Are You Sure Your Customers Choose on Price?
Julian Scadden says more businesses should avoid the race to the bottom and try offering better service.
Here are today’s highlights:
President Trump is planning to eliminate tariffs on some goods that can’t be produced here.
Gene Marks says the stories about AI workshop and hallucinations are true—but not an excuse to avoid AI.
Josh Patrick says there’s not enough discussion of ESOPs that are poorly managed.
In October, U.S. companies issued more layoffs than they have in more than two decades.
PRICING
Julian Scadden explains what drives him crazy about many home-service businesses: “Every contractor I talk to thinks the solution to price objections is better pricing. Lower prices to compete with the guy down the street. Or raise prices and hope customers don’t notice. Both strategies miss the point entirely. Your customers aren’t choosing based on price. They’re choosing based on perceived value. And most service businesses suck at communicating value.”
“Take the lawn care industry, for example. Talk to any homeowner and they’ll tell you the same thing: ‘They’re all bad, but at least they’re cheap.’ Nobody’s positioning themselves as the premium choice. Nobody’s explaining WHY they should cost more. So customers default to the cheapest option, expecting and accepting mediocre results. This creates a race to the bottom where nobody wins except the customers – and even they’re getting terrible service.”
“But here’s what happened when one of our Nexstar members tried something different. Instead of competing on price, he started positioning his plumbing company as the ‘stress-free solution.’ Same basic services. Same technical expertise. But now he sends customers a photo of their technician before arrival. Gives them a 30-minute arrival window instead of ‘sometime between 9 and 5.’ Provides upfront pricing before any work begins. His average ticket went up 40 percent.” SUBSCRIBE TO JULIAN’S NEWSLETTER
