Here’s a question for ten points: A customer is about to spend a decent amount of cash in your shop. It’s way more than the average transaction and it’s going to make your figures for the day look much better than they did an hour ago. Right now the salesperson is closing the deal with the customer; in fact they’re talking about delivery, which costs £50 to the customer’s postcode.
Then, just as you start rubbing your hands, your sales person joins you out the back and asks if you can waive the delivery charge.
You know you could. Of course you could! But it costs the business money to send out a van for the day. You’ve got to pay the drivers their wages, plus insurance, tax, fuel and maintenance for the vehicle. It’s not without reason that delivery costs £50 and even that’s cutting it fine.
But the customer seems like a really nice guy, he’s spending a lot of money already. Free delivery, says your sales person, and it’s a deal.
So, do you waive the delivery charge?
Questions like these tend to spark lively debates in our sales strategy workshops, and this one usually provokes discussions on what’s known in sales parlance as ‘The Discount Trap’. I’m sure you’ve heard of this but if you haven’t it describes a situation where a retailer (either knowingly or unknowingly) establishes a culture of discounting to such a degree that the only reason customers shop at their store is because they are rewarded with a multitude of bargains, freebies and not much else. Some businesses can work like this despite the obvious risks but for many retailers, being pulled into the discount trap is only marginally preferable to being pulled into a pool of bubbling acid.
But if product prices are being driven ever downwards, and customers are responding to that, what can you do to stay out of the trap? You’ve got to be competitive, right?
Well, yes. But that doesn’t mean that you’ve got to do the same as your competition. In fact competition is all about doing something differently; something better. It’s about having assets that make you different from your rivals and more appealing to your customers, assets that give your business a competitive edge and through which, when sold properly, both you and your customers will profit.
So how do you identify these assets?
A simple business analysis is a good starting point. Look at all your core strengths: your expertise, your location, the quality of your shopping environment, your customer care, your service plan, your delivery service: analyse each and every point of difference you have over your competitors and then look at which ones you can develop into a service that will have real benefit to your customers. Make them the focus of your customers’ shopping experience, rather than the price of product alone.
It sounds great on paper, right? We all know that persuading customers on the shopfloor to buy into these assets is much easier said than done. Plus, it’s easy for untrained sales staff to fall into a conversation led by price, and for them to give away profitable assets just to get a sale through the till.
So if that’s happening frequently then look at whether your assets really do add a significant benefit to your customers. If not, develop each one into something that does. Take your delivery service, for example, and make it the best damn delivery service in town.
Secondly, don’t just give it away. Train your staff to understand that even if do you have the best delivery service in town then they still need to Sell it. With as much enthusiasm and energy and passion as they would with any of your products. Services can be more difficult to sell than products: you can’t always see a service, you can’t touch it, it’s not like an object on a shelf. But services do have benefits, and benefits are what you sell.
Here’s something else: think of the relationship between cost and value and how you define those.
In business terms, cost is what you lose from a transaction and value is what you gain from it. Which means that if your shopfloor environment is encouraging shoppers to buy on price alone, then they’re focusing only on cost, i.e. the money they’re losing. Telling customers that they’re saving money can help, but you’re still focusing on cost.
If you want your customers to buy into your great services and start profiting from the value of your competitive assets, then your sales people need to shift that focus away from cost and show customers what they gain from a transaction, and that transaction needs to involve everything that your customers will benefit from if they buy from you. So yes, buying from you might cost more, but the value of your delivery service, your after-sales care, your warranty, the convenience of your location and the knowledge of your staff – this is where your customer gains real value.
They won’t all see it immediately, so sales skills are crucial in making it happen (training can help you here), but if you get it right then not only can you sidestep the discount trap, there’s an increased chance you’ll be able to nurture a strong culture of value and loyalty throughout your customer base and find your true competitive edge in the market.
In fact, if you want to take it further and be really successful at increasing your value proposition to customers then the most crucial part of the process begins with-
Well… come on… I can’t tell you everything for free can I?