Last month I quoted Chelsea Berler of Solamar Marketing Agency’s “…Seven concrete actions that build trust in a business environment…”
Those actions are:
- Demonstrate that you trust others.
- Create relationships that are mutually beneficial
- Directly address issues
- Tell the truth
- Be flexible and patient
- Respect their time, and
- Deliver the unexpected
We said that when people trust you and your business they give you the opportunity to do business with them. That it wasn’t a guarantee that they would do business with you, but you would at least be considered.
You may already agree that trust is very important. If you do, please stick with me for a moment while we address price.
Price should more properly be thought of as value. Over the years of teaching business and sales, I’ve often been called on to help people responsible for sales make the distinction between product value for them, or value for the customer. A classic sales strategy is to be able to list the features and the benefits of each feature to the customer the objective being to show sufficient value in the benefits for the customer to be willing to spend the money required to buy the product. This approach depends on the sales person’s knowledge of the features of each product, and the related benefits. It also requires the salesperson to be able to clearly communicate those benefits in a way that they are of interest to the potential customer.
The most common failing a new sales person makes is thinking that the value they would place on a product is the same value a customer will. That makes it confusing for the sales person when the customer doesn’t accept what the sales person presents as value. What’s even more difficult is when the sales person places much less value on the item than what it’s priced at. People don’t successfully sell what they don’t believe in.
What big box stores and national chains have done is transferred responsibility for learning about products to the customer, offering commodity products at prices significantly less than a local independent seller is able to.
If you are in the business of selling commodity products (in this context, things easily available from someone else) ‘someone else’ will always be able to undercut your price. They may be across the street, in the next town, or online, but someone with less costs, or less financial needs, will sell that commodity for less money. Cutting your price will only hurt your business. Yes, there are times when reducing your price is the right way to go, but you need to assign that discount to a reason (business expense category). You also need to be able to track it so you can make future businesses decisions about cost cutting strategies that work and make sense for your business. We’ll come back to how you can do that, but let’s return to the importance of trust.
Just as it is to you in your business dealings, trust is worth money to the customer. How much money is highly dependent on each and every combination of people and needs. Further, the degree of risk and the consequences of things not working as expected is highly dependent on every situation, so there is no one size fits all. A good rule of thumb is that the greater the cost of fixing a failure, the more valuable trust is. Also, the more likely that a purchase might not fit what’s needed, the more important trust is. For example: buying the right store display rack can positively or negatively affect sales, but buying the wrong point of sale software can cause any number of serious financial problems and additional costs.
Earlier I had said responsibility for product knowledge was being pushed off to the customer. That’s one way companies are able to compete on price as they are investing less in sales support. Often local suppliers comment that they are being used as the learning resource, rightly complaining customers will then shop them on price elsewhere. This happens when all of the value is in the product rather than split between the product and the seller.
If businesses want to reduce that “learn-and-go” habit, they need to increase the value of purchasing from them. Not by reducing the price, but by increasing the value. That is exactly what the seven activities for building trust do.
Something to consider. What can you do to increase the value to your customers of dealing with your business?
Next month: “Competing in a local market - adding value to a commodity purchase.”
Ron Furlong is the executive director of the Amherst and Area Chamber of Commerce
