By Warren Hawkins – In a competitive market, the allure of a bargain can lead businesses and consumers to prioritise price above all else. But value is more than just what’s on the price tag. Understanding this is key to sustainable success in business.
The truth is that people will pay a higher price for something if they understand that they are getting value in return. This value can come in many forms, whether it’s the quality of the product they’re buying, efficiency, better customer service, innovation or environmental impact.
Even in tough economic times, when customers are price sensitive, there are instances where they are willing to pay more for a product or service. But, to do this, they must understand why you are charging the price you do, and see the value that your business delivers in some of these key areas:
Quality – This is probably the most obvious reason to pay more for something. It is most evident when you’re dealing with a physical product where the build quality, design and materials might make it easier to use or longer-lasting. In the long run, a quality item will end up delivering better value because you might not have to replace or repair it as often. But what about when it comes to offering a service?
A business choosing between two communications providers may compare costs and decide to go with the cheaper one based on the monthly fees alone. But without having compared call quality and system features, it’s hard to tell if they are getting real value.
A business doing a more thorough comparison may find that the more expensive system also comes with features that increase productivity, or offers extensive data and analytics that help drive business decisions. So while the offering itself is more expensive, there is real value in how it delivers.
Value is also only significant when it is being used. So in the case of the phone system, if company leadership aren’t aware of the full array of features, and aren’t making use of real-time data and insights, then a higher price point isn’t delivering value.
Flexibility – Whether it’s for a gym or a phone, people don’t want to get locked into a long-term contract that they can’t easily get out of. The same holds true for business to business relationships.
Think of it this way – your business signs a fixed term contract with a service provider. In the first few months of the contract, you have to unexpectedly scale down and you’re not making use of all the features or services available to you. Because your business is locked into this contract, you continue to pay for services you aren’t using.
Businesses might be willing to pay a slightly higher premium knowing that they have the flexibility of a month-to-month contract, or that they can scale a service up or down when they need to. There is value in flexibility and people are willing to pay for it.
Customer service – A recently released survey into South Africa’s online retail space found that customer service was the single most important factor in a retailer’s success, with 73.9% of respondents emphasising its importance. The same or similar statistics would probably apply across most services and sectors.
Companies that are best known for their service all seem to have a few of the same traits in common: their people are knowledgeable and professional, their communication is clear and responsive, they personalise their approach, and they make processes as seamless as possible.
Customers want to feel like they are valued and their needs are understood. Good customer service is about meeting those needs, but excellent customer service, the kind people don’t mind paying a bit more for, is about anticipating needs.
Customers also want to know that when they have a request or a problem, the response will be swift and supportive. So it might mean providing a CRM system where customers can quickly and efficiently log service queries themselves or it might be a professional, responsive and empathetic customer service team who easily resolve problems when they arise.
Delivering in these three areas will ensure that customers know they are getting a good product or service that is responsive to their needs, and backed by service excellence. When these boxes are ticked, customers are not only more likely to pay more for a service, but they’re also more likely to stay loyal to your brand which is how businesses ultimately build success.
Warren Hawkins is the MD of Euphoria Telecom