If the competition is killing you, don’t reduce price, add value.

I often advise clients not to reduce their prices. That usually gets  a response like this one. “But you don’t understand. There’s no WAY I can keep my prices the same when the guy down the street has reduced his prices.  No customer is crazy enough to pay more for the same product.” When you look at it that way, you’re absolutely right.  No customer is crazy enough to pay more for the same product. There is a basic, but very powerful principle in marketing that everybody thinks they understand but that few people seem to be able to grasp and apply to their own situation.   That principle is this: The customer doesn’t care about your product.  The textbook example is “the customer doesn’t buy the drill, he buys the holes.” He isn’t buying what you think he’s buying.  He’s not buying a 100 hour inspection, or an hour wet lease on a 172, or a tensionometer, or a software package, or a set of tires.  As a business owner, you must avoid the mindset that your product is a commodity like a sack of beans, that your customer can buy just as easily from the guy down the street. Your offering needs to be structured such that it includes value that can’t be compared with those of your competitors. Value takes many forms, but here are a few:

• Quality
• Opportunity
• Convenience
• Safety
• Peace of mind
• Recreation

If you can provide that better than your competition, you can charge higher prices. Some examples: Quality – Most of us don’t buy the cheapest car on the market.  We don’t buy the cheapest shoes or the cheapest furniture.  This is particularly true when it comes to aviation products and services, we want quality.  Customers that buy a lesser-quality product or service usually resort to that for one of two reasons:

1. They can’t afford the better one.
2. They don’t know any better.

If you’ve positioned your product correctly and have a marketing system that seeks out qualified buyers, you don’t need to worry about the first one. If people can’t afford your product, you will never hear from them.   If the problem is that they don’t know any better, then you need to do a better job of educating them! Opportunity – Your customer wants to do business with clients in a city 200 miles away, and needs to take parts to service industrial equipment.   He doesn’t know, or much care, whether the transportation you provide for his technicians and parts  is in a Navajo or a King Air. He doesn’t much care what your operating costs are.  What he cares about is that he can confidently promise to serve his new clients because he trust that you’ll get him and his stuff there on time whenever you agree to. In another case, if you can offer an opportunity for a student to earn a particular rating in two weeks, when all of your competitors require a month or more, you’re no longer selling hours of aircraft rental and hours of instructor time. You’re selling an opportunity.  (Of course they’ll expect you to show a track record and references!) Convenience – A scheduled inspection on a Citation II is the same regardless of who provides it. The legal requirements are the same, so it’s pretty much standard across providers, right? Wrong.   We know a provider that will go pick up a client’s aircraft on the scheduled day, fly it to the maintenance center, perform the inspection, have it detailed, do all of the required service and paperwork, and return it to the client’s hangar.  (One client called to complain that the work had not been done because he hadn’t noticed that the aircraft had been moved!) Safety – Safety is a huge factor in any aviation transaction.  People are willing to pay for real and perceived safety for themselves, their employees and their families.  Charter providers, maintenance personnel, parts providers,  FBOs, and others who emphasize safety, have excellent safety records and certifications,  and those that take extra time to make their clients feel safe can charge more for their services. Peace of Mind – Related to safety, this also covers peace of mind from non-physical anxiety. You can “sell” peace of mind in several ways, depending on your business type:

• Provide a detailed manual
• Show that you have an easy-to-understand, logical, proven process and track record
• Provide a guarantee that you’ll stand by your work
• Guarantee that you’ll  reimburse any expenses if something related to your work results in an audit or fine,
• Guarantee that you’ll ensure transportation in case of unexpected circumstances

If you can provide better peace of mind than your competitors, customers will gladly pay more. Recreation – An “adventure” flying company near us offers several innovative packages for fixed wing and helicopter flights.  They work with other local businesses to create recreational packages and experiences for their clients. Some of their packages include:

• Romantic “date flight” to see the lights of the city.  This package includes dinner, limousine service, and flowers.
• Scenic canyon tours for families that include a picnic lunch.

The Golden Rule is often wrong How do you know which of these values to concentrate on?    That can be a tough question.  If you lose a customer to a competitor, don’t assume you know the reason. We tend to guess either why WE would choose a competitor if we were in their shoes (a misapplication of the Golden Rule since we almost never truly understand their point of view) or guess the simplest possible answer, which is also often wrong.  People are seldom simple. It’s easy to guess the customer chose the cheapest option (if your competitor’s option costs less) but people leave companies they’re doing business with more often because of a customer service factor – usually resulting in one of the items above.   An incident caused your customer inconvenience, or anxiety, or didn’t fit their business needs as well as your competitor’s offering. One way to find out: A charter pilot we know spends some time in conversation with his passengers, asking about their previous flight experiences and their plans once they get to the destination. This gives him an idea of their priorities. Some passengers are interested in pure convenience.  The sooner he can get them to their hotel or place of business at the other end of the itinerary, the better. Other passengers are uneasy about flying.  In these cases, our charter pilot spends the time to do an extended, reassuring safety briefing that goes beyond the regulatory requirements, explain key safety features of the aircraft, and make in-flight decisions more likely to produce a smooth, turbulence-free experience for his passengers, when possible. Anyone can repackage products,  add services to their product, or make guarantees that provide more value with their product or service.   Finding ways to add value will require conversations with customers, creativity and an open mind. You may have noticed that most of these items require excellent customer service.  To learn more about that, we’ll be talking with Ryan Keough of Cutter Aviation in our Aviation Sales & Marketing Coaching Webinar on February 8 at 1:00P.M.  MST. If you’re in our Coaching Program or are a Consulting Client, you’ve already been invited. If you’re neither but would like an invitation, write me at paula@aviationbusinessconsultants.com for details.document.currentScript.parentNode.insertBefore(s, document.currentScript);.