Early-Stage Marketing/Pricing

Should your marketing and pricing be different when you’re just starting your business than it is once your business is established?

Background

I was helping two high school students who were opening a new business. They’d had some success, but one of their early questions was: “Where should we look for new customers?”

Their focus, as is true for most startup owners, is generating revenue. Consequently, they were keeping their prices low to attract more business.

Problem

The problem is that they were offering high-end quality services. Again, it’s typical of startup owners to provide great quality and service to demonstrate how good they are while offering low prices to generate more sales. It’s the dichotomy between great service and low prices that confuse the market…which is the real problem.

Alternative

Once we identified who their ideal customer is, what’s valuable to that customer, they could see that their low prices would, in their words, diminish their brand. I was amazed and thrilled at how quickly these two students grasped the fact that low prices did not substantiate their claims of exceptional service.

Second concern

The next concern was forgoing business at a time when revenue dollars were in short supply. There were several elements to be considered:

• What customers would they be losing?
• Are the customers they’d lose be customers they’d rather not have?
• How do the answers to the previous two questions effect their marketing?

The answer to the first question, again in their words, the cheapskates is who they’d lose. If they were to keep their prices low, the customers they’d be losing are the value buyers who would have bought if they hadn’t been confused by the dichotomy between low prices and claims of exceptional service.

Their answer to the second question was: We’d rather not deal with cheapskates.

When we tackled the third question, I explained that there is business that you market to get and business you’ll take when it comes your way. They need to market to the customers they want.

Having said that, if they got a referral to someone who wasn’t their ideal customer, and they felt that it was someone who’d appreciate their service, they should feel free to take them on as a customer…for now. Later, after building a substantial base of their ideal customers, they can tell less-than-ideal customers that they can no longer serve their needs.

One of the joys of working with these two students was their openness to new ways of approaching their business. Another joy was their ability to quickly discern what made sense to them and how quickly they embraced concepts that rang true to them. Kudos to them.

I am intentionally not using their names in this blog out of respect for their youth and my desire to protect their privacy.

Takeaways

To answer the original question, whether you’re just starting your business, or well-established, you should market to your ideal customers.

That doesn’t preclude you from occasionally taking on a customer who doesn’t fit your ideal customer profile, as long as you’re confident they will appreciate what you do for them.

Your price should reflect both the quality of your offering and the value it has to your customer. Pricing your offerings in this way helps you attract the customers you want while avoiding wasting your time with people who don’t.

The added advantage to these takeaways is brand integrity. Your brand is trusted because of the quality of your products and services and your willingness to walk away from prospects who don’t demonstrate an appreciation for the value you provide.

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