4 Ways To Compete Against Low Price Competitors

bargainingThere are two fundamental assumptions you must make in order to compete effectively against low price competitors:

  • Some people buy solely on price…but it is the smallest part of your market
  • Most people buy on value

Let’s talk a minute about the value buyers. People want value for their dollar. You do. Most people you know do. If you have been an adult very long you know that the cheapest product can often be the most expensive. Your dilemma is that some products don’t lend themselves to value appreciation very well. In other words they don’t readily answer the question, “Why should I pay more?” Funerals are one of these. We do a terrible job of enabling the customer to understand both what they are getting when they pay more AND, just as important, what they are giving up. (and if you say: “we have been in business 100 years” smack yourself. They don’t care.)

So, your primary goal needs to be to enable / empower customers to differentiate on value rather than price. If you have a low price competitor who has been in business more than a couple of years AND you continue to lose calls you can be sure you are not doing this effectively. And if you don’t start then price will become the accepted and only measure.

  1. Be clear and explicit. Detail how you are different and those areas in which you compare favorably. Spell it out. Do it on your website. Consider a comparison chart on those things you do like: “your loved one never leaves our care.”
  2. Actually provide value and customer service. This is a whole lot more than words. It starts with how you answer the phone and never stops. Recently, I was visiting with a funeral staff and one of them mentioned that sometimes they get death calls from neighbors or friends of the deceased before the coroner does and they have to tell the caller they need to notify the coroner before they can respond. I asked them if they gave the caller the coroner’s phone number. They did not. I asked them if it had ever occurred to them that the caller might be under stress and would appreciate not having to look up the coroner’s number. They said that had never occurred to them. Customer service often entails thinking for the customer.
  3. Raise your prices. This counterintuitive move is one few funeral homes will consider but is a classic tactic. Think Mercedes and Brooks Brothers. Higher prices actually HELP you tell your story. (This assumes you have one) Higher prices automatically signal a difference and create a readiness among value minded people about how they might be better served. I have a friend who raised his direct cremation price to $5,000. He is competing with several low price companies charging close to $1,000. He is now more than 4 times higher. The result: he lost about 15% of his direct cremations but still services in excess of 150 a year. You do the math. He can now tell a more compelling story and drive up revenue and create more loyal clients
  4. Don’t play the game. I can see creating a low price competitor as a firewall to keep others from coming in your market but deciding to play the price game is always a downhill strategy. Focus on value, value, value. But talk about value in consumer terms. I have already mentioned “your loved one never leaves our care”. Being in business a thousand years is not consumer minded. Helping people capture memories, tell their stories and being creative is.

 

 

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