Compete on Value, Not Price: Building a Competitive Comparison Grid

For a multi-unit franchisee, the relationship with a customer doesn't end with the sale. Each purchase of an item or use of your service is a single transaction between an individual customer and an individual employee. Whether it is a quick meal at a sub shop or a thorough home cleaning, this transaction should be the beginning of a long-term relationship with your customer. After the transaction, the relationship must be grounded in not only the quality of the product or service, but also in the strength of your response to customer needs. How do you gauge and evaluate your quality of product, service and response beyond the price tag?

The successful multi-unit operator will start by building a "Competitive Comparison Grid." Evaluate your products and services and compare them with those of all your competitorsl; not just those within franchising, but in your total market segment. It is not only what you sell, but also how you sell and supply that counts. Customers are always looking for something new, or a bargain price. But what will bring them back long after the transaction is completed will be your follow-through, service, and response to their needs and wants.

A Competitive Comparison Grid can help you internally evaluate what it is that you do best in comparison with your competitors. Use the relationship you build with your customers to define and build your grid. How, and on what, do we compare? Start by defining what it is you provide as a value merchant vs. a price merchant. Of course value merchants don't compare price alone, right? We define ourselves not only by the products we offer but by service as well. Service is value! A client of mine once told me that value is always "one notch above its price point." Service is whatever your customers think it is and expect of you. Therefore you must know your customers very well, and a comparison grid is an excellent means of evaluating how you are meeting and exceeding customer expectations.

There are numerous ways a franchisee can build a comparison grid.

Institute a Customer Service Index

Identify the types of service you should be giving and rate each type in terms of the needs of your franchise. Marriott Hotels initiated a similar procedure with its Guest Service Index, a list of specific services that were rated according to the quality of service a guest received. This is invaluable to front-line people because it enables them to focus on customer satisfaction. Ask yourself, "On what do I want my staff to be judged? Are they knowledgeable and responsive? Do they look for opportunities to serve? Do they take pride in their personal appearance and that of the business?" You can formulate the comparison questions to fit your own brand.

Adopt a Customer Satisfaction Verification Program

Value merchants take the time to make a follow-up call to customers to ask if their expectations were met or exceeded by the value and delivery of the product or service. When staying at a Westin hotel, I was contacted by the Guest Relations Director shortly after checking into my room. She was calling to make sure I was satisfied with everything in the room and to see if I needed anything else. Is your staff making follow-up calls to see how satisfactory your product or service was in that first, invaluable transaction? Do they call to see if they can answer any questions or provide advice? Using email instead of a call to follow up allows customers to respond at their convenience (instead of during dinner) and helps build the relationship.

Sell Your Strengths

Don't create an awareness among consumers that you have a competitor. Rather than competing on price when a customer may press you to compare with a price merchant, you may say, "Our sandwiches are made with high-quality, fresh ingredients." Or, "We guarantee a complete refund or a free second visit if your house wasn't cleaned to your full satisfaction." Note that nothing was said about the competitor's product, service, or price. Doing so will only encourage comparison with another company and its products and services. Don't defend price – define value!

Build a Frequent Shopper Program

When times get tough, don't lower price just to get the business. Instead, give your customers "equivalency points" to use to purchase other items or to obtain a discount after reaching a certain accumulated number of purchases. Several clothing stores I know of "award" customers with points to purchase merchandise at regular retail prices at special intervals. Or, purchase ten coffees, pizzas, or house cleanings and get one free. Recently I was in San Diego and shopped at a California-based grocery chain called Ralph's. Customers receive a coupon printed on their receipt that is good for points accumulated toward the purchase of certain items in the store at a later date, i.e., baby food, wine, bakery items, etc. Businesses can award any type of "bonus points" to the customer after either a certain number of visits or purchases of specified products. Rewards for new customer referrals also can work well, depending on your type of business.

The challenge for us all to avoid is battling with our competitors over price and product/service alone. We can draw a correlation with what the hotel industry calls the "Amenity Wars." A study by the Strategic Information Research Corp. revealed that 73 percent of travelers who responded said it was not the amenities in a hotel that mattered. It was the service level, the staff's responsiveness to their needs, that was most important.

We can only give our customers a product or service that is equal to or better than that of our competitors. The rest is up to your team. You can only provide the best item, ingredients, equipment, or technology the franchisor supplies. I believe the premium customer knows that and wants something more from you. That something more is value-added service.

Stop comparing your brand on price and product alone. Use the information you gather on what your customers want. (You can help determine this by developing a Market Intelligence System; see www.winninger.com/articles/developmis.htm.) Then build your Competitive Comparison Grid and you'll understand who is in command to win the war.

Thomas J. Winninger, founder of the Winninger Institute for Marketing Strategy, is under contract with 70 major companies in North America to ensure their competitive market dominance. He is the author of Price Wars, Sell Easy, Full Price, and his recent Bullseye Book 1: Think Smart. Take the Bullseye Quiz at www.winninger.com.