Today's post is a guest post by my trusted colleague Heather Seitz, of Email Delivered.
The truth? It’s not price at all. It all comes down to value!
If the value is not there, then people are not going to spend the money on whatever it is you are selling. It doesn’t matter if it’s a $17 eBook or a $17,000 coaching program, or something in the middle, if the value isn’t there, you’re not going to spend your money.
And let’s face it… in the current economy, just about everyone is a bit more discerning about where they spend their dollars.
So how do you determine “value”?
That’s the million-dollar question… Let me illustrate with an example of something that happened recently where I really “got” the concept of value and how it relates not only to the decision of whether or not to buy, but also to the overall perception of your customers – and, as a result, the long term impact on your bottom line.
(As you read this case study, think about how this applies to your business and how your prospects react to your “offers”)
We were getting ready to do a complete system redesign (from the ground up) of one of our web applications.
We met with the developer and spent a good bit of time sketching out screens, processes, and flow of the design. We detailed all of the system requirements and went through a number of user interfaces, highlighting what we liked and didn’t like.
The meeting went well and we were ready to get started.
He’d estimated about 80-100 hours to complete everything. We were happy with this and excited to move forward.
Two days later, an email arrived with the mockups (based on our discussion). There were 5 attachments in total (4 mockups and proposal).
I started with the mockups first.
First impression: “not bad”. I wasn’t WOWED or blown away, but they were “okay”. It looked like he got about 80% of the concept we were going for, but missed about 20%.
It’s as if they tried to model existing interfaces, but “missed”. There was just something off – that wasn’t quite right. He certainly hadn’t nailed it! I wasn’t “excited”. (Check out the book “Blink”. It talks about this concept and the fact that we all make snap judgments based on first impressions. And even if we can’t articulate what’s wrong, we know when something’s not quite right!)
This isn’t the major problem, however! I realize I demand a lot out of design and was fully prepared to participate in this portion of the project, even editing Photoshop files for the UI designer if need be.
The BIG problem came when I opened the last, and final, document: the actual proposal.
What was supposed to be 80-100 hours came in at 200 hours! Yep, more than double the higher range of his verbal estimate.
What’s more is that it was basically little more than a new user interface. We had spent HOURS going over the fact that we wanted to build EVERYTHING brand new and on an entirely different infrastructure. That wasn’t included… and would cost another $5,000 – $7,000! So what started off as a $8000 – $10,000 project was going to cost us closer to $25,000.
Talk about sticker shock!
We were mad… frustrated… felt deceived… etc.
What happened next was where the big lesson became clear!
My partner asked me this question: “If we were starting this application from scratch, and it was everything we wanted, would we be willing to pay that?”
The answer was, “Sure… no problem!”
That’s when it became crystal clear!
What we had wasn’t a “price” problem. It was a value/trust problem…
It wasn’t the money we were asked to pay, but what we felt we were getting in return for that money.
I took a step back to really think about the experience and what I took from it was a huge lesson in value and customer perception. Here are some lessons we can all use in our business:
- Initial Impact. Does your “look and feel” match your message? Appearance matters. And the “good enough” bar has shifted. People place value on how something looks and what that first impression is. And remember that “Blink” concept I mentioned before. If it doesn’t FEEL right, then you’re already at a disadvantage before they get to the actual message (and offer). This can impact whether or not the initial sale is ever made.
- Value. Are you demonstrating value in such a way that your customers are HAPPY about the exchange? (Their money for your product or service). Your customers should feel that they got an incredible deal. This is the key to repeat business. If your customer decides to evaluate the competition before making a decision, you’ve failed – or at least stumbled a bit.
- Trust. This is a little harder to quantify or define. And it didn’t actually hit me right away in the story above. It took a few minutes on this one! Considering we were expecting an estimate to come in around $8000 – $10,000 including some wiggle room, when we got the “proposal” with a estimates for each segment which were admittedly “padded”, we felt that we were going to get ripped off… that we’d get a little ways into it and that the scope of each section would multiply just as the initial estimate did.
The problem with “trust” is that one it’s gone… it’s gone! And it’s very difficult to gain it back.
You can always change the image of your website or add more “value” to your product or service (or simply change your message to convey the value that’s there). But you can’t simply wave a wand and regain trust.
So the question is… do your customers trust you? If not, what can you do to establish that trust and CONTINUE TO EARN IT?