You’ve seen it a million times.
Good, Better, Best.
Yugo, Chevy, Cadillac. Penney’s, Bali, Victoria’s Secret. Regular gas, mid-range gas, premium gas. WalMart, Zales, Tiffany & Co.
And so on.
In every population, marketing tests repeatedly show that there’s a fairly stable percentage of people who buy…The big expensive item or service.
Let me repeat that: In every population, marketing tests repeatedly show that there’s a fairly stable percentage of people who buy the most expensive product or service. It really doesn’t matter what the percentage is, though we’d all like it to be higher:)
The point is that if you don’t have a higher priced item, you can’t sell it. Oddly enough, even though we’ve all seen it, not all that many of us make it available to our clients.
Maybe you live in that one community where everyone drives a Yugo, lives in a trailer and shops exclusively at 2nd hand stores…but I doubt it. (BTW, if everyone shops at 2nd hand stores, where do the “1st hand goods” come from?)
If you don’t live in that community, then there is some percentage of people who will buy the nicer, more expensive product or the more comprehensive service. Not all of em, but some of them.
Those items and services should provide a great value to the customer as well as a better profit margin to you. That profit margin is what keeps the profit pump primed when the last 2 customers bought “good” rather than “better” or “best”.
Cell phones are a prime example. Everyone is hot and bothered about the new iPhone coming out in 2 weeks, despite the $500+ price tag and the fact that it is only available on the most technologically outdated cell network in the country (AT&T).
It’s guaranteed that on June 29, iPhones will be a huge success because a portion of the population will view it as a good value for their needs. Sure, some will get it just because they have to have the newest, coolest geek toy, but that won’t last long.
Ask your grandfather if he would pay $500 for a phone and see if he doesn’t give you a Three Stooges smack on the head, or at least look at you like you’ve lost your mind:)
Yet people will buy the premium product or service…if you have one.
Even better, you’ll often find that they will be better customers than the rest. By better, I mean that they’ll take better care of what they bought. They’ll listen to your instructions and advice. They’ll buy more often if given a good reason. And by doing so, they’ll buy enough that it’ll allow you to sell the $59 phone that the newly graduated kid with their first job needs. The one who you can keep as a customer for life if you have your act together.
What’s your $500 phone?