I learned my retail lessons from my grandfather. He told me the price customers would pay for the apples depended upon how they looked; the shiny ones would bring the most money; he was right. I watched as customers picked through the apples, smelling and admiring the polished ones. It was at this point I realized how important merchandising was. Wow, less number one; pretty things sell.
It wasn’t long before I was busily shining up the more attractive apples. The ones with the worm holes went for the least; I told grandpa we were losing money. Grandpa smiled and said it was good I was paying attention and it was important to price the shiny ones so they covered the price of “less desirable “ apples.
This was lesson number two: make sure you understand how to price your merchandise.
How do customers determine the price they will pay?
Yesterday I was speaking with a flooring manufacturer about his products. He spent at least 15 minutes telling me how his products were made and what they were made of. Frankly I zoned out after about 5 minutes and stopped listening. The only thing that’s interested me was whether the product would look right in my kitchen. Unfortunately he never asked me what I call “the customer’s conditions of satisfaction.”
Customers will only pay your price if the product works for them; no matter what you’re selling. Once you know what they want it’s your job to help them justify why it’s a good investment.
Want to know what customers will pay for? Ask them and they will tell you. If possible talk with customers who have defected from your business. These are customers that were only yours but have disappeared. They will have a wealth of information for you. Once you know what they want, you can tell them what makes your products better.
Find out what why your customers have changed suppliers. When was the last time you talked with customers who no longer buy from you? They will tell you why they’ve moved on and why they like your competitors better. The big mistake is to think you “know” why. Typically, the answer will be the competitor’s price was lower. Unless you have a third party interview your lost customer, this is what you will hear. It’s just easier for the customer to tell you your price was higher.
Shop your competitors, buy from them and experience their service. There’s nothing more eye opening than becoming your competitor’s customer. I had a “big box” store measure my house for flooring; the installer came with his IPad and within 5 minutes showed me the layout and what it would cost. I called the local retailer and he was drawing my kitchen on the back of a napkin! We did that in the 70’s and it wasn’t acceptable then!
Installing products should be a “custom art.” “Custom anything” always demands more money; it takes time and means that is being crafted for the customer. I come from the floor covering industry and very few. If it were my business, I would talk about “custom installation” and nicely correct the customer every time she mention the term “installation.”
Talk about what makes you different, can you offer “white glove service?” I recently bought furniture from California that took 4 months to get delivered. The company sent me photos of the “wrapped furniture” and told me what to expect upon delivery.
I was told to take a picture of the furniture when it arrived and after it was unpacked. They also suggested I purchase their “white glove service.” It meant two people would unload the furniture and unpack it for me. I had never heard of “white glove delivery service” but thought I should give it a try. When the truck arrived the delivery man was wearing white gloves but apologized for the dust on them but he was changing them to unload my furniture. I was astonished and the delivery man took it all very seriously.
The real key is the customer determines the value of your products. It’s up to you to build the value and test it with your customers. The more value, the more they will pay.
Increasing your bottom line depends on how your customers see you and your product. This is a good conversation to have with all of your employees. You can ask them, where they think customers’ see the value.
Lisbeth Calandrino has been doing sales/customer service training for over 20 years. She is happy to discuss your situation and how she might help your business. She can be reached at 518-495-5380 or Lcalandrino@nycap.rr.com. She lives in Albany, New York