It doesn’t matter if you are in retail selling to consumers, or in a business that sells to other businesses, it is virtually impossible to create customer loyalty by being the lowest price provider.
Consider this. Low price shoppers are loyal to their wallets and purses, not to the business. As soon as these price-conscious customers find a retailer or any other type of business or vendor with a lower price than the one they have been doing business with, they will move. It’s all about dollars. The retail industry has trained consumers to think that way.
Some businesses have a loyalty or membership card that offers deeper discounts, and you would think that is a way to grab some loyalty. But, that only lasts until a competitor matches the discount programs. You see, if it’s easy to copy what you are doing, then others will eventually copy it.
So, I thought about how a retailer – or any business for that matter – could create some loyalty and still be a low price provider. One way might be through having some exclusivity of a line of merchandise that other low-price retailers might not have access to. The combination of a low price with exclusive merchandise can work.
For any type of business, an emotional connection between the customer and the company can create loyalty. It can be a person or team at a company or store. Or, maybe there is a community project or charity that the business affiliates with that can build a connection beyond price with a customer. Yet notice that both of these are trying to move away from price being the sole reason a customer does business with a company. These types of connections make price less relevant.
Of course I can always preach customer service as the way to attract customers and make them loyal. But, that is much more difficult if the company is focused on low pricing as a strategy. It doesn’t mean you can’t have friendly and even helpful service. It’s just harder to do so while keeping prices low.
So, rather than have a low price strategy, consider a competitive price strategy. A bit higher than the low price keeps you in the game, provided you deliver a better level of service or an amenity that the competition doesn’t offer. In other words, you deliver value. A competitive price, not necessarily the lowest price, combined with good service is a winning combination that can help you win the competitive game of business. Just remember, that if you choose to compete primarily on price, be sure to always be the lowest price, or be prepared to lose customers.
This blog post has been re-published by kind permission of Shep Hyken