Should You Compete on Value or Price?
- May 27, 2009
- by ServeNow.com Staff
- Business Tips
According to a poll in the PInow.com and ServeNow.com Yahoo! Groups 29 percent of investigators have discounted their fees during the recession, and 16 percent of process servers have cut rates as well. Times are tough, and while many process servers and investigators have seen an unprecedented amount of work with the foreclosure and collection boom, others are reaching a point where they have cut prices. This begs the question: During the recession, should you be competing on value or price?
Discounting rates does not increase customer loyalty. If you think you are competing on price, you are setting yourself up for failure by giving the power to your competitors. Your customers who are chasing a dollar won’t hesitate to leave you once they find someone else who is a few dollars cheaper.
Customer loyalty is built over time. It takes multiple positive experiences with your company to create loyalty. Consistent, excellent customer service needs to be a company standard. Know what makes your company better than the rest because clients are looking for more than just a good price tag. This economic downturn, like the others that came before it, will not last forever. When business picks up again, your client won’t want someone who can simply serve a paper. He or she wants someone who will provide online status updates, get the difficult papers served, offers additional services and goes above any set expectations.
Do you want to be known as the Dollar Store or Neiman Marcus? The Howard Johnson or the Hyatt? Every business decision you make reflects on your company and creates the image you portray to your customers. The price of your business’ services is one of your company’s defining attributes. People know that you get what you pay for, and they want quality. Make sure that the price reflects the value of the service rendered.
While lowering your prices may offer immediate help, prices that are too good to be true can hurt your company in the long run. Companies that attempt to attract business for having “cheap” prices can have a lower perceived value than companies that charge what they are worth. According to the global public relations firm Weber Shandwick, it takes about three and a half years to rebuild your reputation, and seven to 10 years for a company to go from poor to adequate to outstanding in the mind of the consumer. Don’t lose years of good business to poor pricing.
Work with Regular Customers
To avoid ruining a relationship with a long-term client, show the business that you are willing to work with it. Work out a payment plan to help your client continue to work with you instead of someone else. When finances improve, they will remember your kindness and send whatever they can your way. If you cut prices for them “just this one time” they will wonder why they ever paid more for your services.
No one wins when you shave your prices. Not only are you earning less, but the industry as a whole has less perceived value. Increase the value of your services so clients understand why they should be paying you what you are worth.