December 14, 2010
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A friend of mine is a homebuilder. Last week, one of his homebuyers, a guy named Jerry, sent a pointed email to one of my friend’s recommended vendors, a local company that sells appliances. In it, Jerry complained that the vendor’s prices on a whole houseful of appliances were higher than he could find online.
For example, the pricey range he had picked out was $109 cheaper at an online retailer ($1189 vs. $1298). He found the fridge for $1440 vs. $1790, and Amazon sold the connective power cord for $8 to $22 vs. the vendor’s quoted price of $30. And on and on. “To do business with us,” Jerry concluded, “you will have to offer prices that are lower than what's immediately available in [other] retail stores and online.”
The owner of the appliance company, Armen, fired a response back. I’ve reprinted it here, edited for clarity:
“Hi Jerry. In your 15 minutes of research you have found one Internet supplier that's a little lower on the range. An Internet supplier will drop the range in the front yard on their schedule, on any particular day of the week. Meanwhile, you must have it there the exact day the builder wants it and you need it inside the house.
“Also in your 15 minutes of research you have managed to find a 22-cubic-foot refrigerator that is actually not 22 cubic feet... but, if you take five minutes to read, is not even stainless. It's clean steel -- a stainless lookalike. The one I quoted is 26 cubic and it’s real stainless.
“Have the person at the online retailer call your builder twice to make sure things will fit. Try to have that retailer even read your plans. Who do you call if you buy an Internet range and it shows up damaged?
“Ask anyone about our reputation, follow-up and expertise. At this point, because you don't seem to trust me, I think you should now become your own ‘appliance guy.’ Did you ever hear the term ‘value-add’? Good luck.”
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Two things struck me about this exchange:
1. There was no way that Jerry was ever going to buy appliances from Armen. If he’s strong-arming for bare bones pricing, he’s probably not going to care about service. He doesn’t care whether the range gets dumped on the lawn or in the middle of the street, in other words, because to him it’s all about saving a nickel (and probably crowing about it afterward).
2. Armen missed a huge opportunity here. Granted, Jerry will never buy from him, but what about the next customer who comes along touting rock-bottom pricing from an internet retailer? Or a big-box store? Or anyone else?
It can’t be the first time that Armen has had to explain his pricing and his own unique value propositions of close contact with the builder, accountability to the homeowner, and top-shelf service. So why couldn’t he articulate that to Jerry -- or again, to everyone -- in a way that would resonate and underscore his fundamental point that extreme customer service is a cornerstone of his business?
Armen’s note -- which comes pretty close to mocking the buyer -- doesn’t exactly communicate that his is a company used to putting the customer first, does it? Even difficult ones?
Today’s customers are smart. They are informed. They are sophisticated in how they are researching major decisions. They very clearly know their options. They know appliance pricing as well as Armen does. So if you are a company squeezed by internet retailers on price, how can you respond?
The thing is, Armen is completely right: He does have a solid value proposition. He just has to be able to articulate that clearly and succinctly (and perhaps a little calmly!) to really bring the point home.
So have you dealt with this issue? What has your response been? What might it have been to Jerry?
Ann Handley is the Chief Content Officer of MarketingProfs and the co-author of Content Rules (Wiley, 2010). Follow her on Twitter @marketingprofs.
Photo credit: Eric E Castro
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NIRMAL PARIKH 1 year 5 months and 5 days ago
My suggestion to the vendor would be to sell the value proposition vs. the price. There's always someone out there willing to offer a product/service for $10, $100, $1000 cheaper. The takeaway is if you sell on the "price" it's a no-win situation because you'll always be chasing your customers. If you position and sell on the "value" the customers will come chasing after you.