Purchase Information

Rate spread
It is often misunderstood that buyers become more price sensitive in difficult
economic times. Indeed, that belief becomes a self-fulfilling prophecy. Executives
expect buyers to become more affordable to abandon their offerings to keep their
customers in business. Voila! Buyers focus on price is increasing. Imagine.
This is counter-intuitive, but buyers are becoming more value-oriented in a declining
economy. Here is a simple example to demonstrate my thesis. You're at the grocery
store in the cannery section. When you reach for your green bean brand, you find that
the store brand costs 40 cents less. You think, "Hey, times are tough, I'll try." Here's
how to get a store can of green beans and corn.

Customer Experience Insights

The same night, serve green beans and find that they are mushy and tender. Most of
them end up in the trash. What will you buy the next time you are in business? Brand
name. Store brands are more expensive, although they are lower in price.
Reluctantly served corn the next night. To your surprise, it's as good as your brand.
Who will you buy next Store brand. The quality is as good as the brand name and the
price is cheaper.
Both decisions are value decisions. The only solution for the price is to try the store
brand first. Then you have returned to the value. Sellers who understand this simple
concept and actually offer more value than their competitors can lose a lot of sales as
buyers try to choose lower-priced alternatives, but the business will return quickly if
buyers see the difference.
If you're thinking, "That wasn't my experience." Then there are some explanations for
your experience:
Your suggestion isn't really any better.

In my 20+ years of helping customers raise their prices, I've rarely found that they overestimate their
offerings. In fact, the reverse is generally true; they tend to devalue their suggestions.
While this isn't a possible explanation why customers don't return after trying cheap alternatives, it's
still worth exploring. It's possible that your quality and outstanding service has gone downhill and
you didn't notice it. After all, many shoppers just walk away rather than complain. They can even use
the award as an excuse not to let you know you're dropping the ball.
Your policy-making process may not be able to predict the impact this policy will have on your
customer experience. More aggressive debt collection or credit taking policies can cause displeasure
among customers and turn them off. I almost left my credit card company when they unilaterally
decided I needed an "upgrade" card which simply didn't have the benefits I wanted.
The key to measuring the prominence of your offering is to look through the eyes of your customers.
No other perspective matters.
Great, but worthless
A more likely explanation for why buyers won't return is that even if your offer is better, your
customers don't appreciate the added benefits you offer. I learned this lesson from a printer who
asked me, "Do customers who come to my print shop want a good print job or a good print job?"
"Nice print job!" I answered. He smiled one of those "understood" smiles and said, "Most people
can't tell the difference between a good print job and a good print job, and a good print job is much
more expensive." My clients want a great print job because they're not prepared to pay for
something they can't see. "
What about your suggestions? Have you improved quality/service above your customer value? If so,
maybe that's why they don't come back after trying cheap alternatives.

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