Bruce Temkin at Forrester Research recently compared price seekers and service seekers based on data from a published a research report called Who Wants Low Prices Or Good Customer Service? He found that:
- Most consumers say that both low prices and good customer service are important.
- The second largest segment of consumers say they seek good customer service and not low prices.
- The smallest segment of consumers say they look for low price and not good customer service.
The top response in Temkin’s report is not important. Uh, duh. Yes, please sign me up for both low prices and good service. The real surprise is that 100% of respondents didn’t choose this option. The telltale part of this survey comes from the rest of the respondents. What’s more important to consumers: price or service?
It should be no surprise that customers will consistently choose good service over low prices. Intuitively, customers equate lower prices with lower quality products and poor customer service. That little voice inside the customer’s head asks, “Why are these prices so low? Why don’t they charge more if the quality and service are as good as they say it is?”
There are other things the customer knows by intuition:
- Supply and demand – The greater the demand, the higher the price. If a lot of people want something, the price is higher. If they don’t, the price is lower. Therefore, if your price is lower, not many people want what you’re selling.
- Good people cost money – Superior service is not delivered by a staff filled with minimum wage employees. If a customer wants good service, they know they have to pay a little more because good people cost more.
People will pay more if you give them a reason to do so. To solve the price vs. value equation, shift your focus from the price tag to the value you deliver.
The real bottom line: The price customers allow you to charge is indicative of the value they place on the experience and service you deliver.