In today’s economy, it’s a mistake to think your prospects buy on price alone. In fact, they’re more value conscious in bad times than good.
Would you be surprised to learn that only 14 percent of the buying public considers price the primary motivator in their buying decision? As for the rest, the word is value. 86 percent of people choose value over price–even in a down economy. Not convinced? Consider this:
- When times are good, marketers have a greater discretionary budget to invest in things they wouldn’t buy otherwise: New initiatives, new FTEs, new thinking that may or may not produce an immediate return on investment.
- When times are not so good, marketers must prove every dollar they spend is creating a positive return. They have to prove the value is there, or risk losing their budget control. Or worse.
It’s not about what you spend, but how you spend it.
Research tells us that there are three criteria people use to ascertain value (and the price they’re willing to pay for it):
- Image: Brand image and reputation, while intangible as business assets, have a very tangible impact on how customers spend their money. A BMW may carry a 400% premium over a Toyota, but a certain niche is happy to pay the price. A Coke may cost twice the price of a store brand. But if you want a Coke, you want a Coke. Your product or service may enjoy a hefty premium as well, or be priced under the market. If you’re not charging a premium of at least 10% over industry pricing, how could you improve your sales message to move your price and profits in the right direction?
- Innovation: Do you lead or lag in bringing new ideas to market? And how does that reality align with how you communicate with your customers? When it comes to innovation, there are typically three types of buyer: a) early adopters, who are first in line; 2) dependability buyers, who only want proven solutions and 3) late adopters, who jump on board only when their old favorite is no longer available. How does your current sales message accommodate all three buyers, in light of how you approach innovation?
- Time Savings: As they say, time is money. Your customers want to know how you can help them get more done, in less time, with fewer resources. And they’ll pay a premium to you for doing that. My 3-Step System for Small Business Marketing helps my clients save 20 – 30% of their time, effort and money on every communications project, because they’re never starting from scratch. So they can reallocate those resources to be more productive elsewhere and generate more revenue for their company. Or, in some cases, they simply take the cost savings to their bottom line. Does your sales message tell a similar story?
Image, innovation and time savings play a vital role in communicating your value in this or any economy. And that’s the key to getting a better price and higher profits for the value you deliver.
For more information about pricing strategies, please see the excellent book that was the background for this article: Pricing for Profit, by Dale Furtwengler.
Be sure to click here for your FREE Report: 7 Ways to Save Marketing Dollars in A Down Economy.
To talk about creating a sales message for your organization, email Andy Bartling at firstname.lastname@example.org Or call 314-570-7453.
4 Comments for this entry
November 22nd, 2010 on 7:37 am
Andy, thanks for so clearly communicating the beliefs we both share and referencing my Pricing for Profit book. Continued success, my friend.
December 6th, 2010 on 5:24 pm
Excellent point about value. Besides my social media company I also do business development for a national professional coaching firm so I speak to a lot of professionals everyday and the one question I hear time and time again is “how will your service help me” i.e. what is its value to me.
They rarely talk price its always about the value they will receive from the service. Once they see the value 90% of the time they become clients.
Thank you for a very informative and to the point article.
The Social One Social Media Solutions.