How would you like to have raving fans, who'll drive hundreds of miles to your stores to pay higher prices than your competitors charge?
REI has stores like that and I love to buy from them. They have great gear and knowledgeable staff (who actually use the gear). But they don't always have the lowest prices. In spite of that I go out of my way to buy from them rather than their competition.
Why?
Here's why:
That's right. A 100% satisfaction guarantee, no questions asked, for as long as you own the product.
I have a friend who went into an REI store with a tent he'd purchased over a decade ago. He wanted to order a replacement pole for one that he'd lost. They told him they couldn't get one exactly the right size. So they gave him a brand new (and better) tent.
Did they lose money on that transaction? Absolutely. But, they understand the lifetime value of a customer. And they understand that outdoor lovers talk.
The cost of a tent was a small price to pay for the number of people who've heard that story since it happened. REI's customers think they'd be crazy to take the risk of buying from someone else.
What's the story your customers are telling themselves?
Great post.
Posted by: Joseph Joel Sherman | 05/11/2009 at 07:46 PM
Lots of companies don't compete on price...
Apple, Chick-Fil-A, Rainbow flip flops. the list goes on.
Posted by: Stephen Bateman | 05/12/2009 at 02:09 PM
Another alternative to competing on price: you can arrest your customers!
http://iamshane.com/2009/05/09/of-atms-iphones-and-911/
Posted by: John | 05/13/2009 at 12:29 AM
It is amazing the hidden cost of customer acquisitions. I worked for a credit card company at one point and they figured it cost them (at that time) $350 dollars to acquire each customer. I imagine with the saturation in the market it's much higher right now.
Posted by: Chris | 05/13/2009 at 10:32 AM
Indeed . . . and appreciate your advocating that businesses offer products, services and solutions that customers value enough to pay for. Equally as important is that you highlighted Customer Lifetime Value, something very few (especially young businesses) consider and thus miss opportunities for growth. Thanks for the post.
Posted by: Chris Hopf | 05/14/2009 at 02:30 PM
L.L. Bean in Maine has the same policy, and my life-time loyalty in return. Amazing.
Posted by: Chris Stump | 06/05/2009 at 09:29 AM