According to customer service consultant Paul Levesque in this month's CEO Refresher journal, competing on price makes the list of The Five Biggest Customer Service Blunders of all Time.
If "cheapest price" is not your market niche, competing on price can actually be damaging to your business. Market research confirms time and again that price is typically not even in the top three things a customer is looking for - in fact, quality is number one.
Paul Levenesque explains:
"It's one of the most common (and most costly) mistakes in business. Price becomes the deciding factor in purchasing decisions only when everything else is equal - and everything else is almost never equal.
Businesses compete on the perception of value, and this includes more than price. It's shaped by the total customer experience - and aspects such as "helpfulness," "friendliness," and "the personal touch" often give the competitive advantage to businesses that actually charge slightly more for their basic goods and services.
Those businesses that deliver a superior total experience from the inside out (that is, as a product of a strongly customer-focused culture) are typically those that enjoy a long-term competitive advantage - along with virtual immunity from the kinds of headaches that plague everybody else."
The bottom line is this: customers go elsewhere when you don't satisfy them. The solution to customer retention is not always to drop your prices. The secret is to deliver better service than your competitors.
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