The argument, pursued eloquently by one of our supermarket giants, is this: “We all buy milk and bread.” Therefore, business logic dictates that we make these cheaper. But once the consumer is in store, he or she will no doubt realise the need to buy other groceries. Or, perhaps, a magazine or newspaper at the counter. Or, even better, supermarkets can lured them with a “two-for-one” offer. The sales process continues.
The upsell at your local supermarket is a good one but my point is: Good relationships are a more sustainable (and effective) sales strategy than bargains and never-ending price wars.
Let me first throw a personal thought.
I’ll pay more for a service if I feel that I gain more from it. I’ll pay more for excellent customer service. I’ll pay more for an experience that better matches my expectations. I’ll pay more for a better reciprocal relationship.
What will you pay for? Honestly, would 10 cents off shaved ham sway your choice of supermarket? What if Jerry, the nice guy in the deli, is not around at the other deli selling cheaper bread? Would you really go for the bargain?
What price service?
Let’s expand on this. What if you spent $5 more on your groceries every week, but in return, Donna greeted you at the door on each visit, or Jerry always knew what you wanted from the deli? Or, what if the shelves were stacked and your favourite items were always there? Or, floor staff focused on smiling at every person they saw, food was always fresh and the checkout lines were never too long? Or the checkout team was friendly, knew your name and took an interest in you, helped you pack your bags and put them in the trolley?
Supermarkets are fighting so hard on price, they are not driving profits up by much. Coles profits, for example, grew a mere 0.3%. So the question is: When is somebody going to buck the trend and invest or reinvest into new service standards, new culture and better relationships instead of short-term price cuts?
Last year, I ran a half-day session called, “Committing to Service,” for a large company. The firm decided it was going to make a change. It sought the change to come from its service, and not by eroding margins. It pledged it could no longer sit behind the GFC’s get-out-of-jail card, and decided to take a pro-active role and retain control of its profits. The company went on to make the change and that’s already significantly impacted its business.
There is a lesson here for every business, from the sole trader to the CEO of a billion-dollar company. The lesson is the same – price is the easiest thing to copy. Do something your rivals cannot copy. What’s your unique difference? Why are you the place to shop? Why will your customers remain loyal to you?
Who’s gaining more from your relationships?
You will find your own answer.