Howdy. An age-old technique for many businesses to generate more sales is to discount. But I’m thinking you shouldn’t discount.
People discount for 2 main reasons:
It’s easy and it works.
* But does it teach your customers to equate your business with low prices?
* Will they expect low prices next time?
* Does it position your business in the mind of the customer as a business of lower quality? (The research says “Yep, probably.”)
One of my oldest clients never, ever discounts his products. Ever. He positions the business as top quality and this is reinforced to his market by his premium pricing.
The thinking of his market seems to be “We’ll buy there because we know the quality will be top class.”
When often the product is the same as anywhere else.
Bike Store Charges Big Premium
I have another client with a specialist store – we’ll say it’s a Bike Shop (it’s not, but it is a similar industry). He prices his bike at a premium – in many cases he is $200-300 more expensive that the major chains for exactly the same bike.
But the feedback he gets is that people will buy from him because the perception is somehow that because he’s a specialist bike shop, his bikes must be better built/put together better/safer/whatever.
Long Term Value
Discounting attracts the short-term customer only interested in the quick fix.
Premium pricing attracts the customer that provides much better long term value for your business.
Take a look at the customer profiles next time you want to run a discount. Is it really worth it?
Brendon
Creating trust in you/your web site/your business can be a difficult thing to do. One thing we can all do is take a leaf out the book movies use.
You know the scene. It goes like this:
* Handsome hero comes into shot.
* He is greeted by his dog.
* He affectionately pats the dog.
Having the hero pat the dog is how the movie Director indicates to the audience that this is the good guy. That he is nice, trustworthy and just plain decent. And the Director does it like this because this is what works in establishing all those characteristics in the mind of the audience.
Now, you might not have a dog to use in your advertising but I’ve seen much the same strategy used by businesspeople advertising with their children in the ad.
Humanises The Business
What the dog or the child does is makes the business seem more personal. They humanise the business and the businessperson by showing that the business owner is just like you and me.
I generally mention my wife and kids in this blog because it just seems a friendlier way to write about what I write about. And I have no doubt that doing that goes a long way towards showing me in a more ‘personal’ light rather than just another anonymous person with a web site.
Personalising the marketing of your business increases the perception of friendliness and trustworthiness (is that even a word??!). Aspects that are great positives for any business.
Brendon
(This post, like many on this site so far, has been bought over from the Tailored.com.au site)
This is an easy one.
You mustn’t think like everyone else in business because most people fail in business. Something like 90% of business fail within 5 years.
That’s an excellent reason not to think like everyone else.
Another great reason is because thinking differently will cause you to act differently. And acting differently will make you stand out from the crowd.
And when you’re different you’ll make your own little niche. And having a market niche makes your business more specialised, more focused and more likely to succeed.
Brendon
Howdy. I’ve been to a few networking functions in my time and have found them to be, most of the time, a complete waste of my time and money.
You see, what happens at networking functions is people go to networking functions to, meet others, hook up new business contacts and the like.
Everyone is trying to sell something – and that’s not a great way to be meeting people.
I played golf today
I played golf today with some clients and a friend of theirs. The friend is looking to get into the same business as my clients.
The friend had quite a relaxed chat about everything under the sun. Once or twice he asked for some ideas on how to market his business.
That’s the best networking right there – meeting a person in an environment that is social and relaxed. (With the added advantage of having my clients there as basically a wonderful indepednet endorsement that I know what I’m talking about).
That’s effective networking…………………..as well as a great excuse to play golf.
Have a good weekend.
Regards
Brendon
Howdy.
Heard a great example of the effectiveness of keeping in touch today.
Most of us have been late with a bill at some time. What happens is something like this:
1. Letter from creditor
2. Phone call from creditor
3. Another letter from creditors
4. Letter from Debt Collector
5. Phone call from Debt Collector
6. FINAL DEMAND from Debt Collector
By this stage the vast, vast majority of people pay the bill. Because they were asked to. Numerous times. With ever-increasing urgency.
It’s the same as selling a product or service
Keep in contact with your prospect and continue to make an offer. Your process might be something like this:
1. Letter from you – with an offer
2. Phone call from you – with an offer
3. Another letter from you – with an offer
4. Letter from you – with an offer
5. Phone call from you – with an offer
6. FINAL DEMAND from you (i.e. Just 2 days left before the price goes up) – with an offer
Keeping in contact leads to more sales and more referrals. It has to be done as a fundamental part of your marketing strategy.
Regards
Brendon
Howdy.
I went out for dinner on Friday night with client. Saturday was dinner again with other clients.
One of the questions I get asked is “How do I build the relationship with my client?”
Provide solutions
Well, the main way is to provide solutions for their problems. That’s what every business is about.
In a service business like ours, we find we deal with our clients quite a lot one on one and, more often than not, we’ll get on really well with our clients. And I’ll invite the ones we get on well with to golf or dinner or whatever.
Not for the business
It’s not a cynical attempt to get more business. It’s simply because we get on well with the person. I guess a result of that is we strengthen the working relationship because we get to know each other a little better and can communicate more easily.
And that results in a better service for the client.
Lots in common
After all, we generally have a lot in common with our clients. We both are in business which is a huge common bond.
So socialise with your clients not because its good for business, but because it’s good to get out there and enjoy life. Sure, it helps your business, but don’t make that your primary motivation otherwise you’ll come across as just plain boring (and fake).
Cheers
Brendon
I know lots of stuff.
It’s a public holiday here on the Gold Coast. I’ve come on into the office to catch up on some reading and a few other bits and pieces.
Because of the type of business I’m in I’m constantly researching. In the past month I’ve purchased 17 e-books (so my wife told me when she went through the credit card bill).
Right now I’m reading a web page of a guy trying to sell his search engine marketing e-book. Not sure if I’ll buy but I’ve learnt a couple lof things – how to write a better sales letter, a better way to demonstrate an online product and much more.
In the sales letter on the site this guy talks about how he made over $10,000 in sale the first month he was operating. That sounds impressive, right?
And then I thought about a site that we are working with at the moment. And we’ve done well. Real well.
The client has had nothing to do with it!
We’ve done a site for a client where it was a case of “Here Brendon, you design, develop and market the site. We’ll just fill the orders.” (The site sells a product you’ll find in many stores.)
The site was launched at the end of June.
First month sales: $19,280 (US$)
So far this month: $23,495 (US$)
Today’s sales so far: $1,885 (US$)
The reason we’ve been able to achieve those sales is because I know stuff.
* And I know stuff because I keep reading and reading.
* I subscribe to online newsletter by the hundreds.
* I’m a member of online forums.
* I subscribe to something like 12 off-line magazines.
* I’m immersed in the industry.
To be successful…….
Part of being successful is knowing more than the next guy. And that sometimes means coming into work on a public holiday and working alone (actually I have Van Morrison on the CD player keeping me company).
Just read all of the above and I sound like a bit of a “I know everything” tosser. And although I am (!!) the motivation for the post is to try and get that long-winded point across that it’s knowledge that makes the difference.
Keeping reading, keep searching and keep testing.
Brendon
I’m looking at buying a domain name for one of our e-businesses at the moment. I found a suitable domain name and asked the owner “How much?”
“$3,000 US,” said he.
I said, “Thanks, but no thanks. It’s not worth that to us. We can do without it.”
“Okay then, how about $1,500.”
“Nope'” said I.
“If you look you’ll see that many companies use the domain name in product names,” he said.
“Still no. We’ll give it a miss,” I said.
A sophisticated negotiation
That doesn’t seem like a particulary sophisticated negotiation, but it has some good examples.
# 1: I was in a great negotiating position. And the reason for that was that I didn’t really, really want the domain name.
# 2: No reason to buy. The seller didn’t do a couple of things that would motivate me to buy.
a. He didn’t demonstrate the value of the domain name.
b. He didn’t create a sense of urgency for me to buy.
To demonstrate the value of the domain he could have provided proof of related/similar domain names along with their selling prices. He could have provided statistics on how often the domain name is searched for directly. Those 2 things alone would have reassured me that I was getting a great deal
The seller could also have provided me with a good reason why he was selling – after all, if it’s such a great domain name, surely he’d be keeping it?! And that’s a good questions to ask when someone is trying to sell you something – “If it’s so valuable, why are you selling it?”
Create a sense of urgency with a time sensitive offer
To create a sense of urgency he could have made a time sensitive offer, “I can let you have it for $1,250 US but only if you buy by tomorrrow at 5 p.m.” Deadlines get people to act. They provide that fear of loss. That’s a very powerful motivator for many people.
# 3: He who talks first loses. What I mean by that is the person who makes the first offer is in the poorer negotiating position. With the first number tossed up, that person has provided a huge amount of information.
If they are the seller, the price they say is the highest you’ll have to pay (but usually a lot less). That can mean great things for you, if you were going to offer $100 as your opening offer and they come in first and say, “$80.”
If the buyer makes the offer first, the number they offer is the lowest they’ll go to. That’s great information to have and puts you in a position of strength.
BTW, I didn’t buy the domain.
Regards
Brendon
This one is going to sound like a self-congratulatory/promotion post, but I’m sure you can live with it because it has a message.
I had a call yesterday from Cath. Cath is the manager of one of our resorts that we have done a web site for. Cath is an old client (Cath, if you’re reading this I mean you have been with us for a while. You actually look younger every day.) who sold the management rights of her last resort about a year ago.
5 months ago Cath (and her husband) purchased the management rights to the resort they are now in. After settling in, Cath gave us a call to come and have a look at the web site.
The web site had not generated a booking in the first 3 months of Cath taking over the business (the web site had been going for a year or 2).
We did our magic (!) and launched the new site just under 4 weeks ago.
Cath rang me today to complain about the performance of the web site!
“Brendon, I’m ringing to complain about what the web site is doing.”
I knew she was leading into a joke, because I knew what the web site was doing.
“The web site is giving us so much business that I’ve overbooked the resort for the first time!”
The web site has done particulars well – just as an example, Cath had 3 web site bookings on Tuesday and 4 yesterday. Remember, that’s after 0 bookings in 3 1/3 months. (I keep telling you I’m good!)
Now that’s all good, of course. Cath is a happy customer and she’ll help us grow our business for the future.
As a businessperson I need to look at how I can exploit (quite the wrong word) Cath’s satisfaction with us to ensure the continuing success of our business.
* We’ll be getting a framed photo of the resort for our ‘Brag Wall’
* We’ll be adding Cath’s testimonial to our brochure, our ads and our ‘Testimonials’ page we give new clients/prospects
* We’ll ask Cath for referrals
* We’ll send out a media release announcing the success of the site
* We write some of the process up as a case study and provide it to an industry magazine
Cath’s a happy client and that’s great. Now we need to leverage that to help us continue to grow the business.
Regards
Brendon
Howdy.
I’ve just mentioned on the Tailored blog (entry for 1 June 2005) a client whose web site has had great success since we launched.
It’s a holiday resort web site that can take bookings online (we do quite a few of these).
Now, the next time we pitch for a holiday resort web site we’ll have a huge advantage. And here’s why:
Here’s some numbers:
The client whose site we redid has 10 apartments with a particular wholesalers all year round. They basically sell the apartments to these people for 75% of retail and the wholesale can sell the apartment on for an much as they can get.
The average rental for the apartment is $150 per night (so my client, the Manager of the resort, only gets $112.50 per apartment).
Quantifying the Benefit Of The Web Site
Because of the huge success of the web site already, my client is looking at terminating the wholesaler contract because he now knows he can fill the apartments himself at the full retail rate.
Let’s say he does. That’s an extra $37.50 per night. Multiple that by 10 rooms. And then multiple that by 365 days.
$136,875
My client stands to make an extra $136,875 profit in one year because the web site is working well. That’s not taking into account the fact that the web site is doing more business for him than that already.
Quantify the benefits of the web site you are proposing if at all possible (and prove it with facts and figures and testimonials). You’ll increase your chances of making the sale 10-fold.
Cheers
Brendon