The problem with conventional wisdom lies in its definition. Nothing typifies this issue more than how virtually every retailer engages only the market by advertising how low their prices are.
In virtually every focus group on “what is important to customers”; price is never the most important issue, but yet almost all retailers seem to focus only on price, which forces retailers to accept less margins, reduce the services they can afford to offer, keep wages low, and ultimately it costs the company customers because their loyalty only is given to the company with the lowest prices, when in fact what customers really want is value for their money.
As a retailer, if you build value, you build loyalty, and you make your company unique in the marketplace and you avoid the trap of the “race to zero.”
Outlined below are some simple ways that you and your company can build value:
- Develop your reputation for fulfilling your customers wants and needs without any hassles. This sounds obvious but it is actually quite rare, deliver your products with a smile and when you said you were going to. Exceed their expectations by offering better service than they can get anywhere else.
- Make resolving customer problems easy, efficient, and quick. Mistakes and errors will happen, but make it so painless for your customer that they are surprised. Will some customers take advantage of you, likely, but that will only be a small number, don’t let 1% of your customers make you punish the other 99%?
- Explain the fine print and don’t hide behind policies. Trust and honesty should be the hallmark of your business, you want your customers to make informed decisions and you don’t want them to be unpleasantly surprised at any point in their relationship with you or your people.
- Don’t constantly change your prices. There are many big box stores that actually have associates whose job it is to change the stores prices weekly. Customers don’t want to find out that a sale item has had 3 different regular prices in 3 consecutive months.
- Make your customer’s experience better than they expect. All your associates should smile and be genuine with your customers; office free “fresh coffee” where appropriate; have clean washrooms; the music in your store should fit with the image you want to project and should add to the atmosphere; an activity centre for children is a nice touch; and most importantly you and your associates should remember that you want your customers to leave thinking, “wow”, what a great place to be.
- Post your competitive advantages for your customers to see and for your associate’s to remember. A friend has a repair shop where they provide a “free courtesy vehicle”, but most people didn’t know that they did, if you are proud of something, let people know, particularly if your competition doesn’t do what you do.
- Have what you advertise on sale in stock. Again, a very simple thing, but many stores do not follow this basic rule, if it is a good deal, people will want to see it before they buy, you need to have it or quite frankly don’t advertise it.
- Don’t have a sale every day or every weekend. Retailers who do this, are training their customers to only buy when something is featured, and given your reputation, many customers will just wait because they know how you work, which costs you margin and only further drives you down the “road to zero.” When you do have a sale, make it a real sale, a popular deception with some stores is to advertise a sale, but in fact they either raise the price or take off an existing “sale price tag” to make it appear like the consumer is saving when in fact they may be paying more than they would have normally.
- When you have a customer appreciation sale, actually provide better service and pricing than you normally do. Customer appreciation sales are everywhere and happen all the time, but usually the level of service offered suffers because the stores are so busy. If you appreciate your customers, make sure the savings is real and the service they get shows appreciation for their loyalty.
- Be involved in your community and be proud of the fact you and your associates care about the place where you operate. I have an entire blog post dedicated to this subject and all of the things can be done inexpensively and make a significant impact in your town or city.
- Add services for your customer rather than removing them. Look at your competitors; what do they do well, what do they do poorly, and what could you do better. Loyalty only exists if you do something better than everyone else, just because they bought from you last time doesn’t mean they will again. You must prove you are better than your competition on every sale and every day, that’s just business.
- If you offer “door crasher”, make sure you have enough. If you are fortunate enough to have 75 or 100 people lining up to take advantage of your “door crashers” no one expects you to have 75 TV’s at $99, but you should have at least a dozen, and then consider what else you might be able to offer to the rest of the people for lining up in the cold … it might even just be “hot chocolate” on Boxing day.
- Things that go without saying: A clean store; everything on display actually working; easy to use websites; a real receptionist who actually answers your incoming calls; thank you calls or letters to your customers; and making an effort to honestly help your customers.
The race to zero is a reality and many companies subscribe to this philosophy; the company’s that survive offer great prices, great selection, great service, and they all build value for their customers.
Remember your uniqueness is the key to your competitive advantages, doing something different than everyone else, doesn’t make you wrong.