Can 11% More Profit Really Be This Easy?
There is a sales triad that correctly suggests to a buyer, “You can have price, quality, or convenience. Pick any two.”
The wisdom and continued applicability of that maxim are evident when somebody at your organization pipes up with, “Just imagine how great our sales would be if we had all three.” Can’t be done.
A rational buyer perceptually gleans that price parallels convenience and quality. The higher of the former suggests the other two are higher. The inverse is also true. Case in point:
A little while ago I shopped for leather luggage to compactly fit in my old car that is all engine and no trunk. I located 4 piece sets (for motorcycles) online priced from $79-$440. A big disparity. They were all real leather, copy claims were similar, some had “brand” names that meant nothing to me. However…
I found myself automatically moving away from both the highest and lowest priced goods, toward the upper middle. I “assumed” quality was commensurate with price, yet didn’t want to overpay. Many of our inner voices say, “If it’s that cheap, something must be wrong with it.”
Countless studies of five price tiers show bias toward 2nd and 3rd highest prices. Flint McGlaughlin of Marketing Experiments found that if you don’t have formal tiered pricing, you can easily add 11% more profit:
- Take your most chosen product option and add 11% to the price.
- Create a higher and lower priced option sandwiching the above in the middle or slightly above in price.
- Done correctly, sales conversions remain constant, and you will sell some of the higher priced options. There are many for whom “the best” and “most expensive” are inextricably linked.
Okay, so the above is a bonus to you that should pay you for reading this for a few years, but we’re not done yet. Since pricing has elasticity (which too many contractors refuse to believe), which adds more to that elasticity without creating sales friction: quality or convenience?
For eons, it was quality. Everyone touted it, discussed it, and dissected it. And though it is clearly a reason for brand loyalty, that loyalty suggests that a purchase preceded it. Yet today, for the prospect, the answer is migrating toward convenience.
Convenience is the byword of instant gratification. Think of it. A search for 24 different sets of compact black leather luggage would’ve taken me days of grueling shopping and research just a few years ago. I did it all, in 7 minutes, in a chair.
Your prospect searches for “Heating Contractor in Milwaukee” and sees the “most active and relevant to less active and less relevant” in .02 seconds.
In the Yellow Pages, this was alphabetical and/or based on “money spent” via larger to smaller ad hierarchy. Or you’d ask a neighbor. Now you see “Reviews” online; who needs the neighbor?
Your prospects want to be fixed now or they can call 4 other contractors. If they used Angie’s List or other online lead generator, it’s nearly a footrace to get the job. Quality is a “concept;” price is “relative;” speed is an absolute.
So, how do you portray and increase your convenience to and for customers? A few suggestions.
4 Ways to Raise Your Price and Image with Convenience
1. Be Consistent. Any non-integrated plan today is begging for brand and lead dilution. We see it all the time: A company has a nice website, which bears no resemblance to their manufacturer-supplied print ads, and is incongruent with their “Buy Now!” radio ads. In today’s fractured media world, inconsistency of message kills results.
Advised: Pick one theme, one look, and for each promotion, one message. Pound that in across the media and watch the results. These are called sister promotions and you’re advised to use this approach in all of your marketing. This is a shift partly due to a) an overly distracted public, b) additional media choices and c) short-term memory and focus loss. This is not theory.
2. Be transparent. Request and display your reviews. (Even if your “average” is 4 stars out of 5, it shows credibility.) Show your testimonials. Display any awards, memberships, any charities in which you’re involved. Rate your Service Window Success, such as “94% of our service calls handled within 24 hours.”
3. Prove and Guarantee. Basically, your proof must be overwhelming, and the guarantee supports that proof. Everybody says something like, “We’re fast and reliable!” but the modern method must be more forceful. “If we don’t make our time appointment window, we’ll give you a $50 Gift Certificate.” (A discount on service.) That reeks of convenience. Everyone says, “We help you save energy!” but now you must prove and guarantee with “If our system doesn’t save you 26% in energy from last year to this year, we’ll refund you the difference.”
4. Follow Up. Nearly every successful online retailer has found that a discount certificate offered within 72 hours of purchase has nearly a 1 in 4 chance of being redeemed. You are making it convenient to do business with you. Every service or installation should be followed up similarly. A move to a maintenance agreement following service. A “better” filtration option, an “upgrade” to a warranty, basically an incremental sales bump immediately post sale shows you’re willing to deepen the relationship, raise the convenience.
For all the above, these can be displayed on your website, in your marketing copy, in local listings, on your service vehicles, in your taglines, on invoices, and during follow-ups. As you make yourself more convenient, you automatically make yourself more valuable. This means price resistance and competitive pressures ease.
I greatly encourage you to seek ways to build convenience into your marketing, pricing, and selling strategy.
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Posted In: Building Performance, Sales & Marketing
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