Two Contrasts yesterday…which one are you?
I had great sessions with a couple clients yesterday. Both have important lessons to share.
Let’s call him ‘John’. When I started supporting him two years ago he charged $270 per call out. Yesterday he said it’s up to $675. He’s gone from around $300K/yr to $1.3m and I’m supporting him to reach $12-15m/yr.
Is this about just getting more dollars for nothing? Absolutely not!
He’s had the state manager of Google come and visit him because he has over 200 five star reviews!
John is obsessed, and I literally mean obsessed, about customer service and delivering 110%.
Making the customer happy is repeatedly encouraged and enforced with his team on a daily basis. His team are measured on 5 star reviews they get.
What is even more interesting is that his competitors always assumed he was beating them on price and that was why he was getting 5star reviews. There has been feedback they are really getting annoyed and scratching their heads now they know it’s not price! LOL
This client is helping import a new product from China that sells for $15K-25K.
This is around 30-40% cheaper than the competition and they are excited about this and guess what?
The price difference is their main selling point. They are pushing how much cheaper it is. And getting excited about this fact.
I had to burst their bubble. I see this quite a bit. A startup gets the idea that they can bring in a product far cheaper than the current suppliers.
Where’s the bubble?
The new startup has very low overheads.
In this case no factory or real fulltime staff. No marketing budget. No warehousing costs. No warranty repairs yet.
The competitor on the other hand has figured out that to pay wages, pay overheads, stay in business through the slow months, etc etc…they need to charge that 30-40% more. Make sense?
The other issue I have with undercutting the market is that it lowers price expectations with customers. It ruins it for everyone and costs us jobs.
Hence we are seeing so many stores close in Australia and jobs lost. We think about ourselves only and want cheaper cheaper cheaper, but lose sight of the real costs of this to others including the environment.