46 The Financial Times Guide to Business Development
16. Price with the competition in mind
This concept is particularly relevant to those in the services sector and is
something I stumbled across almost accidentally after a very large number
of ‘mystery shopper’ research projects.
If you were to look at and research your immediate and direct competitors
as regards fees in any town, city or local market place you would typically
nd one or two rms or businesses which were signicantly cheaper than
the rest and maybe one or even two which were massively more expensive.
The rest however would fall into what I call the ‘middle ground’ and pre-
dominately this is where the battle over price is being fought and where the
majority of people will buy.
What is most signicant, however, is that if you look at the comparative
fees at the top and bottom ends of the middle ground you will nd the
difference in charging rates is almost always relatively small. With this
in mind, consider positioning yourself immediately at the top end of the
middle ground. If you are able to develop good enquiry handling tech-
niques and pile on the ‘weight blocks’, any small fee difference should not
work against you. (See Chapter 5.)
17. If you must have a loss leader, make it
count!
Many businesses internally justify their low prices and fees as a loss leader,
their reasoning being that they will attract interest, potentially win some
business and enable you to generate a bigger spend either then or in the
future.
While the logic of the loss-leader concept is absolutely ne and in many
cases very successful, I have also seen it work against businesses. With
this in mind, plan carefully how you are going to make your ‘loss leader’
work for you in the future. If part of the plan is to use it to build relation-
ships with customers and clients for the future, then you must have in
place a programme for keeping in touch with them and nurturing that
relationship.
Remember, if you don’t get them to come back or sell them something else
at protable levels, it is not a loss leader, it is just a loss!
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