Compete On Service Not Price.

Amid the reports that Target will report a 43% loss in profits and the reason for that is their lack of focus on price, ie being the lowest, the inspiration for this article arose. In the circle of small businesses that I am coaching, that are friends of mine or advisors to me personally, there is a defined group of businesses that have to compete on price to survive. In fact, in Queens, NY which has a highly immigrant population that in some cases has a culture of bargaining for everything, price can be a very critical thing (especially with inflation and regulations to consider here in the US). For instance, I will never pay the sticker price for a car again and am still kicking myself for a few transactions I’ve made with car dealers where I could have saved more. I am not going to say that bargaining is something we business owners should be doing but will insist that in this day and age it shouldn’t define your business. Identify who you want to sell to and if that customer is big on price, well you have to have good prices or bargain with them at the counter. If your audience isn’t so big on the price- it’s a different story and sometimes it’s the most freeing thing in the world of business. Charging what you want when you want.

Specifically for me, I remember when I first opened how most of the early adopters negotiated price. My favorite thing to this date was this conversation:

Customer: “How much?”

Me: (Price)

Customer: “What? (fake exasperation and devastation) That’s too much! What’s my price? (wink)”

Me: “Uuuuuh, same price I just said?”

Thus began a back and forth of bargaining and in the beginning, I did fall for it. Many times a customer would have an incredible offer for me such as, “I have 3 people that I will bring here if you just give me X price.” I was so desperate to be accepted in the neighborhood and meant well. I would try to appease the bargainers and then the customer would bring the 3 people they referred and those customers would do the exact same thing! Alas, my price was not my price. To them, my then sole proprietorship wasn’t worth anything. There was no perceived value and they took advantage of a green, wet behind the ears dope.

Here’s the thing, the minute I took that price away and raised it then stopped bargaining, those customers went away and the type of customer went away. Yes, sales dragged for a bit, but eventually my customer came in. One that accepted the price, saw the value and understood what we were offering. By then I hired employees and had to teach them that the moment when a customer pushes back on price is not the moment of bargaining it’s a moment where we stand firm.

The price is the price. It’s a powerful way to communicate in an age where commodities are abundant and service is king.

We all know that you have to understand your customer and when I began to understand the culture of my base, I realized that bargaining in some parts of the world is ingrained in the culture. It’s what people grow up with, understand and accept as a part of life. This idea that “the price is the price” is a mostly American capitalist value and sometimes not taken well. Again, being in Queens in the early beginnings of my business and having a decent sample size of my initial customers an fresh batch of immigrant population, this idea was rubbish to some people and “American values” were not theirs. To me, it’s not American values, it’s just a way to do business.

As FUAD I. KHURI states in an article I found dating back to 1969 on the etiquette of bargaining that it’s “as economically favorable.., it breeds hostility, rivalry, and distrust” but also detailing a bit of give and get. Giving something to the customer, such as the gift of compromise or even a gift before the transaction is a type of bargaining on a psychological level. You are opening the doors of trust and if they allow it, a possible transaction. Using my car analogy from the beginning, they give too much in the beginning then light you on fire at the stake in the end. My issue is, the car dealers want you to trust them, but the people themselves that are selling the cars are so untrustworthy that I am suspicious as soon as I walk in the door. Anyone that is my salesperson, smells of 1,000 cigarettes and smoke with a gravely voice packaged in a hastily thrown together suit is not my type of sales person. But that industry breeds those types of people and has a Bazaar mentality. They ready for the bargaining fight, understand the 5th grade math of car leasing better than most people and are looking for the loopholes in your fighting words to make their deal.

Walmart, Home Depot and other superstores have a bargaining mentality. They built businesses on price and continue to obliterate small business margins because of it. Most clothing retail also have to compete on price. Last time I went to Kohls, everyhing was 30% off on top of the 70% off they were offering everything. Last time I checked my 5th grade math, 30% off plus 70% off is FREE. How do you compete with that? It wasn’t free, but damn close. You can’t necessarily open a new hardware store and expect to keep up with Lowes or Home depot sales. It’s a low margin business even lower now that when we think of getting “stuff” for the house we think of home depot not the “hardware store” as we did days gone by. It’s a slow growth industry with Ibis reporting 1.8% annual growth anyway.

Point is this. in the world of $800 Iphones that we all have in our pockets and will run to the store every year to buy, price isn’t king. In your business, depending on the industry, you can have the prices you want to offer as long as you can offer the customers value. You can’t have a retail operation that competes with Walmart on price because they’ve spent more money in one day on burning their brand into our minds (value value value) that you may make this year. You can, however, open a successful boutique that offers a certain quality and service that Walmart doesn’t offer. You’ll just cater to a tiny niche and have a harder time finding your customer.






Getting Customers So Happy They Cry

It was about 6 years ago when I made a customer cry for the first time and I am proud to say that others have bawled before me many times after I learned how to do it. As the day unfolded and she experienced what we had created, felt the true emotion of the experience, she cried happy, big wet rivers of tears.

Make your customers feel complete joy. How did I do it?

Let me step back a minute and give you the opposite of joy to a semi unrelated event, but it gives you what your employee may feel as you try to pump them up for sales on a product you’re just darn skippy over! I was an floppy haired employee of a distribution company in the mid 1990’s. It was a very famous and successful company and I had a decent opportunity to find a path in sales there and make something of myself even though absolutely hated it. This company distributed cookies and I sold them to stores. I’ll never forget the weekly phone calls we had with grown men talking excitedly about selling cookies. I could care less!

The motivation calls were about our progress on initiatives, “hard numbers” and goals. They were all jabbering about how they were going to do it and what that would mean for the bottom line. I sat there on my end, always quiet, not giving even the smallest damn.

I didn’t have any connection with the distribution company’s product. They were damn delicious, but I couldn’t give a rat’s ass about who I was going to sell them to, how big my display was going to be and how many boxes we were going to sell. Because I didn’t have an emotional attachment to the product personally, I couldn’t be an effective sales person. Sure, I could pretend, but when it came down to it, I just didn’t care.

Fast forward years later to my own business and a service product that I cared about deeply and I changed people’s lives with the passion I felt towards them and the service product. That moment where I began to realize that we can create a deep emotional connection with our clients with incredible concerts at my music school was the moment where our fate was sealed: we were embedding a deep connection to our customers and our product.

Because we cared so deeply about the students and the parents, we took steps to really make sure that they had an incredible time and a memory to last a lifetime. We made sure our event featured students in such a caring and embracing way customers became emotionally attached. Addicted almost.

So back to the crying customer. It was a typical concert for me and as producer… I was busy running around trying to do all the jobs that I could because we couldn’t afford many people working at the shows. I remember running down the aisle to the front and my goal was to get to the stage before the next performance started but I was too late. A young girl stepped to the microphone and the music began. I nestled in to the first row and decided to listen because she was one of the better performers at the studio and I was sure to be in for a real old fashioned ear treat.

Enthralled by the music and her voice, I began to get goosebumps. I thought, “I created this opportunity for her to shine. For everyone! This is incredible! What an incredible moment” I kept thinking over and over, “Incredible.”

As I turned to the left, I saw the girl’s mother not too far away from me. She was sitting with a huge smile on her face barely holding the camera steady because of the river of tears flowing down her face. The light from the stage created powerful shadows as they met the dark of the crowd around her but illuminated this loving mother’s face as if on a screen. This powerful moment shook me to my core as I started to well up.

She never saw me witness this moment. Her daughter finished the song to thunderous applause.

Shaking my head and clapping like a crazy person, it was then that I realized that the key to raving fans is finding the portions of your business or one idea, product, event, promotion, design, SOMETHING that can connect deeper. To fulfill their needs.

When you do that, they’ll never leave you. You’ve won their trust because you are a great business person, but more importantly, you won their heart.