Archive for July, 2011

The price is right

July 29th, 2011 No comments

Most business-to-business companies don’t offer coupons, but that doesn’t mean there isn’t something to learn from the strategy. Actually, most of us, whether we use coupons or not, don’t really give them much thought. It seems they’re just another means to entice us to buy something.

Even if we’re not manufacturing peanut butter, there is much to be learned from coupons, for they tell us a great deal about prices. How do you price your product or service? Do you just have a standard mark-up over labor and materials? Have you done research into what competitors are charging? Smaller businesses often don’t even have direct competitors. They’ve done a great job offering some product or service that no one else offers the same way, so competitive market pricing can be very difficult to determine.

Even if you can’t just look at the marketplace to discover what the price should be, a flat mark-up of costs is rarely the best strategy, although it is a good place to start. It is surprising, though, how often this model is applied. I worked with a company some years ago that was selling a laser product for about 60% less than their competition! They weren’t losing money, so no harm done, but after we unceremoniously raised the price we generated more revenue without damaging sales one bit.

Coupons are more than just promotions to encourage purchases that might not have happened otherwise. Instead, they help to divide the market place up and provide valuable information about the real prices people are willing to pay. Suppose you see a coupon for 50¢ off your favorite peanut butter. A thrifty, unemployed college student might very well make the effort to bring that coupon, along with many others, on his next shopping trip. A couple of married professionals with three kids won’t be able to find the time between bringing kids to soccer practice and late night business dinners to take advantage of the lower prices they get by finding, clipping, and sorting coupons.

Manufacturers get to offer their products at two different prices and nobody complains. One lower price enables people who have the luxury (or inconvenience) of valuing money more than time to still buy their goods, and the other allows those whose time is worth too much right now to simply pay top-dollar and get it over with. The manufacturer a chance to see how the product is seen in the market place, without risking pricing it too high or too low, losing customers or leaving money on the table.

It’s still unlikely that an original equipment manufacturer (OEM) is going to start offering coupons to their customers, but adapting this strategy to determine prices based on time, but also delivery, guarantees, service, and of course, volume discounts, can provide valuable insight and reduced risk.  What’s worked for your business?

Categories: Business Tags: , , ,

Will the real customer stand up?

July 7th, 2011 No comments

Who is your customer? It’s not as obvious as it might seem. In many businesses, the real customer might not be the person your company is thinking about, but it should be. Simply put, regardless of who drives your business, you’re real customer is the entity who decides to pay you for your products and services. Let’s look at some examples:

Are you a Google customer? If you’re like the majority of us and you only use their services such as search, mail, and maps, then not really. Google’s customers are the people who buy AdWords, and search placements. Without you and me, Google might not have much of a business, but without advertisers, they’d have even less.

Are you looking for new opportunities with Monster’s job boards? Monster has to spend some of its resources making sure you find value in their site; but you’re a volunteer product, not the customer. This is true for all sorts of recruitment firms and the source of many a misunderstanding between recruiters and job seekers. ‘This guy doesn’t seem to be working for me…’ is a common complaint, but frankly, you shouldn’t expect them to. The job seeker typically doesn’t pay anything for the privilege of someone finding a job for her. Monster and other recruiters work for the businesses for whom they find candidates. They’re marketing message must reflect this.

During the start-up phase of a company developing a web-based application to optimize how we buy things, the company constantly had to remind itself who the real customers were (stores) and not be distracted by all the positive feedback they got from people who planned on using the application (individual users). Like many businesses today, exactly who your customer is might not be so obvious because you must get a group of people excited about your product and then leverage that interest and enthusiasm with someone who will pay you.

In an earlier article we discussed the importance of letting people know what you can do for them. Of course, it’s impossible to get the right message if you haven’t even identified who your customer is. Hopefully, you’re well ahead of this game, but given a little thought and you might even be surprised.

Categories: Business Tags: , , ,

Ask not what your business can do…

July 6th, 2011 No comments

In his inaugural address John F. Kennedy famously turned a common question around: “Ask not what your country can do for you—ask what you can do for your country.” [Surely good advice today, with both sides of political spectrum explaining what they will do to create jobs and opportunity for waiting citizens, who wonder, not what they should do to create a better nation, but which elected officials will do so for them.] Answering the right question is often critical to success.

It seems logical, after all. “Let me introduce myself,” is a pretty natural way to open a conversation. The majority of company presentation slides start out this way with often one, two, or more slides explaining “who we are.” ‘We’ve got to explain how great our technology or experience is, don’t we? That’s our selling feature!’ Unfortunately, no, it isn’t. Your selling feature is not about what your business can do, but what you business can do for the customer.

I worked with a firm that had an exciting, innovative technology and they are rightfully proud of it. Initialy, the company presentation started out explaining that they were a well-funded organization with patented technology, and then took a few brief moments to explain this innovative technology before showing examples of how it might be used. Sounds reasonable, but the audience never seemed to be listening. And why should they? What’s in it for them?

We turned around their presentation, describing instead typical problems customers might have encountered that the technology could address. Presenters could ask questions about which of these seemed the most appropriate and tailor the rest of the presentation to fit the customer’s specific interests. Armed with this new information, success stories illustrating different applications and results how a customer might save money, or avoid costly maintenance. Suddenly the audience is interested, and they start asking questions about how this technology works. Doesn’t that seem a more logical, to tell them about your products, after they’re convinced that it might do them some good?

Websites often suffer from the same problem. Instead of focusing on how products and solutions might benefit the customer, we have pages describing how our companies and products are different, better than the competition. (Eye On Technology suffers a bit from this, but that’s what this blog is supposed to do–show our benefits.) Customers have little patience to learn about why you’re important when they haven’t figured out why they shouldn’t just click another link. You have very little time to answer this question before they’re gone—don’t waste it.