Moving Words – Value
Written by Timothy Brady.
“Price is what you pay. Value is what you get.” – Warren Buffett
Definition:
val·ue ¹
Pronunciation: ‘val-(“)yü
Function: noun
1: a fair return or equivalent in goods, services, or money for something exchanged.
2: the monetary worth of something.
3: relative worth, utility, or importance <a good value at the price>
¹ from the Merriam-Webster Online Dictionary
Value is the one item you can add to your services which can create that competitive edge.
Why is it when we shop for a service or an item, we’ll search out the best value for our dollar, but when we look at developing our hauling rates, we try to be the lowest price on the market? If we call a potential customer and find they’ve been quoted a lower price than we offer, we’re jumping through hoops to beat that price—when we should be showing them the exceptional value in our service. Anyone can go and get all the business they want by providing the lowest price in the neighborhood. But keep in mind that if you compete with price alone, you will price yourself out of business.
What will ultimately decide whether a customer remains or goes is whether they’re receiving value for the money they are investing with you. If your rates are so low that you’re constantly struggling to make ends meet, you’ll find it next to impossible to create value in your services. Your efforts will be based on staying afloat, not providing service beyond expectations. If being at the lowest price were truly the way to succeed in business, everybody would be successful. But that’s virtually impossible.
Selling on price alone is not selling, it’s order taking. Any salesperson worth his mettle sells value, based on knowledge of what the customer wants and what the customer needs. And that’s the first step to creating real value for your customers.
The next step is setting hauling rates that are based on the costs of providing ‘beyond expectation’ customer service. No matter what type of operation you have, to be successful you must know ALL of your costs, work to control the costs, and set your rates to be sure you are making a reasonable profit.
With this said, the secret to being successful with rates that are higher than most of your competitors is customer service. Think of it in these terms: if you had a choice of purchasing one of two different widgets, you’d consider the following scenarios. Widget #1 costs considerably less than Widget #2. The company selling Widget # 1 ignores your calls for information, or is late on appointments, and you’ve heard that they are even worse after the sale on service and warranty. Yet the more expensive Widget #2’s sales people call you back right on schedule, work on getting you the needed information in a timely manner, and have a reputation for getting the job done correctly regardless of the required effort. The higher-priced Widget #2 will most likely be your choice because it has greater value for the price. Does it cost more to provide that level of service? Not always; in fact, the majority of the time creating value in your services can help to reduce costs. Providing value beyond what the customer wants or expects will keep your customers returning time and time again, and it costs tremendously less to keep customers than to locate new ones.
You need to think in the same terms of how you can provide the highest level of customer service, and then do it. Provide a level of service that is higher than the rate you charge and its value will be worth your price. The only way your competition can beat you is to provide better service. All you have to do is make the customer service bar too high for them to reach. It’s not whether you’re charging the highest or lowest rates, it’s whether you are providing value beyond your customers’ expectations for the rate you charge.
“The value of a person should be seen in what he/she gives and not in what he/she is able to receive.” – Albert Einstein
Contact Tim Brady:
tbrady@writeuptheroad.com
