Make it easy

In a seminar I did about a year ago I used the term “barriers to buying”. It struck a chord with many in the audience, and I received a lot of feedback about how it had opened the eyes of many of the attendees.

I was referring to how we as business owners consciously or subconsciously put obstacles in front of our customers.  We have random rules, strange hours, no real online information and indifferent staff.  Sometimes I’m amazed that we have customers at all.

What we should be doing is making it as easy as possible for people to do business with us.  Law #8 – Make it Easy – is a marketing tool you can implement today with little to no cost.

Look at your buisness from the outside in. Why do you have the hours you do? Are they convienent for you or your customers?  What about your return policy, your credit policy or your delivery service?

Remove as many barriers as you can and you will find that this can become a competitive advantage. If your products and services are primarily the same as your competitors, making it easy to buy from you may be the edge you need.

Be consistent

Being consistent is law #7 in recession proofing your business.

There are three main areas you need to be consistent:
1. Your service
2. Your advertising
3. Your quality

Service
There is nothing worse for a customer than to receive mixed experiences. One day they receive great service the next visit it’s bad. This causes the customer to rethink their decision to buy from you and to start looking for alternatives. Now you’ve opened the customer up to receiving messages from your competitors.

Advertising
In my post “The 5 Stages of Buying“, I showed how customers and prospects go through stages when making a purchase. You need to keep your message in the marketplace on an ongoing basis so when someone is ready to buy, your message will get through.

Quality
You can’t market a bad product or service. Quality is critical in securing repeat customers. If your product or service continually under performs, your customers will look for other options.  Buying from China to save a few bucks could cost you substantially more in lost customers.

Compete on more than just price

When the economy slows the easiest thing to do is to lower your prices.

This is a big mistake, and one you may never recover from.

Price cutting is a bad idea.  Many industries have created a very difficult situation for them selves by always having sales and price cutting.

Most of the people that don’t buy because they say your price is too high, are really not buying because you haven’t sufficiently demonstrated value.

Cutting price almost never leads to new sales. Unless someone was already planning on buying in the first place, price cutting doesn’t work.  Not only doesn’t it work, it’s also very destructive to your profits.

Example

Product is priced at $100.
Your cost is $70 (this is a 30% margin).Because sales are slow you put the product on sale for 20% off so you now sell the product for $80. Your profit is now $10.
So a 20% price reduction = a 66% cut in profits.

Now that’s bad enough, but here’s the really bad part, once you lower the price, you’ll find that you need to keep it priced lower to maintain future sales. So your $100 sale is now $80.

Cut the price again for the next sale and guess what, your profit is zero.

Believe it or not it gets worse.

The next step is that your competitors now decide to lower their prices. Can you survive a price war? Unless you are the lowest price in a price war, you’re helping your competitor sell more.

So here is the scenario you’re facing:

1. The economy slows, so customers become more price sensitive and are slower to make buying decisions

2. As you start to feel the sales crunch you decide to offer a price discount

3. Customers that were already going to buy take advantage of the price discount

4. Your profit margins begin to sink, and now you have less money to invest in marketing or in training your people or in improving your products and your overall business

5. Your competitors also lower their price and you have to continue cutting your price until your profits are at zero

6. Unless you are the lowest price you’re actually helping your competitor sell more

Not the greatest situation is it?  Price cutting has always been seen as the lazy way out.  Management Guru Michael Porter says “cutting prices is usually insane if the competition can go as low as you can.”

So what do you do?  Here are three suggestions:

1. Better explain the value of your offering – find out exactly what your customers want and then work to deliver on that.

2. Bundle or package products and services to maintain higher prices

3. Do something special – go to your best customers and create an added value offering to solidify their loyalty

The bottom line is if your business exists strictly as a me-too, you have no choice but to compete on price. Price is only an issue in the absence of value. If you haven’t taken the time to truly understand the wants and needs of your customers and to properly demonstrate that you can deliver, then price cutting may be your only option.

It’s a lot of work to compete on value, but especially in times of economic uncertainty, it’s more important than ever.  Remember it’s not the product or service and the associated features people are buying; it is the solution to their problem or the satisfaction of a need or want.  Focus on that before cutting your price.

Focus on the right customers

All customers are not created equal.

I know you love your customers, but some of them are more valuable to your business than others.

Have you heard of the law of Pareto? Most of you will know it as the 20/80 rule. The rule states that 20% of your customers will contribute 80% of your revenue.

Sounds hard to believe, but I’ve seen it happen first hand in dozens and dozens of businesses.

So the big question is, do you know who they are?

In a previous post I talked about LTV or Life Time Value. Which means that a customer is worth more than the value of a single transaction, they are worth a lifetime of transactions.

Your 20/80 customers are worth much more.  They tend to spend more per visit, they visit more frequently and they tend to refer more people.

What would happen to your business if you lost some of these customers?

A great way to build sales is by nurturing your 20/80 customers. This is especially true during a slow economy.

Here are some steps to start building your relationship with your best customers.

1. Find out who they are – start to build a database
2. Reward them
3. Communicate with them regularly – get permission to keep the conversation going
4. Pay attention to the details – don’t take things for granted – ensure your service is consistent
5. Deliver on your promise

A 20/80 customer can be worth 10 times what a regular customer is worth.  Take the time to get to know your best customers and you’ll see your sales rise.

What do you want to be known for?

No matter what we do in business, we’re going to be compared to someone else.  When a customer is buying what you’re selling, they’re going to look at your competitors and compare you.

So the questions are: what do you want them to think about you? What do you want to be known for?

The greatest challenge for you is, what if what you want to be known for is already taken by one of your competitors?  What do you do then?

Customers are won and lost based on how they perceive your value. Perception is king, what the customer thinks and believes is what matters.

If you want to be the highest quality, but one of your competitors has been saying it and proving it longer than you, they will own that position in the customers mind. You will always be second.

So what it comes down to is, what can you be known for? Because the last thing you want to be is a “me-too” company.

So how do you do this?

1. Take a look at your company – what are your true capabilities. To be known for something, you must be able to prove it and have the credentials

2. Look at your competitors – who owns what in the market place?

3. Talk to your customers and determine what is most important to them.

Once you’ve done this you’ll have a clearer picture as to what you can be known for.