When times get tough, everyone’s first reaction is “cut prices”. It’s an understandable reaction but it’s also very dangerous for small business owners. In almost any segment, there are economies of scale. Big businesses like Walmart and Costco are artists at stripping the costs out of their system and bringing products to market at very aggressive prices. However along the way, they also strip the expertise out of their sales force and some of the enjoyment out of the customer experience. You can’t win on price but you had better win on expertise, customer service and customer experience.
This lesson was brought home to me twice during that last week. Once by Jim Hopkins of USA Today and once by my son-in-law-to-be (henceforth known as the SILTB).
Jim Hopkins is unique among reporters. He not only covers small business but he has owned and run a small business. That experience helps inform his coverage of the world that we all live in. Thats one of the reasons why I’ve recently added his blog to the list of recommended resources that appears next to this space. Jim caught my attention recently with an entry in his blog titled “Following this advice might have saved my business.” He told the story of his experience with cutting prices in the face of a tough market. He also wrote this article that describes how some other business owners are facing the same challenge right now.
Chris Adams, the SILTB, is running a high performance auto parts business while he’s finishing up his business degree. His experience is an interesting counterpoint to my post about customer service nightmares being broadcast across the internet. In his case, someone posted a complaint about his prices being higher than some of the internet retailers or chains and suggested that Chris was ripping his customers off. All of a sudden, there was a huge flurry of blog posts and email defending Chris. He had built a loyal customer base that was happy to pay a modest premium for knowledgeable, friendly service. And the guy to started the brouhaha? He’s now a customer.
Always look for an opportunity to give your customers a great experience. Find interesting new products for them to consider. Listen to their interests and make smart recommendations. I’ll close with a shameless cliche. When you treat your customers well, they treat you well. It’s as simple as that.