Darryl Rosen

Your Customers don't Buy Everything at Costco

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Your customers don’t buy everything at Costco….

It’s no secret that price is important. But is it the only consideration that people have when they shop?  No! If it were, then your customers would buy everything at Costco!  And, if they did that—well, they’d need a gigantic warehouse to store everything.  You can’t just buy a hammer at Costco—you need to buy eight hammers.  And who needs eight hammers?  Bob Vila doesn’t need eight hammers.  Tim Allen doesn’t need eight hammers. But your customers don’t buy everything at Costco and the reason is that many other variables loom equally as important when your customers spend amounts big and small.  

One year we raised a few prices at our family’s chain of wine stores.  After many years of matching competitors’ prices, we came to the realization that we needed fair, healthy margins to be viable.  Because Business is a game of margin, and we needed more margin.

It didn’t go so smoothly at first.  Not in the least bit.

One day, a woman called and mentioned that we were priced higher than Costco on a case of water.  My Dad immediately sought me out.  “How can we be higher than Costco?” Veins were popping in his forehead.  The veins were actually doing the Macarena.    And this was years before the Macarena was even invented.  Kind of scary! 

I calmly (sort of) explained that, to save a few dollars, the customer would have to drive to Costco, park two football fields away, grab her own cart, pull her handy-dandy Costco card out of her wallet and show it to Costco’s version of TSA checking boarding passes, get approved for entry, navigate the aisles, all the while avoiding being run over by very large people pushing 13’ flatbed carts piled 7’ high with Doritos and Spam, finally find the water in the far Northwest corner of the store, pull the cases off the third shelf, located about eight feet over her head, retrace her original steps towards the front of the store, again, trying not be run over folks who looked like they were stocking their very own Las Vegas buffet and finally reaching the register, pay for them, show the Costco TSA agents her receipt, so as to prove she had not come all this way just to steal a case of water, and then haul everything to her car, all by herself. 

Does this sound familiar? Is this what you go through when you shop at price clubs and discounters? 

I imagined that once the price shopper completed the task of buying the water, she would still have to get the cases to her 14th floor apartment! 

Or, in return for a few dollars more, we could deliver the cases right to her refrigerator! 

Money isn’t everything!   Despite what Costco would have you think.  She bought the water from us after we explained that the benefit of doing business with us was a fair price and, much more importantly, convenience. 

Maybe you are thinking “nice try, pal, but like I said earlier, my customers only care about price.” Yes, it is important. Please understand, however, it is not the only criteria your customers use when spending their money. Your customers may steadfastly hold to the ‘price is everything’ argument; however, the more you get to know them, the more you understand their needs, and the more you are able to ascertain their problems - for which you have solutions - the more likely it is that your customers will pay your prices.

It’s always best to educate your customers about the overall quality of your offering, and always keep these other attributes in mind.  There really is much more to the experience of dealing with you and your company than just the price of your products.

Your customers probably care about the following, in addition to price. 

·      They want to have a hassle-free day/week/month/year – the more you do to help your customers in as many ways as possible, the more you will be a trusted and valued resource – and partner. From the water story from just a few minutes ago: the act of bringing three cases of water to our customer’s doorstep was helping her avoid a real hassle. She just needed help thinking of it that way.

·      They want courtesy, speed, and timeliness when they ask questions. Call people back right away! Remember, the person calling is probably reporting back to the decision-maker.  The sooner you handle the problem/crisis/opportunity, the better it will be for your sales.  I know a top beverage professional who makes the following promise to his clients:  He promises that he will always call back the same day.  Lip service?  Not a chance.  I have spoken with a few of the thousands of retailers he has helped who say that he has lived up to that promise every time.

·      They want simple interpretation of price lists – confusion erodes trust.  Lack of trust costs money, and if your customer doubts you, the price actually goes up because the customer has to spend time looking over your shoulder and checking up on you. You must be able to clearly point out what the price is, in simple, understandable terms.  Have you ever done business with someone simply because you trusted him or her?  Of course!  We naturally gravitate towards clear, transparent and trustworthy people. That’s what your customer wants.

·      They want to work with companies that do the little things – always have the mindset that the devil is in the details. For example, if you make signs for your customers, make them in an accurate and timely manner.

·      They want you to have confidence in your products, your price and your people – everybody wants to make the right decision.  The more you back up your words with solid data, the more you educate your customer.  The result:  they will be more confident in their decision to do business with you due to your unwavering belief in your company and your products.

·      They want salespeople that respect their time – and show up prepared for the sales call.  Respecting your customer’s time is more than being on time, it’s being ready to go.  It’s having the information your customer needs to make a confident, sensible decision.  You should know what that level of information is because you asked prior to the meeting.

·      They want people with unmistakable personal values, ethics and honesty – so they can invest in what you’re saying.  They want you to wear this integrity on your sleeve so they don’t have to go looking for it.

·      They want the creativity it takes to build their business – and value any creative suggestions that will help them increase average tickets, customer counts and bar rings.

·      They want to be part of a valued relationship – your prospects want to be around likeable people.  They want to feel part of a process, part of a team.  Oftentimes, your primary contact with a customer is with an individual who assists the ultimate decision maker.  It is conceivable that you are more knowledgeable, and more educated about your products (or the beverage business) than they are at the present time.  Educate them.  Ask them what they think.  Listen to them, not just to appease them, but so you can hear what they have to say.  Take their feedback seriously. 

Create a comfortable environment for your customer, and price will be less and less of an issue.