Price wars

Learn these three keys to turning customers into lifetime clients and avoid getting caught in a battle over price.

by Richard Buckingham

Distributors need loyal clients today more than ever before. Unfortunately, few business owners or managers know how to effectively attract and retain lifetime business. In their quest for immediate profits, they slash prices and cut service, hoping for at least a one-time buyer to jump-start their declining sales. What they fail to realize is that price is not what converts customers into repeat clients. In fact, price is usually a limited concern to most clients. What is most important – and most often overlooked by business people – is the value you’re able to offer.

Regardless of your product or service, your No. 1 goal when interacting with buyers is to properly educate them about what sets you apart from the competition. To do that, you need to focus on three main elements: expertise, quality and service. By keeping these items the focus of your sales presentation, you’ll convert more one-time customers into lifetime clients.

1) Your expertise
The majority of business people, whether they’re novice sales professionals or seasoned business owners, never completely and clearly display their experience to customers. They mistakenly let price be the main issue. The fact is, however, when customers become repeat clients, they are not returning because of your price; they are buying all the experience and value your firm offers. Whether you realize it or not, clients are paying for all your years in business, your hard-earned business lessons, your successes, and all the “failures” you have learned from. You need to understand and accept this fact before your client ever can.

When a client asks about your past mistakes and complaints, don’t avoid or deny them. Mistakes and complaints are excellent learning opportunities. When you acknowledge and learn from mistakes, and properly handle client complaints, you will improve and better serve clients in the future. Your clients will then pursue you rather than the other way around. When clients pursue you, money is rarely an issue. Clients are already sold on you and your firm.

In addition, understand what makes you special in your marketplace. Why would a client want to do business with you? The best way to understand your place in the market is to better understand your competition. Calmly and thoroughly analyze your competition to discover both their strengths and their shortcomings. The better you know your competition, the better your business will be. You’ll learn what works and what doesn’t when it comes to serving a client, and you can benefit by learning from their mistakes and adjusting your own policies accordingly.

2) Your quality
If customers are hung up on price, you have not properly educated them on the importance of quality. For a buyer to base his or her decision to do business with you on price alone is very shortsighted. You must demonstrate that what in the short term appears to be the least expensive option could very well be more expensive in the long term.

Lifetime clients want you to be their trusted advisor, someone who explains and advises them on all the possibilities and the short- and long-term ramifications of each. The more you educate your customers by offering them a variety of options, the greater your chance to earn their lifetime business. Education over selling is the cement that builds a lifetime relationship with clients.

If you are not continually improving the quality of your product and service, you are falling behind. Ask each client after every engagement or transaction, “How can we improve? How can we better serve you?”  When you gain this information from clients and then implement the suggestions, future business will come your way. In addition, after you have solicited and implemented client feedback, you’ll speak to future clients with a much greater confidence in your ability to properly serve them.

3) Your service
Most business people never completely utilize the outstanding advantage of service.

First, let’s define service: it’s the client’s ease of doing business with you. This relates to how long it takes you to return phone calls and how long it takes you to complete a transaction. For example, if you promise that a job will be done in April, and by July the project’s end is nowhere in sight, you can guarantee that your customer will never do business with you again or refer others to you.

To determine if your service is up to par, evaluate how easy it is to do business with you. Do you consistently meet deadlines? Do you have voice mail so your clients can easily communicate with you? Can clients e-mail requests to you? Is your firm client-friendly?

The general rule is that you should return all calls the same day, if not sooner, even if you do not have all the information the client needs. At the very least, let them know you are working on their request and that you will call them back when you have the solution. Then, actually do it.

Providing outstanding service means taking the initiative to treat every transaction as if it were your last opportunity to serve the client. Call clients before they have to take the time to track down your telephone number and call you, only to find you are out of the office or away from your desk.

Always be on the proactive side of completing a project or a transaction. Don’t let repeated telephone calls push a transaction through your office.

Finally, call your clients after you provide a product or service and find out if they are happy. If a client is not happy, do whatever it takes to correct the situation. Profitability and long-term success are in the lifetime relationship. This one follow-up call is worth more than all the preceding calls made to get the sale. Think about it: When was the last time you received a follow-up call from a business to check on the quality of service you received? How many times did you refer that firm to others?

While money may be tight these days in many buying organizations, price is only an issue if you let it be. When you take control and direct every conversation you have with customers, you can gain their repeat business and pump new life into your organization. Continually remind clients of all the benefits they are receiving by doing business with you, such as service, experience, delivery times, your expertise in solving their unique concerns and building a lifetime relationship, etc. This is what will bring them back time and time again.

Making a sale is about educating your clients to all you can provide them. In fact, any price issues a client may have disappear when you demonstrate your expertise, offer the highest quality possible, and provide excellent service. Wow your clients with these three factors. You’ll soon discover that what you offer, not what you charge, is what brings clients back for life. The result will be clients chasing you rather than you chasing them.

Richard Buckingham is the author of Kiplinger’s Customer Once, Client Forever. He may be reached at (301) 913-0222, rdb@goalstar.com, or at www.goalstar.com.

This article originally appeared in the September/October '02 issue of Progressive Distributor. Copyright 2002.