The major auto makers got into terrible trouble and some had to be bailed out, barely surviving. Why? There were many reasons, but one important reason was their marketing strategy. Their marketing practices had the equivalent of crack addiction - heavy discounting.
This gives an immediate boost to sales, but your customer becomes addicted to it.
- The people who buy most from a promotion are your best customers, who would have bought anyhow.
- People bring forward their buying so there is a slump afterwards.
- You are training your customers to expect bribes.
Ever notice how most insurance companies now bombard you with how they can save you money? Has anyone stopped to wonder how the 5 or 6 largest companies can ALL save you hundreds over the others? After all... SOMEONE has to be more expensive than the others. (By the way, if you listen carefully to the wording there is a "catch" how they can make the claims that they do...)
Studies show that companies who fare the best spent most on positive advertising and the least on discounting.
Think about it. When you spend more on offering deals than explaining why people should want to buy your stuff, you are perilously close to saying "Our stuff is not good enough to sell on its merits at full price."
So, bottom line, don't offer "deals" all the time. Instead, build value. If you have a product, sell it on its value - its good qualities. And then, sell it on its benefit to the customer - not on price, but BENEFITS. Finally, make yourself the final "value added" part of the equation. The human element.
So what is it you are offering then?
- The product or service. The "What" in the equation. The good qualities of what it is you are offering.
- The owner benefits. This is the "why" in the equation. Why they will benefit from what you are offering.
- The value added. This is the "you" part of the equation. The extra value you add that no one else can offer.
In relationship marketing, we focus on this last part, and actually put it before everything else. Its a process of creating connections - establishing a bond that MAKES the person want to do business with you! So when the next best offer comes down the road, and they could save a few dollars on a service or product, they don't jump ship because the "value" you offer is something that can't be duplicated anywhere else.
Developing these type of bonds are what build in customer loyalty. A good analogy is losing weight. With weight loss, if you go for the "quick fix" and lose a lot of weight right away, you are more likely to gain it back just as easily.
With building relationships, the "quick fix" is the same thing. If you advertise offering heavy discounting and new customer purchase based on price only, those same customers will leave you just as quickly for the "next great deal."
However, if you build long-term connections, your customers become loyal "clients" and stay with you because they WANT to keep doing business with you.
Another great side-product of building added value is that you don't have to discount your price and you can CHARGE MORE! You will become more profitable over the long haul.
Build value. Build long-term relationships, and stop worrying about charging less and being undercut.
