Q: My profit margins are quite slim and I need to increase prices. However, I am afraid if I do, I will lose customers. Is there a solution to my dilemma?
A: Ever wonder why some people prefer a Cadillac to a Chevrolet? They both will get you where you want to go, yet the Cadillac is nearly twice the cost of the Chevrolet.
There are several reasons why some people are willing to pay more for a given product or service. Some are into image, while others appreciate what they perceive as added value.
Added value can take many forms in the mind of the consumer:
Options — Does the product or service come with conveniences that make their use more user-friendly?
Warranty — Is the customer assured that the purchase comes with a 100 percent satisfaction guarantee from the seller?
Brand — Is the brand recognized as top of the line by consumer advocates, e.g., Consumer Reports?
Testimonials — Do others who have made similar purchases recommend the product or service?
Service — Is the shopping experience made easy with friendly, knowledgeable sales people who are willing to take the time to answer your questions? Also, does their interest continue after the sale is closed?
I own a Lexus and it is the third Lexus I have purchased from the same dealer. The salesman, sales manager and service department personnel know me by name. I am provided a loaner car when my vehicle is in the shop for service.
When the service is done, my car is returned to me washed and vacuumed. Every effort is made to make me feel special.
I also receive a follow-up phone call from the service department to ensure I was satisfied with the experience.
Businesses that focus on price and the quick sale are missing the boat. Try hard to cultivate relationships with the customer. It is human nature to want to be noticed. Try to think of ways to make him or her feel appreciated.
A satisfied customer will always come back and, more importantly, he will tell others to come too.
Gray Poehler is a volunteer with SCORE Naples. Their counselors can assist and offer advice concerning management issues facing your small business. Counseling is free to all U.S. citizens and legal aliens. To register call 239-430-0081 or visit http://tinyurl.com/43aqelw.
If you would like an answer to your question, fill out the form at http://naples.score.org/mentors. A counselor will contact you within 48 hours. Please include your name, email address and a contact phone number.