Wednesday, April 1, 2009

Your Customers Are Looking For More Than Cheap Prices

I had an great Twitter conversation yesterday with a good friend, JaWar (yes, that's his name) about a great topic - customer loyalty and price.

When Businesses don't service their clients with excellence, someone else will. Price isn't always the deciding factor. So, how do you prove this to new business owners who attempt to be the low price leader?


When it comes right down to it, building a strong base of great customers has little to do with price - and every thing to do with how you and your employees treat your customers each and every day. And surveys show that as long as you are competitive, price is rarely the reason your customers leave your business.

In fact as it turns out, the number one reason your most valued customers stay or leave your business (nearly 2/3 of all customers) is based on how you treat them - whether or not they feel that their business matters to you at all.

Unfortunately, because most business owners think "their clients" are different than every one else's, I show them the truth. You see, one of the first things that I have my clients do early in the Business Coaching process is "conduct a survey" - to find out what their customers are thinking. But, I'm not talking about your usual customer satisfaction / retention survey. Rather than just finding out what all of their customers are saying, we focus on breaking down their customers into three groups:

- Bad Customers that are the bane of their existence,
- Good Customers that come and go, but have no real loyalty, and
- Great customers that are raving fans and cheerleaders.

And then determining what separates the three groups.

The key to the survey is that you can not directly ask the obvious question - "are you happy with my business and my prices?" That will skew the data. It's more important to have them divulge their overall satisfaction with the business and then determine what factors most influence their decisions.

And in everyone of these surveys, one thing stands out, price is not a break-out issue - Customer Service is.

The numbers bear it out, all three groups of customers (bad, good, and great) are, at best, moderately satisfied with price. And there are no indications that lowering prices will have any bearing on customer loyalty.

So, although lower prices may draw you more customers in the short term, you won't gain any more in the long term. Instead the only thing you will do is decrease your profit margin.

Rather than focusing on price, instead offer value. Offer something to your customers that they can't get anywhere else - your service. And make it the best you can. And know that by doing this and making your customers feel appreciated, you are more likely to turn your good customers into great ones while at the same time, keep your great customers coming back for more - while bringing all of their friends and family.


  1. As I read this post, the following quote came to mind: The greatest gift is a portion of thyself. ~Ralph Waldo Emerson

    Gifts of self are simple and leave a lasting impression. A smile, a word of thanks, and going the extra mile in business are ways to create raving fans and happy customers.

    The way I feel after I walk out of a place of business is the voice I listen to as to whether I will go there again.

    Good service matters!

  2. Wendy, Well said. Thanks for the input.

    Learning "how customers feel when they walk out the door" is the most important thing any business can learn for their future.