Successful Business Customer Care Strategies, Thomas Winninger

Choices – Three, Never More Than Four!

Choices, choices, choices! In today’s strong economy, customers have so many choices of what to buy, where to buy, when and how to pay, why should independent business owners be concerned with giving customers more choices? Because one of the key responsibilities of any successful leader is to help customers sift through the myriad of choices available in the general market and guide them toward our products. The challenge for us is to effectively offer choices without confusing the customer.

I have always followed the rule I learned many years ago from Ray Kroc, founder of McDonald’s, the key to having your customer choose you is to offer choices of your products and services. “Every customer needs choices,” he said. But Ray’s rule was to offer customer three choices, yet never more than four. What kinds of choices are we giving our customers? Don’t force your customers into shopping you against your competition by giving them only once choice of how you can meet their needs or solve their problem. Now you might be thinking, “I give my customers the choice of everything I have in my showroom!” However, with that frame of mind, we are really offering them one overwhelming choice. In essence, we are saying, “It’s something or nothing.” Always remember, a large inventory does not constitute offering choices. Choices must be based on benefits and satisfying your customers’ needs.

PACKAGING
The real key of offering choice is effective packaging. Choices can be offered by packaging models, features, function, etc. A simple but effective example of packaging choices is the method followed by the coin-operated car wash bays. For one amount, the lowest, you can get the Basic wash, rinse and power-dry for your vehicle. Add $1.50 more and you get the Deluxe wash, which includes the basic items, plus wax. For $2.00 more your vehicle gets the Super-Deluxe Care Package which includes the whole job plus under-carriage super power wash and premium wax. You can see how each choice offers more to the customer. A “sell easy” example in the manufactured home industry might offer the following packages:

Package A: House delivered to a building site and laid onto foundation – $50,000.
Package B: House delivered to building site and laid onto foundation, includes utility hook-up with septic and well – $65,000.
Package C: All of the items in Package A and B, but the customers receives assistance in selecting the right lot and placement for the home – $75,000.

The key is to give your customer choices of you, you and you – not you or someone else!

SET A BENCHMARK
A savvy business leader can effectively offer choices and can count on selling more of the higher priced choices by starting with a benchmark package. Choose a basic
item at the lowest price you can offer. This is the benchmark product. Then add accessories to add value. For example, you might offer:

Customer’s Choice: A gourmet cooking set, with a complementary utensil set at no charge.
Silver Choice: Same cooking package utensil group, but with a complete cookbook set.
Premium Gold Choice: All the previous items and including a premier quality knife set.
With each choice, you have added price to the benchmark, but in small increments, with the smallest increment added to the most expensive choice. The customer sees greater perceived value in the Premium Gold Choice and his response is likely to be, “It’s only $300 more and look – I get everything I want.” You will also anchor your customers to you because you have taken them from selection to choice. Selection is two. Choice is three. The third choice has to be extended in terms of value, but not extended in terms of price.

Accessories are an important part of offering choices but will not boost your sales if they are detached from your benchmark. A lawn care dealer may have a showroom full of accessories, but realizes he doesn’t sell very many. If he has them positioned as stand alone items, I can assure you they won’t. Accessories need to be connected to the featured items. Most customers want to make one purchase decision. The more decisions a customer has to make the more complicated it becomes. If you have a primary choice item on the floor and the accessory choice on the wall, your customers will think by purchasing an accessory they are increasing their cost. The accessory will likely stay on the wall.

SELL EASY RULES
Rule Number One: Offer at least three but never more than four choices. Take your basic product or service and accessorize it into three choices for the customer. Each choice should cost a bit more, but each choice must offer more value.
Rule Number Two: Build vertical packages. Packaging is not just offering more accessory choices but rather building an accessory package around your benchmark item.
Rule Number Three: Price vertically. Always spread the difference in price between package A and B wider than you split the price difference between B and C. Make your greatest value choice the smaller margin difference.

Thomas J. Winninger, CSP, CPAE, and member of the Speaker Hall of Fame is the president of Winninger Institute for Brand Strategy and over 70 major companies in North America depend on him to assist them in maintaining their market dominance. Thom is the author of best selling “Price Wars”, “Sell Easy”, and new in 2000, “Full Price!” Contact the Winninger Institute at (612) 896-1900
E-mail: thomas@winninger.com; or visit our website