How to Charge Any Price You Want
It’s quite evident that we are willing to part with more of our money when dealing with a smiling salesperson than a grumpy one.
We also have upper limits on how much more we’ll pay for a comparable item. Regardless of how wide the car salesman’s grin is, you are unlikely to pay three times as much for a new car.
To get your customer to pay any price you want, you’ll need to follow a two-pronged strategy.
Step one is to improve the customer experience and thus the willingness to part with their money.
Step two is to make your product or service more unique and thus incomparable to others on the market. This will remove the question of how much more you are paying than another comparable product.
Step two is more difficult for some businesses than others. You may not be able to make your product completely unique but you can still make the entire experience of acquiring it unique.
In a study done by PwC, they tested exactly how much more people are willing to pay for everyday items when the customer enjoyed and improved experience.
People are generally willing to pay a larger premium for luxury services likes hotels and dinners than for grudge purchases such as insurance.
Even though customers appear willing to pay more for items across the board, there are still limits to how much more they will pay for every day or generic items that can easily be compared to others.
Make it Easy
Making it easy can get a customer that’s on the fence to commit to a purchase.
Zappos started as an online shoe retailer in 1999. The biggest problem with online shoe purchasing is getting the right size.
Their solution was to offer free shipping both ways, and no questions asked returns.
This is all backed by a 24hr call centre. While other businesses, particularly online stores, use the telephone as a last resort, Zappos has their phone number in large font at the top of their home page.
The telephone might sound old fashioned, but it allows a customer to immediately get feedback on an issue without days of emails going back and forth.
It’s just so easy to pick up the telephone and ask for help instead of thinking how to articulate the perfect email.
They also offer email and online chat support, but most of their customer service is done with a voice on the other end of the line.
Zappos tracks how long they take to respond to calls, chats, and emails. These numbers are posted on a chalkboard in the contact centre for everyone to see.
Their strategy paid off handsomely as their annual sales crossed the billion-dollar mark in 2008, 9 years after launching.
Delight your customer
When we in a good mood we spend more money. We all do this when we are on holiday. We pay more for everything and don’t think too hard about what everything costs.
We here to enjoy ourselves and budgets aren’t enjoyable. We will even tip the waiter more than usual because we are delighted to be on vacation.
Getting your customer in that mood will cause them to buy more things and pay more for everything. Not only that but they will tell all their friends to come to your store as well.
“If you’ve been treated well and honestly, if you’ve been delighted by the person you’re doing business with, you’re going to return to that person,”
— Warren Buffet
Create an atmosphere of fun and enjoyment in your store and remove all your customer’s worries.
The easiest way to delight your customer is to listen to their needs. It’s surprising how many times I have seen companies rationalize why they can’t do what their customers want.
The whole point of business is to do what your customer wants in exchange for a fee.
Companies will say what their customers want is impossible, cost too much or can’t be done.
If you don’t solve your customer’s problems, they’ll soon figure out how to solve them without you.
Make your version unique
If you google most expensive anything, you will often come across a typical top ten list. You will find the most expensive, cars, houses, whiskies and even cheeses.
What all of these will have in common is that they are likely to be unique, one of a kind or extremely rare.
When I searched for the most expensive car in the world, the results showed a 1964 Ferrari 250 GTO. It was priced at 70 million dollars — ten times the latest Bugatti price, one of the fastest cars in the world.
The Bugatti is much faster, has more features, luxury and creature comforts than the classic Ferrari.
The only difference is that while the Bugatti is somewhat unique, it will still be compared to other so-called fastest cars in the world.
The classic Ferrari can’t be compared to anything. It will stand on its own, and its price will defy gravity.
They don’t care that it doesn’t have Bluetooth or go half as fast as the Bugatti because they aren’t comparing them to each other.
You may provide the same service, whether you a lawyer, a hairdresser or an accountant, as many other service providers.
You will also find lawyers and hairdressers that charge ridiculous sums of money and get away with it.
You may find that these people are not the most talented, but they have a unique offering.
Think about how you can make your offering more unique. This will disconnect that price comparison in people’s minds when buying from you.
People are always tempted to make price comparisons and ask why they should pay more for the same thing. So make sure you are not offering the “same thing”
Bad experiences can destroy your business overnight
In Shep Hyken’s 2020 Achieving Customer Amazement Study they interviewed over 1000 people. They asked if they would switch brands if they could get better customer service.
96% answered “Yes!”
Basically, everyone is looking for a better experience throughout the buying process.
What we expect from a clothing store, compared to a phone carrier or the waiter at a restaurant is different. You might get away with providing an inadequate service when your competitors offer a similar lacklustre service.
Suppose one of your competitors decide to up their customer experience game. You could be taken out overnight since almost everyone is willing to switch for a better experience.
Wouldn’t a better strategy be to lead and start implementing ways to improve the customer journey? Perhaps instead you will be the one to take their customers.
If you don’t know where to ask the simplest thing to do is to ask your customers. Even companies with highly rated service will find plenty of customers willing to complain.
Keep it simple
We are programmed to remember bad experiences more vividly than good ones and customers will share these memories with others far more often.
When we try to improve customer service, we assume it’s about rolling out the red carpet. While customers love to feel appreciated, they will still turn away from you if your service is not seamless.
How many times have you heard that annoying recorded voice on the customer service line telling you that your call is important to them? If you were important to them, then a real person would answer the phone and talk to you.
The key to customer service is not adding bells and whistles but understanding what’s annoying your customers and fixing it.
If you keep them happy, they will have no reason to even try your competitor’s product. In fact, they will be more likely to add your latest product to their basket.
If your offering is unique and acquiring it is seamless, then you can charge any price you want. Simple, Right!