Why you shouldn't use low prices to attract new customers.
There’s one thing that all businesses, new and well established, large and small, have in common. That is the fact that businesses have an insatiable desire to bring new customers through their doors. Often times, businesses rely on sales and low prices to get new customers interested in what they have. However, as you’ll soon find, these tactics are actually more likely to do harm than good for your brand in the long run.
Why Using Low Prices As A Selling Tool Is A Mistake
I know, it may sound strange. After all, it seems like every company out there attempts to attract customers with low prices. The truth of the matter is that the “charge less than your competition and cross your fingers” marketing technique only works if you are a high volume store that’s looking to attract bargain shoppers.
While this method may drive some customers in to see what you have to offer, you’re driving customers that are only interested in saving money, not necessarily solving a problem. However, when you attract the customers that want to solve a problem, you are able to charge more, increasing your margins and growing your business. In fact, according to Russell Ruffino, millionaire entrepreneur and founder of Clients on Demand:
“If you don’t know how to convert leads into clients consistently, you sell from your heels. You discount your services which kills your margins. You can sell your services for 10-15X what other people are charging.”
How To Sell Your Services For What They’re Worth
The good news is that Mr. Ruffino is right. The truth of the matter is that price is ultimately no object when you have a solid product or service. In fact, increasing your prices has the potential to cement your brand as a luxury brand. So, how do you get to where you can sell your products and services for what they’re worth? It all starts with proper marketing!
To make sure that your marketing is driving the right kinds of potential customers, make sure that your marketing aligns well with the three key factors below:
- Get To Know Your Audience – First and foremost, to attract an audience that is highly likely to purchase your products or services for what they are worth, you have to know who that audience is. This takes a bit of research, and there are several tools online to help through this process. However, investing some time, and maybe even a little bit of money, into figuring out who your target audience should be is crucial to the long-term success of your company.
- Extreme Targeting – Instead of following the marketing concept of “The more that see, the more that will buy,” it’s important to pay attention to who is seeing your ad. At the end of the day, when you spend your marketing dollars, you want to make sure that these dollars are spent on views on your ad by people that are likely to buy. Highly targeted ads are likely to attract those who are looking to solve a problem, and therefore, willing to pay decent prices for high quality products and services. Use the information that you learned when getting to know your audience to ensure that your advertising campaigns target these groups of consumers.
- Promote Transformation – In your ads, instead of promoting your prices, a bunch of information about your product, or who your company is, make sure that you promote transformation. At the end of the day, people with a problem to solve don’t care who you are, that your prices are better than the next guys, or what your product is made of. Instead, these people care about how your solution is going to transform their problem so that they don’t have to deal with it anymore. So, make sure that your advertising campaigns properly portray this transformation.
Closing The Deal
Now that you know how to attract the right type of customer, it’s important to focus on conversions. Some tips for increasing conversion rates on the leads that your ads attract include:
- Promote Transformation – Once again, your audience isn’t going to care much about price if they are interested in solving a problem. Make sure that when you go to sell the leads that your campaigns are generating, you sell them based on the transformation that your products or services offer rather than the price they will pay.
- Know Your Worth – The truth of the matter is that customers like to work with companies that they are confident will be able to do something for them. This confidence ultimately starts in sales. If you are fumbling around and lacking confidence in the sales process, the customer will start to have questions of their own. However, if you stand with your head held high from the very beginning, your confidence will likely lead to a much higher conversion rate.
- Don’t Be Afraid To Ask For The Money – No one likes asking for money, but if you have a great product or service, there shouldn’t be any shame in your game when it’s time to do so. The bottom line is that you don’t get what you don’t ask for, and a deal isn’t closed until you get the money. So, if you want to make the sale, ask for the cash with confidence.
It’s Time To Transform Your Process
If you’re looking to get more out of your marketing campaigns, convert leads at a higher rate, and increase your margins, focusing on prices just isn’t the way to do it. Building a business on bargain shoppers is far more difficult than you may think. However, using the tips above to transform your marketing and sales process will likely lead to strong growth in sales and a meaningful improvement in margins.
Jeff Broth is a business writer, mentor, and personal finance advisor. He had been consulting for business owners and entrepreneurs for the past seven years.