19
Feb
07

Marketing Quality to Price-Sensitive Customers

By Joshua Steimle 4 Comments Categories: Marketing

This post is a question, not a statement. The question is how does one go about marketing a high-quality B2B product or service to customers who are at best price-sensitive, and at worst just plain cheap? Add to the situation that the product/service is a new offering, and the marketplace is already crowded with offerings that claim to be high-quality. I’ve already got a few ideas, but any suggestions/insights/experiences would be appreciated.

1. Branding. Although within this particular space every competitor already says in one way or another that they offer a high-quality service, their brand doesn’t reinforce the claim. Everything from their logo to their website to their messaging says they are fly-by-night operations. However, I don’t pretend to believe that good design and branding will carry the day when it comes to selling a product/service to cheap customers who tend to ignore good branding. Certainly it will help, but I don’t believe it will be enough for effective differentiation.


2. Reputation. Certainly having a good reputation and word of mouth will be effective, but not in the short-term with a new offering since no reputation has been established. However, just as I don’t want to overestimate the power of good branding I don’t want to underestimate how fast a reputation can be built, positive or negative, given the right channels for getting the word out, which leads to public relations.

3. Marketing blitz. Out of every 100 potential customers there will be some who will actually purchase this product/service without any more prodding than having the sales pitch put in front of them through some traditional marketing medium such as direct mail, outdoor, pay-per-click, radio, or TV.

4. PR / buzz. I’m a firm believer in PR as being one of the best forms of marketing when it is done correctly. I think the effectiveness of a magazine article can easily be 10 times that of magazine ad.

5. Partnerships. In my opinion the right partnership could be the best way to pick up new customers quickly. In this case we have already identified companies that focus on the same target customer and whose own products/services dovetail well without being competitive. In addition there could be a substantial benefit to the partner in reciprocal referrals.

Have you had any experience marketing a high-quality product/service to a low-end audience who says they care about quality, but who in reality cares a lot about price, perhaps more than quality?

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  • http://www.nimbletheory.com jeff barson

    Hey Josh,
    Here’s my take. Reputable testimonials and some kind of free experimental something. 37 signals seems to be doing well with basecamp et al. (Oops… forgot your last post.)

    I get nervous with over designed sites (deviantart). They seem as trite as the rainbow letter stuff. Credibility has to be your differentiator and that’s all about known users when it’s online.

  • http://www.recycledhuman.com/blog Timothy Uhl

    Josh,

    What a fun topic! There are two types of cheap clients.

    1) Those who just don’t have the money.
    2) Those who have it, but don’t want to spend it.

    Try as you might, the first type will almost never be your customer. Not only do you have to sell them, you’ve also got to convince them to put your service on a credit card or refinance their house. It’s economics and nothing else.

    The second type of client, can be sold to. They just need to be convinced of the value of your service. I focus the pitch on my process. I show them that consultation is the only way to ensure that their needs are met.

    The first thing a low-end vendor does is cut consultation out of the process. A discovery phase or strategy sessions is easy to remove without clients noticing. When I sell to clients like this, I make sure they know what goes into the process and why. Instead of selling them on the deal itself, I sell them on the consultation. They may be uncomfortable with my price at first, but as they’re out there kicking tires they ‘re looking for consultation. When they don’t find it, they come back feeling good about the deal.

    I’ve got a post on my blog with something similar. It’s a piece that discusses how companies like LogoWorks and LegalZoom are taking the consultation out of the process. While their solutions are fast and affordable, they’re not always what’s really needed.

    http://www.recycledhuman.com/blog/rant-babble/why-companies-like-logoworks-and-legalzoom-are-evil/

  • http://www.anntorrence.com/blog. Ann Torrence

    Sigh… It is a peculiarity of this local market, the penchant for “cheaper” which explains why it has been impossible to find a decent gelato in this town. 15 years ago in Houston, I could indulge in a gianduia (chocolate hazelnut flavor) at a niche market gelateria that catered to the limousine crowd along with the mere mortals. I keep waiting for the trend to catch on here, but I fear that this market just won’t pay for quality.

    Ask yourself if you really want this market segment. Will the bargain-hunters pay on time, respect your license, make referrals to the kinds of customers you want?

    Assuming you have a good business reason to chase this market, a couple things will help differentiate your pitch.

    1) Metrics. Your competition won’t invest in generating any metrics that demonstrate quality, so if you have some, you win. If you need metrics (because all your existing clients have a confidentiality issue), do a charitable project for a cause that resonates with your target market, in exchange for the metrics. Preferably, choose a charity whose trustees are littered with the kinds of clients you want (ones that pay).

    2) Tiered pricing. Set up a series of packages that lets you sell to the price-conscious client without frittering away too much energy so you can cultivate desired clients.

    3) If you have to go for the bottom-feeders, set your price at your target level and then give your cheapos a discount. They’ll feel like they are special because they got a good deal, and you adjust the discount as the market grows in the full-price paying category.

    4) Appeal to the herd mentality. It’s another peculiarity of this market, and if you can get the buzz that you are the go-to guy, you can charge what you want.

    Now where’s my go-to gelato guy?

    AT

  • http://www.mwi.com Joshua Steimle

    Thanks Ann, that’s some good commentary. Just for clarification though, we’re not going after the local market with this idea, but rather the national and perhaps international market of what I’ll call “price conscious” buyers of the particular product/service we’ll be offering. However, Utah is probably a good test market. If the people here will buy it, chances are people will be even more likely to buy it elsewhere.

    And I wouldn’t mind some gelato myself. Let me know if you find a place.