Smile, but don’t lower your price. Instead, raise your value.
I sell cars for a living, but truth be told, there are a lot of similar strategies between selling cars and selling furniture. There’s no marketing skill required to advertise a sofa and loveseat for a shade over cost to generate a high short-term sales volume for your business. In fact, at times, this can be an effective strategy. The underlying problem however, is that it’s not sustainable. It’s a short-term solution that only leads to trouble down the road. As a company, you’re creating no long-term value to your customer because you’re not coming from a place of value to begin with, you’re coming from a place of price.
Your customers know that when you promote high-volume sales tactics through advertising, they’re just a number to you rather than a person. Plus, you’re putting added pressure on not only your customer, but your financial services managers. That’s because clearly, you’ll need to make the profit up somewhere which will be in the business office selling extended warranties, protection products, etc. Don’t get me wrong, there’s immense value in these add ons, but to rely on selling these and crushing your volume purchase agreement targets by taking extremely low profits on the front end to generate high volume isn’t a sustainable business model.
When you portray to the public on a regular basis that you’re willing to give your product away for virtually nothing, that’s the culture you create for your company long term.
By creating a consistent message that you’re fully prepared to give everything away right out of the gate, customers come to expect that day in and day out. Unbeknownst to you, you’re allowing price to become the customers’ focus rather than the value of the service you can provide, which is where the sustainability truly lies.
Here’s what to do when your competition constantly undercuts your price and publicly advertises “your” product for a shade over cost.
You might be scratching your head at this one. Why on earth would you thank your direct competitor down the street for advertising the exact same product you sell for a shade over cost? After all, as a furniture store owner, you know the level of difficulty in establishing a company and creating sustainable, long-term growth and financial security.
Well, here’s my point of view on it, what they do is completely out of your control so there’s really no point in wasting your valued time stressing about the situation or complaining about their style of advertising.
I believe they are blindly doing a favor for you by spending an absurd amount of money on advertising on your product. You’re bound to receive some fall off from their marketing strategy (which has proven to be the case in the past), so let them ride the wave, continue to sell your way and reap the benefits of the fall off you’ll receive from their marketing tactics.
In a lot of cases, this style of aggressive advertising is often put in place to manipulate the customer to get them into the store. Let’s face the truth: It’s marketing, and it works most (but not all) of the time. It’s important now more than ever to ask your customers high quality questions so there’s transparency on the offer that’s been made to them from that competitor.
Ask the customer to put together a check list so they can fairly compare your numbers to the competition. By doing this, and assuring the customer that it’s in their best interest, which it is because they want to be certain they’re getting as good of deal as what’s portrayed to them, you look like the good guy or girl because you aren’t trying to hide anything.
Here’s how your checklist might go:
- What’s the retail price of the living room set you’re considering?
- What’s the delivery charge?
- Is financing available?
- What other services are available?
- If the retailer is reluctant to share this information, they are obviously hiding something.
At this point, we aren’t expecting the customer to provide the answers for us, that’s not the goal. The goal is to provide them with the answers to those four questions yourself and allow them to fairly compare it to your competitor. If they come back and say the competition is beating your deal, then you need to go to the drawing board and figure out if it makes sense to make the same offer or not. If they come back to you and say that you’re competitive or even beating the competition’s price, they’ll quickly realize you’ve been honest with them from the beginning and aren’t playing mind games with them to persuade them into buying.
I know you’ve heard the term “Buyers are liars!” Give your customers the benefit of the doubt and you’ll be surprised at how many will be honest with you. I’ve found the more honest you are with them, the more honest they are with you.
Ignore the Ad!
Don’t let your competitor’s ads get to you. For starters, that’s exactly what they want. The last thing you want to do as a furniture store retailer is get into an advertising war with your competition. Stay the course.
It’s crazy expensive to earn new business and if you’re constantly chasing that new business, you’ll get sub-par financial results. It’s a simple formula: Stick to your roots, find the customer’s needs, provide value and ask for the sale. People willingly pay for value, it’s up to you to provide it.
Find your Why as a retailer. What’s the message you want to portray to the public and to your employees? Happy employees create happy customers.
We’ve shifted our focus to higher employee and customer engagement and have noticed drastic results within the company. The way we advertise now is directed at our message as a company, why we exist, and the leads have picked up immensely. Not only have the leads started flowing in, we’ve found the quality of these leads is a lot higher too because we have a much higher closing percentage.
Creating a culture where you raise your value rather than lowering your price is a recipe for success!