Value, RevisitedByRaymond D. Matkowsky
Last month we reached into our archives and pulled out an article on value that was written approximately one and a half years ago. It can be found here. Even though nominal household wealth in the United States is at an all-time high, people are saving more, sales are down, people have stopped buying impulsively, and now rating the “value” of a product over price. Price much of the time only comes into consideration at the end or when you have two products of equal value.
For the past year, I have been getting surface mail, email, and flyers trying to convince me to buy a new service that an existing vendor of ten years is trying to sell to us. This new product is an enhancement to an existing product we already purchase and we used satisfactorily for nine years. Problems began when the new product was introduced. When trying to resolve these problems, the service has been poor. I have gotten the feeling that this vendor is trying to use poor technical service, while still collecting a fee, to convince the client to migrate to the new product. Failing after several attempts, each subsequent piece of mail or email comes in at a lower price point. Evidently, this vendor thinks that my sole consideration is price even though I have told them verbally that this is not the case and I and my company do not “value” their new offering and question the future “value” of their company. Especially, since it was clear that customer service was of a secondary thought to them. About three years ago, I dropped a thirty year vendor over similar customer service issues. This vendor has also come very close to being dropped also.
There are people that buy solely on price. Forty-five years of experience tells me that they are the worst and least loyal customers that one can have. You are better off not giving them much of your time. People do buy on “value” and they make great customers because they see something else in it for them. They will recommend you to others. This “value” may not be a unique property of the product itself, but may stem from your sales or technical service representatives. It may stem from a problem caused by another vendor’s product that the customer feels that you may be able to resolve more quickly. Everybody has a unique definition of what “value” is. The simplest way to find out is to ask your customers what they value and then try to give it to them.
The population through the world is graying. Soon there will be more senior citizens around than any other age group and they as a whole have a greater disposable income than any other age group. They buy on “value” to them not on price. You would be wise to pay attention to this demographic. A purchaser will be more likely to be sixty five than between 18 and 54. Since seniors are working longer this is just as true for business to business transactions as it is for business to consumer sales. Again, this group buys on value not price alone.
There are many reasons why I believe that the tradition of pitching to the 18 to 54 age group is no longer a good decision for a marketer. For example, it is an irrefutable fact that on an inflation adjusted basis millennials earn less and have less wealth than Baby Boomers had at the same age. Other reasons are that this group is so heavily indebted that the normal expenses of life is a burden, they have the largest unemployment percentage of any group plus this group has the poorest credit rating of any other segment. They will probably buy on price if they buy at all. If history repeats itself, you will regret it and so will they in the future.
The vendor that was mentioned at the beginning of this article is still with me. Data Stats still purchases the original product and service. Why? They admitted that their customer relations has exacerbated the problem. They realized that it is better to keep an existing paying customer than to find a new customer. Keep in mind that they are on probation and they still might lose me as a customer. I will not tolerate any further disruptions. I certainly will not tolerate any further poor customer service.
If you have any further suggestions, do not keep it to yourself. Help your fellow readers!
If you have any questions, comments or suggestions drop me a line at rdm@datastats.com.
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