Apr 23, 2022
Prices will never be low enough for customers. After all, have you ever got a customer survey back that said you should charge more for your product or service? Have you ever written that yourself as a customer? Of course you haven’t! Who would?
As you may remember, some of our listeners write in to our “I’m in a Pickle” feature of the podcast. This week we consult Peter about his business-to-business (B2B) customers that push back on price. Peter’s company is not the cheapest, nor do they have plans to be, so he wants to know what he should do about this customer behavior.
Too many organizations don't have a pricing strategy, even though having one is essential to your overall customer strategy. The foundational element is that you should communicate value. Without value that the customer sees, your price will never, ever be low enough.
Chances are, some of you have faced Peter’s problem, too. So, this episode is about customer pricing and the psychology surrounding it. Perhaps more importantly, it’s about how to keep your prices high and your customers feeling like they are getting a deal.
Key Ideas to Improve Your Customer Experience
In another podcast, we discussed Fernando’s problem regarding distinguishing a commodity from the others in the field. If you haven’t heard that one, a simple summary is determining how you are different from the other suppliers is first, and communicating this difference is second. These are the same principles vital for pricing strategy. After all, nothing is valuable until a customer is willing to pay for it.
Here are a few key moments in the discussion:
- 03:21 Ryan, who researches pricing in his academic career, talks about the different approaches one can take to address pricing issues with customers, starting with communication.
- 05:12 Colin talks about the concept of perceived value and how no one will buy anything without it.
- 10:05 Ryan begins his advice for Peter by talking about how a pushback on price is often a feeling that the value provided does not justify the price, which is usually a communication problem.
- 13:14 Colin talks about buying an uninterruptible power supply using a metric he understood, but maybe not the most important one; Ryan explains that this happens a lot, so manufacturers should know what that easier metric is that customers use to decide.
- 18:00 We talk about the Curse of Knowledge, and how it can affect how we communicate about a products’ features and specs instead of the benefits that customers would understand and want to know.
- 24:35 We also suggest that the problem might be that Peter has price conscious customers and he needs to attract a different type instead based on a podcast a few weeks ago about firing your customers.
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Customer Experience Information & Resources
LinkedIn recognizes Colin Shaw as one of the 'World's Top 150 Business Influencers.' As a result, he has 290,000 followers of his work. Shaw is Founder and CEO of Beyond Philosophy LLC, which helps organizations unlock growth by discovering customers' hidden, unmet needs that drive value ($). The Financial Times selected Beyond Philosophy as one of the best management consultancies for the last four years in a row. Follow Colin on LinkedIn and Twitter.
Click here to learn more about Professor Ryan Hamilton of Emory University.
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