Increase your sales with 'Goldilocks' pricing
What is it? A way of doing business in which satisfaction is guaranteed and customers are allowed to pick the pricing that's best for them. For companies, that mix can offer a potent way to boost sales.
Some businesses have found they can increase closing rates by 30 percent by offering the right guarantee at the right price. An extraordinary guarantee reduces the fear of risk for prospects and also has been proven to create value. Here's why: When a firm knows that its fees are on the line, its commitment to service quality increases -- that benefits buyers and sellers alike.
When it comes to service levels and prices, give prospects three options, otherwise known as "Goldilocks pricing" (after the fairy tale heroine who should have been arrested for breaking and entering at the bears' house). As a child, I never understood the supposed moral of that story, but as a sales consultant it helps me remember that prospects like choices. Here are six ways to do that:
1. Fear not. Most businesses are afraid to promise total customer satisfaction. So a strong guarantee can be the feature that makes you stand out in the client's mind. The greater the customers' expected hassle, aggravation, expense, and time lost, the greater the power of the guarantee. While bad service at a restaurant can ruin your evening, bad service from a law firm can ruin your life.
2. Think it through. Find a way to fit the concept of a satisfaction guarantee into your own organization. What will you guarantee -- results, process, on-time delivery? How will satisfaction be measured -- at the end of the engagement. monthly, quarterly? Answering these questions in-depth will do two things simultaneously: allow you to re-engineer your own business to improve performance and ensure client satisfaction, and close more first-time clients by lowering their barriers and perception of risk.
3. Pick a range. Give customers a range of pricing choices. No doubt you offer more than one kind of service or level of service -- package these creatively in ways that will let clients feel in control of their buying. We use the terms "Silver," "Gold," and "Platinum" as shorthand; you can name your packages whatever you like, so long as it makes sense and implies a scale of value.
4. Start with the bare-bones. "Silver" packages are the lowest level of service you'll offer -- bare-bones, no frills, pragmatic, and no-nonsense. This is the lowest price but the worst deal. When you describe the options, mention it last.
5. Aim for the middle. "Gold" packages add more features, frequency, or services. They're the ones most clients will choose, because most people believe moderation is a good thing. Tell prospects this is the most popular choice.
6. Don't forget the carriage trade. Finally, there's your "Platinum" package. This is the package that will attract the kind of client who shops exclusively at high-end stores. It is for the person who likes to say, "I'm worth it." You may not sell a large number of them, but when you do you'll be satisfied that you didn't leave money on the table.
Regardless of which package your new client chooses, it's still guaranteed. If you can't offer a 100 percent satisfaction guarantee for "silver" transactions, consider whether it's worth offering at all. Your reputation is at stake with every client at every level; if you can't afford to do your best work at your lowest price point, then you may need to consider raising your prices.
Image courtesy of Public Domain Image
Popular on MoneyWatch
- When it comes to vacations, the U.S. stinks 110 Comments
- Reverse cell phone lookup service is free and simple
- Amy's Baking Company could face legal 'nightmare'
- IMF chief named key witness in French payoff case
- Snapple co-founder Leonard Marsh dies at 80
- Ellen DeGeneres buys Brad Pitt's Malibu home
- TGI Fridays nailed for doctoring booze
- Amy's Baking Company: Post-meltdown PR campaign