Is Price Everything?

It seems like more than ever, price is playing a critical role in consumers' purchasing decision. The obvious success of companies like Wal-Mart, Best Buy, and Amazon.com has spearheaded this low price revolution... and why not. If you have $100 to spend, who wouldn't want to get the most for that $100. Compounding the situation, we're witnessing a growing gap between the middle class and the affluent. The middle class are finding it difficult to pay premium prices when, just a little bit of research over the internet or a couple of phone calls, can save them a few bucks.

Are we, as entrepreneurs and small business owners forced to engage in this epic price battle? Several companies have shifted their focus towards becoming more customer centric and beefing up their customer service to combat the price war, but is that enough?

Being the business owner of a database and direct marketing agency (www.connectfivemarketing.com & www.directmailquarterback.com), I am faced with that question every day. I tell our agency clients that price is important, but credibility, trust and loyalty are just as critical and are perhaps more influencing factors. It’s very difficult to sustain being the lowest price provider at all times. As long as you’re in the ballpark, the relationship that you build with your customers can mean the difference between long-term loyalty and a group of consumers that can be easily swayed by the next “lowest price offer” seen on the internet. Not to mention the benefit that comes with having your most valued customers talk up your business and producing referrals.

Developing a relationship with your customer means knowing each one’s unique qualities. The more you know about an individual customer, the more you are able to personalize your service and the greater level of relevancy you can bring to the interaction. Trust and credibility is built upon the quality of each interaction. From first contact to product delivery, it’s all in the memory of the consumer. The greater the experience, the less likely your customer is willing to give a competitor, who comes along with a better price, a chance.

The term CRM has continued to evolve ever since I first got into the business and I’ve seen it have different meanings for specific applications. One central theme, however, governed the philosophy behind all CRM applications, that being the customer experience and establishing more personalized relationships. Capturing key data about each customer within a database, not only allows businesses to communicate better, provide more product relevancy and give the customer a more tailored and positive experience, but also gives marketers the capabilities to automate the relationship building process. Whereas, in the era of mass marketing we had a one-to-many relationship, in order to compete in a price sensitive and cut throat marketplace, we are wise to adopt a more one-to-one relationship approach.

With that said, I believe by being strategic in the way you capture, store and use your customer data, you can grow your business successfully in a price sensitive market.