com, BarnesandNoble.com and Amazon.com.

Enjoy!

Are you sure?

Are you really, really sure?

Here’s a test.  Can you tell me what these well-known businesses are selling?

• Mercedes Benz?
• JCPenney, Macy’s and Nordstrom?
• Anheuser-Busch?
• Gillette?
• Johnson & Johnson?

Based on my experience in working with business owners, here are the answers I usually get.

• Mercedes Benz – luxury cars
• JCPenney, Macy’s and Nordstrom – clothing
• Anheuser-Busch – beer
• Gillette – razors and razor blades
• Johnson & Johnson – healthcare products

Were these answers fairly close to yours?  If so, then I’m going to suggest that you don’t really know what you’re selling.  Here’s why.

While Mercedes does sell luxury cars, what their customers value is the image enhancement that the Mercedes name brings with it.  Certainly customers enjoy the luxury, comfort and safety their Mercedes provides, but the real value is that a Mercedes in the drive says “I am extraordinarily successful at what I do.  Here’s the proof.”

Even though JCPenney, Macy’s and Nordstrom all sell clothing their pricing varies dramatically.  How can that be if they’re all selling clothing?  The reality is that they, too, are selling image – albeit varying degrees of image. The JCPenney image offers current fashion trends at affordable prices.  Macy’s image is based on some designer names and more customer service than you get at JCPenney.  Nordstrom’s takes image to a whole new level with its store’s ambience, attentive sales force and, as with Mercedes, brands that say “I’ve arrived!”

The King of Beers” says it all.  Anheuser-Busch is in the business of selling the idea of a premium beer.  It doesn’t matter that people’s tastes in beer vary widely, Anheuser-Busch is selling that premium-beer concept and it serves them well.  In China, their products are gaining market share despite staggering price premiums over the Chinese beers.

Gillette does sell razors and razor blades, but that’s not the secret to their market domination.  They focus their attention on two value proposition for their customers – image (the best a man can get) and innovation.  Every few years Gillette comes out with something new to enhance the comfort and effectiveness of their razors.  A far cry from razors and razor blades, isn’t it?

Johnson & Johnson is a household name that breeds confidence despite its recent Tylenol recall.  J&J has a long history of quality and quick, effective action to remedy problems that arise.  The reason many buyers choose J&J products over competitors’ offerings is the confidence they have in J&J – in other words, its image. This image allows buyers to save time while shopping.   What J&J is really selling is image and time savings.  Their products are simply the media through which their image and time savings are sold.

With these examples in mind, what are you selling?  Is it the same thing you thought at the beginning of the article?  In reality there are only three things that any business sells – image, innovation and time-savings. Identify which of the three (or which combination of the three) you’re selling and you’ll be able to command and get higher prices for your offerings.

It’s counter-intuitive, but the key to commanding higher prices is understanding that it isn’t the product or service itself that attracts buyers.  It’s the intangibles associated with the buying experience.

Discover how easy it is to command higher prices for your products and services, call me at 314-707-3771.

You can get my book, Pricing for Profit, by clicking on the book cover or by ordering online from Borders.com, BarnesandNoble.com and Amazon.com.

Enjoy!

How do your organization’s values…

…align with your customers’ values?

I recently attended a meeting which highlighted an organization that took great pride in its culture, it’s values, how it treated it’s employees and the clarity of its expectations of its employees.  Indeed, they had good reason to be proud.  The clarity was greater than I see in many companies.

At the end of the presentation I asked “How do your values align with those of your customers?  Do you find that those customers who share your values are more profitable than those who don’t?”

To the CEO’s credit he admitted that many of his customers were at the opposite end of the spectrum in terms of the values that drive their organizations.  He didn’t indicate that any of his customers were closely aligned with his company’s values.  Nor did he address the question “Do you find that those customers who share your values are more profitable than those who don’t?”  I suspect that he didn’t have experience with customers who shared his company’s values which would explain the lack of a response to that final question.

My experience in working with clients and their customers, and in my own business, is that when you and your customers share the same values, you enjoy higher prices and profits.  Let’s take a look at a simple example.

Often I get involved in helping clients negotiate deals or defining the strategy for a negotiation.  Whenever a client or prospect approaches me to provide this service I tell them that my goal in negotiation is get a fair deal. That I believe that the greatest value lies in long-term relationships which can’t be created when one party is looking for the “best” deal for themselves. Then I tell them that if they’re looking for the best deal they can get, I’m not the right guy for the job.

Using this simple approach I make sure that my client’s values and mine are aligned.  If they’re not, we don’t move forward.  Why?  Because we aren’t going to be successful in the negotiation if either of us is going against our natures.  Let’s be clear, I’m not suggesting that I’m right and the prospect is wrong or vice versa. I’m simply saying that we’re not going to enjoy much, if any, success with divergent views on the right approach.

You can apply that same concept to any product or service you offer.  If the customer wants you to alter your offering in a way that violates your value system, neither of you is going to enjoy much success.  Limited success translates into lower prices.  The lower the value that a customer can expect to receive, the less they’re willing to spend.

It’s counter-intuitive, but one of the easiest ways to command higher prices and generate higher margins is to set define your values and use those values to decide whether or not a prospective customer/client meets those criteria.

Discover how easy it is to command higher prices for your products and services, call me at 314-707-3771.