A business owner’s worst nightmare is learning they’ve lost their best customer.
Many times you don’t get closure when a customer quits your business. You don’t learn why your customer didn’t come back.
But what happens when you do know why you lost a customer?
I was speaking in Portugal this past week. I was taking a tour of the 300-year-old Taylor’s Port Wine Facility when the guide told me about the day they lost their best customer because he would no longer pay their price.
Watch the interview below to discover the story.
Common advice at times like this tells you to lower your price to keep the relationship.
Nothing could be further from the truth. You need to stick to your guns and not lower your prices.
Customers are pleading poor to get a deal – at Dollar Stores and Neiman Marcus – and many of those retailers are giving in. A 10% off coupon here. A buy one get one free. You get the idea.
It’s easy to say don’t rock the boat – just make them happy. The problem is that you could be hastening your own demise.
You must know your costs – down to the penny. That’s all of your costs.
If you’re like Prada and know that your sizes can be off, and you decide to send 3 different size dresses when a customer orders from your website, you need to factor in that hefty return cost into your pricing.
If you’re like Taylor’s, you know that while high volume is tempting, you would be giving up the profits necessary to keep you in business by going too low.
Know what your pricing stands for or you’ll fall for anyone’s plea for a lower price.
If you are a luxury brand and offer a lot of extras for your customers…
If you are a boutique retailer and do a lot of personalization of your offerings…
If you spend a lot of time training your employees on how to provide an exceptional experience for your customers…
...that all takes money.
You can’t fake your way to profits – you have to earn them.
So what to do when you lose a big customer? Go find new ones. Move forward and don’t look back. Those who value what you offer will be back, and those who don’t will move on to the next business.
If that business caves to their price demands, you’ll soon have one less competitor.
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