Cheapest or Best? It is a question that we all think about often when buying, but something that isn’t discussed at length. Some people will default to the cheapest product they can buy without regard for quality. Others will gladly buy the best item with the most features without taking a second look at the price tag.
But what about the majority? I’m talking about those that want to spend wisely and still receive something that provides quality. In today’s post, we’ll look at whose responsibility it is for providing value and why I believe people will gladly pay more if you can prove your product’s worth with a strong Unique Selling Point.
Table of Contents
What to Send?
The Shiny Envelope or The Manila?
It seems like a dumb question if you’re sending thousands of direct mail pieces. Normally, a business would say pick the cheapest. After all, I could spend about 12 cents on a manila envelope to send out direct mail pieces, but I chose to spend 35 cents per envelope for these shiny green ones. Here’s a lesson within a lesson.
What was intriguing was that people began to ask her about the shipment and if they could have a package. One after another, they asked, and asked, and asked. She came back and told us what happened and I realized that this direct mail piece was perfect. There was no doubt in my mind that they would be opened.
Thinking about that experience made me realize that people felt like these packages were Christmas presents. They wanted to open them. They wanted one even though they had no idea what was inside of them. While this is a good lesson in direct mail marketing, that isn’t the point of the story. The point is that we were spending more on envelopes than we could have. They were nice, but did that justify the expense?
How did we Triple Conversions?
We mailed out the same exact direct mail piece without the shiny envelopes. It was easy to mail. It cost us less. We still made money. It was mailed in a plain white envelope. Nothing fancy. However, now that we ship out our offer in the shiny green envelopes our conversion rates are nearly 3 times what they were. There are other variables that have caused an increase in our conversion rates, but there is no doubt, a big part of that is our direct mail piece. The shiny envelope piques their curiosity!
Just so you understand, we chose to spend more to get the best envelope. Why? Because, after testing I believe the envelopes work best. In this case, the value was a higher return on investment. The principles are the same. People buy what they buy because of what they believe is best. This doesn’t mean it is the truth, but it is what they believe.
Dumb Customers Will Always Spend Less
But it is our FAULT isn’t it?
The revenue amounts he’s making is relatively small compared to where he’ll be in a year or so, but still the same, he landed the deals by sharing the why and changing their beliefs!
If everything is equal, customers will always buy based solely on price. It is the same in my business of being a marketing consultant and owning an agency. There are thousands of companies who offer website design out there. Many will do their so-called marketing services for much less than we do. However, very few of these guys understand lead generation and how to promote online.
What sets You Apart?
To the average business owner, we’re all the same. In regards to the design quality, the sites might even look similar to the untrained eye. But what about security? What about SEO friendliness? What about site speed? What about opt-in offers? What about automation? What about all the stuff we do that an average designer doesn’t know jack about? We are worlds apart if someone actually is educated about lead generation and online marketing. The sad part is that most business owner doesn’t understand the “value” of online promotion, so they will be inclined to pick the cheapest because they BELIEVE that they are the same.
They are ignorant to what works in marketing, so they buy the cheapest. This is why I say dumb customers spend less. It isn’t their fault however. It is mine. Yes, it is my responsibility, and yours as the owner of your company to document and explain the value of what you do, and why it is better than the rest of the competition. The fact that the end consumer doesn’t understand something isn’t their fault. It is our fault for not explaining it to them accurately.
Finding what Customers Care About
So the first step is to figure out what customers care about and what are their core beliefs. The next step is to innovate. This way we can deliver exactly what they’ll want. Lastly and most importantly, we then educate them about how we’ll deliver exactly what they want. Once you’ve innovated and can honestly say exactly what the prospective customer wants, you’re on track for rapid growth and increased conversions.
So how do you find out what customers want? Here’s a few ways you can find some insight.
a. Surveys
One thing we do is to survey our customers. We want to know what they thought. We ask them and then evaluate the information they share on surveys. Our innovation list starts with what customers say.
b. Online Research
If you look up the reviews of your company and the reviews of competitors, you’ll quickly hear what people like and what they didn’t like. Was the product delivered on time? Was it easy? Was it fast? For the guy who left a 1 star review, what was his pet peeve? Reviews and online research tell the story of what customers are thinking.
c. Ask Missed Opportunities
If you missed a sale, why? A quick email to the decision maker will tell you exactly the reason. In most cases they feel bad about not being able to hire you and will reply. You have to send them a humble email, stating you want to improve, and asking for feedback about why they bought elsewhere. Only when you know the truth about people’s beliefs, can you then improve your message or change to become what they want.
The Manila Envelope Salesman
If I had a company offer me manila envelopes for a penny each, would I buy them? Nope! I wouldn’t. From testing, my belief is that shiny green envelopes work better. I would buy what I believed was the best value for my business. If my current supplier of these shiny green envelopes, burned down, leaving only one competitor, what then? Would I spend $2.00 on an envelope? Maybe, but probably not. $2.00 might make me reevaluate and look for other options. A price is purely a guide to value. Inside of every shopper is someone asking, “Is this really worth it?” Should I give up X to receive Y?
Regarding my green envelopes, a price increase to $2.00 might tip the scale and change my actions so that I don’t buy. I wouldn’t feel like $2.00 was worth it. It wouldn’t change my belief about what was better. I know the shiny ones work better, but it isn’t worth it. What would I do then? When the company who offered them for .35 cents rebuilt, I’d go back to them. For most, a higher price item means higher expectations. I probably wouldn’t spend $2.00 for a shiny green envelope if it was exactly the same. But what if that same envelope, sold for $2.00 did something else? What if it had blinking LED lights and allowed me to record a message that played every 2 hours. What then? I’d probably think about it. You see, the higher the price, the more value we expect.
Remember this to Survive
Remember, people will always do what is best for them. You have to tell them why you’re better! The survival of companies will be determined by listening to prospective customers and delivering what they want. When the customer is uneducated about what is best and the waters are muddy, it is the responsibility of the business to document it and educate them. Only when they understand the “why” will the customer spend more and buy the higher-priced item.
A Few Question – In today’s world, some businesses revert to being the cheapest to get quick sales. What’s your take on this? Does your business resort to being the cheapest sometimes and how do those transactions work? Have you ever bought something cheaper only to find out it is more expensive in the long run? Chime in! I’d love to hear your feedback.