10 key reasons customers will pay more for a product or service
In my book, The Power of Wow! Why Thank You Makes Dollars & Sense I talk a lot about customer buying patterns and the strategies you can implement to avoid customer buying from you purely based price. One of the biggest challenges I believe we all face in business is remaining relevant in a marketplace which is evolving at a rapid rate.
How do we continue to build upon our client intimacy when one-on-one interactions are becoming less common? There are some fundamental elements required to guarantee that your business will remain relevant.
Many of us assume that customers are looking for the best possible price, right? Well no, this is not always the case. In certain circumstances customers are willing to pay more for your products or services, especially when they hear about you via trusted sources, their family, friends or colleagues.
Geoffrey James, wrote an article for Inc.com and he outlined 10 key reasons customers are often willingly pay more for a product or service even when they can get a functionally similar (or even identical) product elsewhere for less.
Here’s what Jeoffrey had to say on why:
1. Your product is easier to buy.
Customers hate futzing around with complicated purchasing and payment options. Customers are usually willing to pay a bit more if you can streamline the process of buying from you, rather than elsewhere.
2. Your product arrives more quickly.
Customers, like everyone else, want immediate gratification, especially when they’re spending money. If you can gratify your customer’s desires sooner than the competition, they’ll usually pay a premium.
3. Your product has a “must have” feature.
Customers sometimes fixated on a particular feature even if it’s not that much use to them. I once saw a company pay a $100k extra for a publishing software that could snake text around the shape of a hand–a feature they’d needed exactly once in the past.
4. Your product burnishes the buyer’s reputation.
Consumers buy fancy-branded luxury goods because it makes them look and feel wealthy. The same dynamic operates in the business world, which explains why companies are still buying high-priced, IT-intensive ERP systems.
5. Your product has a lower cost of ownership.
It’s not all about price… it’s about the time and money you spend after you purchase. For example, an iPad costs more than a Windows netbook but requires less maintenance, thereby making it cheaper in the long run.
6. Your customer service is more friendly.
Companies underestimate the anger (and even hatred) that business buyers feel when they experience horrible customer service. By contrast, customers will pay more when they know their problems are handled quickly and cheerfully.
7. The price difference isn’t worth the hassle.
Customers will keep purchasing something that’s higher priced if the difference between your price and the competitors price isn’t large enough to get onto their financial radar. People don’t worry about the cost of salt when they’ve got big fish to fry.
8. The customer likes you personally.
Customers are human and humans prefer doing business with their friends. That’s one good reason that developing rapport is so crucial in customer relationships; it provides a buffer that keeps the competition at pay.
9. The customer wants something else from you.
A customer will generally pay more for your product if he or she is angling for a job in your company, or wants access to your business contacts, or is looking for, well, something more than “strictly” business relationship.
10. The customer is rapidly expanding.
Customers who are growing so fast that they’re struggling to take advantage of all the opportunities usually don’t have the mental bandwidth to worry about what everything costs.
In summary, I believe customer intimacy is the most important factor for success in an erratic economy. Once we understand our clients’ needs, wants, behaviours and expectations in detail, we can deliver a solution to their requirements and start to build client intimacy and trust. We then need to ensure we do the following:
- Ensure our product/service matches our clients’ needs and expectations.
- Ensure our operations processes are focused on the emotional aspects of “why” the clients buy in order to ultimately not just meet, but exceed, their expectations.
- Innovate to ensure our products and services offer a point of difference and that we are considering the implications of the future.
- Communicate our message clearly. I encourage you to deliver the message with an emotional focus on the feelings your clients will experience.
By mastering some fundamental principles, your business has the potential to grow at a substantial rate.