Walmart has a not-so-secret plan to crush what’s left of competition and it’s called Project Impact. But it’s not another devastating round of price reductions. What is it? Customer experience enhancement. Even Walmart understands that people don’t want the lowest price, they want the best value. Walmart’s Project Impact could be called Project Eliminate (as in: the rest of small businesses)
|Photo credit: zieak|
So what should you take-away when the largest retailer and price-cutter in the world starts shifting focus from price-cutting? Bring your focus back where you have a distinct advantage over Walmart: compete at the point of contact, compete on customer interactions. Yes, Walmart can say that they are improving customer service, but it’s just not possible to make that promise uniform at nearly 3000 locations with almost 2 million employees. You can on a local level.
Experience and Value
All things being equal, people will choose the lower price. That’s why you better make sure all things aren’t equal. There are two parts to customer interactions: experience and value. They go hand-in-hand and enhance each other. The more remarkable the customer experience, the greater the perceived value.
Yes, even when money is tight, people still seek out that unique blend of experience and price value. Because while customers will sometimes make a single purchase based on a price tag, they will make repeated purchases based on an experience. The customer experience is the number one factor of customer loyalty, and having loyal customers means you don’t waste time and money searching for new customers. Additionally, there’s evidence that a customer experience focus actually boosts revenue.
So step one is to focus on delivering a remarkable customer experience. But what about that darn price tag? People are trained (by businesses) to look at that price tag and ask “How much does it cost?”
Here’s where you need to be very careful. Because the wrong pricing strategy can actually erode your brand image and destroy profitability. Meaning, while you may make some short term gains (very short), you create long-term problems for your business. Cutting prices means working harder for less money at the expense of your future brand. What can you do other than lower prices?
- Provide additional services to loyal customers. Businesses tend to reward first-time buyers more than loyal customers. Instead, reward loyal customers.
- Add value to your existing product/service. Package different services together, add a feature or a benefit, give greater or more immediate access.
- If you do reduce prices, reduce what the customer gets for that price. Don’t just lower your price and give the customer the same thing.
- Give people options. Three choices, three prices. Each successively lower price comes with less value.
But again, it goes back to the experience and the interaction you have with customers. Bottom line: Don’t just quote a price; provide an experience and deliver value.
How can you start your own project impact to improve your customers’ experience?