If you are buying petrol you may be happy to hunt for the cheapest price. But there are some things in life that you want to be expensive. The last thing you want is a special offer on heart surgery, because you will immediately start considering the quality of what’s on offer and the inherent risks of getting it wrong.
So what are the parameters for perceived value?
The Pineapple was introduced to England in the 17th Century. It was a rare and exotic fruit with a unique taste. The English loved it, but because of its rarity it became a fashion item, with the aristocracy using it as a table centerpiece rather than a food. A single pineapple could cost up to £10,000 in today’s value – you could even rent them!
2. Knowledge of product
In markets in which people are not completely sure of how to assess quality, they use price as a stand-in for quality. Clearly everyone knows what constitutes of a pint of milk, so the cost of milk is pretty fixed. But when it comes to buying a diamond it takes an expert to assess its true quality, so instead we presume that the more expensive the diamond the higher the quality.
3. The risk
The risk of a basic haircut going wrong is negligible so there is little price variation. However the risk of heart surgery going wrong is very real. If we had to pay for it then we would want the best and the best would be the most expensive. Adverts for half price heart surgery or ‘buy one get one free’ would not be well received.
If you’ve just bought a cheap washing machine that broke down or cheap car insurance that didn’t pay a claim, the next time you buy you probably won’t have a problem paying more for what you believe to be a better quality item.
So how does any of this relate to our market? Well, we offer a quality service that is more expensive than the competition. But often the prospect wants to treat it like a commodity, concentrating on nothing but the price.
In light of the above our emphasis should be on the following:
Rarity: What do we offer uniquely? An obvious one is that the client can talk to the directors and decision-makers.
Knowledge: Remember you are the expert. The prospect doesn’t know what a good invoice finance deal looks like, so you have to educate them.
Risk: What happens if the prospect gets it wrong? Restricted funding, upset customers, bad debts, unforeseen costs. To emphasis our service levels, we are so confident that we are the safe choice that we can offer service guarantees or short term facilities.
Context: Our best clients are often those that come from other Finance companies. They have suffered bad service and then they get us. I had one client say “it’s like chalk and cheese” - we are the cheese!
Sometimes expensive is a good thing, and that’s what you need to sell.