How To Earn More Customers Without Lowering Your Price
The conundrum that has baffled businesses forever has been:
“If I raise the price, won’t I lose customers? I want to grow, but I can’t sacrifice the price.”
My Answer: assuming you aren’t under-priced to start with, the answer to this question is yes. Unless you do something different like reduce the Hassle Factor.
This is the component that most companies forget about when it comes to the value of doing business with you. And it’s not just about the price they pay and what they get. It’s about how hard it is to do business with you. Do you create a memorable and relatively “easy” or “frictionless” customer experience? Or is it grueling for them?
If you want to earn more customers coming back for more without having to give your products or services away, your goal should be to reduce the hassle factor. In a world where we are moving quickly, and the competition is fierce, providing a great product or service and creating a memorable experience for the customer will allow them to see the inherent value in their transaction.
One of the most recent examples I have seen of a company that reduces the hassle factor without lowering price, is National Rent-a-Car. As most of you know, I travel a lot and invest a lot of time and money in rental cars (easily 3 days per week). And let me say this, National Rent-a-Car is not the “cheapest.” So, if I invest that much money in rental cars, why wouldn’t I go with the cheapest option? I could save probably $5000 per year if I shopped for cars each time I travel. I have an assistant that could even do it for me so the shopping time isn’t really the issue. To further the point, I have checked a few times and I know I am paying more than other companies.
So, again, why would a sharp business man like myself, that trains and mentors businesses on how to make more money, make a decision like that?
It all comes down to the hassle factor. Here are a few things National does that makes it very easy to do business with them:
From the beginning of the experience it is about easy. I can get online and have a car rented within about 60 seconds generally. I know exactly what and where to click, and my information is all saved on their site, but again, that’s the idea. It saves me easily 5 minutes or so each time. Multiply that by 3 cars per week (I am in different cities each day) and I just got 15 minutes of my life back. That is worth a little extra to me.
Their Emerald Club allows me to walk from my plane and get directly in a car of my choosing (most of the time there is a decent variety) without talking to a single person or standing in a single line at pretty much EVERY airport I visit (with a few exceptions at very small airports). I have spent upwards of 30 minutes or more waiting in line for a car in the past; add that up and that’s 1.5 hours per week I just got back.
Again due to my “club” membership, which is free, I don’t have to worry about tolls as I rent my car. They just charge me for whatever tolls I actually accrue. Other companies have asked me to pay a minimum each day whether I used the tolls or not. Really bad plan in my case. Again, no hassle, just easy. Just go drive as if I am driving my own car. How much time is it worth to be able to drive the tollways as needed versus routing around a city I don’t know very well?
And finally, when I drop my car off, as long as I have either filled it up or pre-purchased my fuel from them (my choice), I pull up to the drop off point and grab my things and walk to my plane. No waiting around for someone to check me in. They email me my receipt usually about the time I hit the terminal. Again, maybe 10 minutes each time, but that is 30 minutes per week for me. Now I do wish they would allow me to pre-purchase less than a full tank (National, if you’re reading this, that would be a nice addition), but so far, the rest of the equation adds up to an easier experience than the other companies out there.
Because I travel so often, my time is one of the most valuable things I have. Saving a few minutes here and there adds up to huge numbers in the aggregate of everything. Some of you reading this may have different things you value. The point is, that the easier you make a customer’s life, the more forgiving they will be on price. (Now of course there is a point where customers will jump to a competitor if you raise the price too much; the hassle factor is only worth so much.)
So, take some time and examine your business. Is it designed to make you and your company’s lives easier or your customers lives easier? Do you go out of your way to be sure your client has a seamless experience from beginning to end? Do you make them feel appreciated and valued? Do you set your operation up with their satisfaction in mind? Consider this, “Take away my pain and I will pay you… Add to my pain and you will pay.”