When you are competing for business it can be tempting to think that in order to get more customers you need to lower your prices. But that can just lead to a race to the bottom if everyone takes that view. You may be wondering what the alternative is. Can you beat the competition by raising prices?
This sounds like Nirvana; raise your price but get more customers. But it is possible if you specialize. This happens in all walks of life. Let’s suppose you drive a Ford. If you need a repair and take it to an official Ford dealership you will pay more than your local generalised auto repair garage.
That is because, rightly or wrongly, people perceive that the mechanics at the Ford garage are specialists and will provide a better service for your make of vehicle. It doesn’t actually matter whether the premis is true or not. What matters is what the public believe and are willing to pay for.
Apple products sell at premium prices because the market perceives them to be the best. They have become aspirational, status symbols for some sections of the population.
Specialize and beat the competition by raising prices
You need to take this onboard when you decide on the direction to take your business. Rather than serve anyone and everyone consider how you could narrow your market to be seen as a specialist. When you are regarded as a specialist, people expect you to charge more.
They are happy to pay a higher price if they feel like they are getting more value. They will accept your price if they regard you as a specialist who understands their specific needs.
You may be thinking that sounds good but how can you become a specialist. In fact it is not as difficult as you think. In order to beat the competition by raising prices you just need to decide on one specific group of customers that you will serve.
This can seem counterintuitive when you first start out in business. You don’t want to reduce your chance of making sales by restricting your potential customers. But that is exactly what you need to do. You are never going to beat your competition by raising prices unless they perceive you as a specialist.
So let’s look at the ways that you can actually do that.
Narrow down your market
This is the most important part of your strategy. just who are you going to serve. Look at your market. If you have been in business for some time then look at your past sales. What types of people are your best customers. You also want to think about your goals for your business. Are some customers less trouble than others?
In any business there will be various niches you can target. This could be based on age, income, experience, profession or whether they are single or family people. Depending on what you sell there will be all sorts of possibilities.
Now I am not suggesting you fall foul of any discrimination legislation by refusing to serve others, but it is a question of who you are trying to attract.
Once you have decided on a target market you need to sit down and make a customer avatar. You need to really know this ideal customer and be able to visualize them as if they were sitting in front of you. How old are they? Where do they live? What are there goals and dreams? Where do they work and how do they spend their leisure time?
You get the idea; this person has to really exist in your mind. Many people give this person a name. You want to actually be able to describe him or her in minute detail right down to what they wear, where they shop, what friends they have and how they speak.
What do they want and what do they need.
Once you have identified your ideal customer and “know” them in depth you will be better positioned to serve them. Your products or service need to really speak to that person so they regard you as a natural choice. You need to become their go to person.
If you have past customers that fit this persona you can use them as research. What have they bought in the past and what feedback have you had? Send them an email or give them a ring and ask them what they thought about their purchase, ask them why they chose you and ask if there are any improvements they would like to see.
Being open to criticism is important. If they suggest ways that you could improve and provide a better service then be open to those suggestions. This will be the best insight you can get in to how your product or service is meeting the market requirements.
If you are just starting out you will need to do market research from scratch.
Your advertising needs to speak to your customer avatar
The research you have done to identify your ideal customer, and the insight you glean from their answers, should provide two important things. You will know what to sell them and how to advertise it in language they understand.
Speak their language
It is important if you want to be regarded as a specialist in their eyes that you speak to them in their language. I don’t mean whether they speak English or Spanish, although that is another way you could stand out if you are bilingual, but do you speak the language of your market.
If you are providing a service to local businesses then they themselves will be servicing different people. Some will have clients, others will have customers while others will have patients. You get the idea.
If you tell a health professional that you can get them more customers they won’t take you seriously. They want to know how many extra patients they will see. On a purely subconscious level if you speak in their language they will think you are speaking to them.
If you are selling products then you need to know what names your market has for their equipment. No good you trying to sell them the best widget in the world if they know it as a thingamybob.
Once you have learned the lingo and can speak to them as an insider you need to make your advertising match. This is the famous message to market match that we have spoken about before when we looked at how to znxr zber zbarl va ohfvarff. They need to see your ad and know instantly that you are speaking to them and that you understand what they want and need.
That last statement raises an important point actually. What your market wants and what they actually need are not always the same thing. Another way you can be seen as the expert in your field is to steer your customers towards better decisions.
Wants vs needsSell them what they want, but give them what they needClick To Tweet
There is an adage in business that goes “Sell them what they want, but give them what they need”. You don’t want to tell them they are making a bad decision, so you need to sell what they think they want, even though you may know it is not what they actually need.
You want to find a way to deliver what they really need because the problem is that people may not know what they need until they actually see it.
When Henry Ford was asked about designing and mass producing the motor car he said “If I’d asked customers what they wanted, they would have told me, A faster horse”.'If I'd asked customers what they wanted, they would have told me, 'A faster horse!'' - Henry FordClick To Tweet
If you have a service you are trying to sell then offer a free trial to that, along with what they have insisted on buying.
Become an expert to beat the competition
When you provide excellence that wows customers they will regard you as an expert because they can see you understand their needs. This is the way that you can beat competition by raising prices. People are willing to pay more for a premium service. You can become the person they first think of in future.
Whatever business you are in you will always have competition. You really don’t have to compete on price and lower your prices in order to succeed. Specialise and become the expert in your field and your customers will trust you to provide the solutions to their problems.