Avoid the pitfalls of letting price become your competitive edge
The internet, a plethora of start-ups and the low price and accessibility of imported goods means that being in business has become tougher than ever with competition across a variety of sectors and business types fierce.
The battle to stay one step ahead of the competition is an ongoing one and can sometimes feel like an uphill slog where the end is never really in sight. Some business owners may try and shortcut the process, and one common way to do this is to reduce prices or offer blanket discounts.
Whilst this can be effective in giving sales a boost, the downside can be that it starts a price war, where the lowest the price will go will be dependent on who is the most brave, or unwise – dependent on your stance on this issue.
It’s worth considering that in this world of higher competition, customers are more discerning and are looking for so much more than simply price alone. The cost is often viewed more in terms of value – and value can mean different things to different people.
Quality of product, customer experience – incorporating aspects such as ease of use of a website and buying journey – customer service and reliability are all factors that are proven to be of importance to a vast majority of people. The rise of review sites and review research by consumers is testament to this.
So, before cutting prices, it is worth considering:
Offering something else in lieu of a discount that has a perceived value to the customer. This could be a rewards programme to promote loyalty, an introductory offer or free delivery, for example;
Only offer discounts on multiple buys, to promote extra sales;
Offering support to aid the buyer journey. Ensuring customers can navigate easily around your website and find what they need easily can help them save time and hassle, and that can be invaluable. The rise of website live chat, offering customers help in buying with the use of real-time communication to guide them, can be very successful;
In the case of service-led offerings, rather than selling of goods, throw in extras that are cost-negligible for the business but of value to the customer. A restaurant might consider a free dessert or drink, whilst a hotel might offer some chocolates and wine in the room as an added bonus.
When offering such perks, the creation of goodwill with the customer can far outweigh the monetary value and it is such goodwill that will foster loyalty and word of mouth recommendation – the Holy Grail for many businesses.
For further suggestions of tactics to employ to avoid falling prey to the consequences of price wars, see our Winning Price Wars guide in our resources section.