It’s every small businessperson’s biggest nightmare: You finally make the move to raise your prices, and you immediately get dozens of customer complaints and calls and you decimate your bottom line! But what if the reverse happened?
Renowned social psychologist Robert Cialdini suggests that in some cases, businesses can actually increase their sales by raising prices! Why? He explained that in industries where consumers aren’t sure how to assess quality, they use price as a stand-in for quality.
In other words, few people will pay $5 more for a gallon of milk because it’s too easy to compare it to other, similar gallons of milk in the same freezer that cost much less. However, in certain categories of products and services, people have no idea what something should cost.
For example, why does one painting sell for millions, whereas another that may not look much different sells for $20? Certainly, art historians could wax on for hours about the artist, the materials he used to construct the piece, and the time period it was created. But often, people buy a painting because it’s expensive, and because it’s expensive it communicates to the buyer and others that it’s of highest quality.
Cialdini went on to say, “especially when [consumers] are not very confident about being able to discern quality in their own right, people who are unfamiliar with a market will be especially led by price increases to go in that direction [and purchase more expensive offerings].”
He continued, “…organizations will sometimes raise their prices and as a consequence will be seen as the quality leader in their market,” regardless of whether they’ve upgraded their offerings.
Cialdi was very clear about one thing: If you were to increase your prices, you better back those prices with the very best skill and reputation, so people feel like they’ve gotten what they paid for!
If your prices have languished for some time, it’s okay to give them the bump they need. After all, the cost of everything has risen! But if you do, be sure that you’re delivering that very important word—VALUE!!!!!
How do people determine VALUE in residential services?
Here are 6 things you MUST be delivering to be the high-priced option in your market:
1. Appearance
Your phones must be answered live 24/7, 365 with a live person who is prompt and helpful. The homeowner should be greeted by a clean, wrapped, sparkling truck that pulls up to the side of their home fully loaded with parts to perform an array of jobs. And a technician with a spotless uniform, cleanly shaved, and a big smile on his face should be walking to that person’s door!
2. Communication
Your call-taker should instill immediate confidence in a homeowner that his/her problem will be resolved by your company. Your technicians should know how to confidently communicate with customers so they know what’s going on with their home. Your tech should also be able to handle any questions or objections that arise with ease and a smile on his face.
3. Options
Your technicians may drive your sales, but they shouldn’t feel like salespeople. They are in the home to educate homeowners and lay out their options. Make homeowners feel empowered—like they’re ultimately deciding what’s best for their home. You’re simply there to advise and assist them in that decision. You become their ally!
4. Satisfaction
Your company must be 100% committed to delivering 100% customer satisfaction. Often, that can mean giving money back to a customer who may not deserve it. It will be worth every penny if that upset homeowner later becomes your biggest fan.
5. Financing
So, your call-taker does a great job setting up the appointment, your technician provides exceptional service while in the home, and you have a homeowner willing to make a big investment in your services… BUT… the homeowner doesn’t have the immediate cash reserve to do it. You should absolutely be taking credit cards and you should offer multiple financing options to help the homeowner. Otherwise, you will have lost out on a great opportunity, and you’ll likely never have that person as a client again.
6. Follow Up
Once the service call has been completed and you have the customer’s money, your interaction should not stop. Not at all. Every homeowner deserves a “happy call” to ensure the service experience was outstanding—and if it wasn’t outstanding, it should be addressed by a manager immediately. That call is also a time to clear up any lingering questions. After the “happy call,” someone in your office should be designated to write a brief, handwritten thank-you card to each customer. And that customer should be put on a mailing list and email list where he/she will receive offers, newsletters, coupons, and other regular forms of communication!
If you deliver effectively on each of those six points above, you shouldn’t have a single problem raising your prices and increasing your sales!