If Everything Is the Same, Price is the Deciding Factor

If Everything Is the Same, Price is the Deciding Factor

Tuesday, October 3, 2017

by Tom Grandy

Kenny Chapman recently presented an outstanding live webinar to our Advantage Members.  During his presentation he made the following statement. "If everything is the same, price is the deciding factor.  If nothing is the same, price is never the deciding factor".

I am going to give you a moment to read that statement again, then encourage you to think about the ramifications as you ponder how you sell products and services.

What kinds of products are sold on Amazon?  Right … commodity items.  Why do millions of people buy on Amazon?  Answer, since the item they desire to purchase is a commodity item (meaning lots of organizations offer the same exact item) the deciding factor is price ... right!  Since Amazon has been around for many years it has established the reputation of being the "least expensive" place to buy an item online.  If you happen to be a Prime Member (which I highly recommend) most items are free shipping as well.  Face it,if you want to physically purchase an item based on price, you go to Walmart.  If you want to buy online you go to Amazon. Again, why?  "If everything is the same, price is the deciding factor."

Think about what your company offers.  If you are a plumber, HVAC, electrical or any other trade’s contractor the basic equipment you sell is pretty much the same as other contractors in your industry or town.  If you offer basic equipment based on price, that item just became a commodity, so guess what?  The customer’s decision on who to purchase from is now based on price, period!

"If nothing is the same, price is never the deciding factor."  Think about it.  How do you compare two items that are totally different in color, function, and/or benefits.  Bottom line you can't so the buying process has now shifted from being a commodity decision (based on price) to deciding if the offering meets and exceeds your expectations.  The offering can become unique (no longer based on price) in lots of different ways.  Let me list just a few:

  • Description of Installation Process - Keep in mind most customers know little how you will physically replace their equipment.  One quote might say "Replace old XYZ with brand new ABC."  That is simple and to the point but very commodity (price) based. 

What would your reaction be if you read or the sale person explained the process like this:

  • Our truck may be parked in your driveway or in front of the house, your preference
  • Before entering your home our technicians will place booties on their shoes (so we don't mess up your carpets.)
  • "Clean" drop cloths will be placed from the front door to the point of installation
  • ABC equipment will be professionally installed by one of our factory trained certified technicians.  All technicians are required to have at least X number of technical training hours per year.
  • After installation the equipment will be thoroughly tested to ensure its proper installation prior to leaving.
  • The homeowner will be totally briefed on how the equipment is operated with written instructions provided if necessary.
  • The old equipment will be properly and environmentally disposed of at no cost to you.
  • Once installation is completed the entire area will be vacuumed with the objective of leaving the area as clean as it was found if not cleaner.
  • Office Records:
  1. All your equipment information (date installed, make, model, serial number, etc.) will be entered into our state of the art computer system.
  2. When maintenance is performed or future repairs are made, all records will be maintained as part of your complete equipment history.
  3. ü  You will be notified the month BEFORE your warranty expires to allow us time to make any repairs (if needed) while your equipment is still covered.Happy Call - A few days after the installation has been completed you will receive a phone call from our Customer Service Representative to be sure everything is running properly.  If you have any questions we encourage you to write them down so they may be answered at the time.
  • Our technicians take full responsibility for each installation they perform.  Should there be a problem, necessary tweaks or adjustments needed to the equipment, the same technician that installed your equipment will return to your home. We believe in personal accountability!
  • One last item.  We are fully insured so in the unlikely event of an accident our employees and their work are fully covered.  

Ok, which quote was unique and which one seemed professional to you.  Same equipment but one is being offered based on price, the other provides extra value for the same equipment ... and likely at a higher price with increased profit!

  • Price Includes Additional Benefits - Become totally unique by offering additional benefits others do not. What about changing out smoke detector batteries or if you are a plumber, throwing in a set of stainless steel hoses for the washing machine (originals only last 3-5 years).  I remember a competitor getting the contract for siding and trimming an entire house because he was going to "recondition" the customers awnings.  Translated, he was going to paint them!  You get the idea; offer something other contractors (selling the same equipment) do not offer.
  • Offering a Variety of Add-On Options - It's amazing how many customers would have purchased one or more add-on items if someone had taken the time to explain their benefits.  Better yet, include some of these add-on items in the original "Best" price (we will talk about Good, Better, Best options in a minute)
  • Extending Warranty on Labor - Consider extending the warranty on YOUR labor, free of charge.  Face it, if there were a problem with the equipment that your technician caused you would go fix it, free of charge, right?  So why not extend the labor warranty.

The last point:  A commodity sale basically says "This is the price … do you want it or not?"  However, if your offering is unique, you need to offer choices.  Offer Best, Better and Good in that order.  Always start with the gold offering that covers everything.  Then take away a few benefits on the Better offering and finally offer the Good option, in case price is a major problem.  Most find the average customer chooses the Better option ... but not all the time.  Providing one option creates the "take it or leave it" environment.  Multiple offerings (that are unique) provide choice.  Hey, this is America ... we want choice!

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