Wednesday, 9 February 2011

SECRET MANUFACTURER: Something about Mary

Our manufacturer on the street agrees  deliver customer value, instead of relying on discounts, to gain sales. Who is the author? Sssh, it’s a secret!

The recent Mary Portas ‘Secret Shopper’ TV programme, featuring the sofa furniture retailer CSL, could have easily been substituted for the bathroom industry. She helped increase the fortunes of this company, simply by focusing on improving customer service. Mary suggested they remove promises of discounted prices, with ‘can’t buy cheaper’ quotes, by introducing a ‘best price’ for all sofas in the store. I constantly hear the mantra that ‘you just have to discount’ in the bathroom industry to secure sales. No-one wants to be the first to break the status quo and yet CSL did just that - and won. And it’s all the more impressive in an industry where discounting is not just expected but where advertising messages focus almost entirely on this tactic.

Deadset against sales
The sale becomes a vicious circle. Prices are discounted and sales go up. Yet they are often simply cannibalising future potential sales. This results in sales, reducing post discount period, lead to the decision to go back into a sale period and so on. The CSL approach to always offer their best price – no sale, no discounts, no misleading pricing – was a brave move. That it did not run a sale period in December last year was even braver. The results spoke for themselves. Despite a slow start, CSL had its biggest trading day ever with a 30% increase on their previous best performance. It was making a very clear statement – the product is worth the price.

Delivering customer value
Conventional marketing wisdom suggests that there are two clear drivers for delivering customer value – economic and psychological. Economic value is driven by function, reliability and durability. For a bathroom purchase this is delivered by ensuring the customer buys good quality product that fits their bathroom and works well.
Psychological value is delivered through the relationship created between consumer and reseller during the transaction. By creating a level of trust with the customer by considering their requirements, making suggestions and developing a proposal that delivers on these and then ensuring goods are received in a timely manner, in good condition and resolving any issues promptly. Added value services such as installer recommendations (making sure the end to end experience is positive), follow up after sales messages to ensure all is to the customer’s satisfaction can all add further to this psychological value.
Deliver on this and economic value is also enhanced and perhaps one day we may be ready to follow the example of CSL and create an industry where the question of price becomes a distant second to that of value.

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