Many changes are taking place in the business world today and even more within the rental industry. In times of great change and uncertainty, business owners generally look to drastic measures to cope with their changing marketplace.
Many times these measures are unpleasant ones. Employee layoffs, branch closings or inventory liquidation are attempts to combat an anticipated change in the business climate. And in the current environment, change may come from a variety of sources.
Where once steady, predictable and even subtle change in the marketplace was the norm, the rental industry now measures change on a daily basis. This may include stiffer competition in the form of national conglomerates and hardware chains. Change resulting from new and emerging buying cooperatives is affecting the acquisition cost of equipment. Include the change in the way manufacturers distribute their products, and you have the recipe for uncertainty, with more advantages to some than others. The knee-jerk response to all these changes is to lower the price of goods and services in order to survive.
One often-overlooked business measure-and much more proactive than reactive-involves the re-assessment of the relationship between the value and the price of one's products or services. In the rental business, this value/price relationship requires the proper balance of the perceived value your customers attain from doing business with your firm and the price or rental rate paid. This may sound easy enough, but it is generally the most misdiagnosed assessment of one's business.
A colleague once told me that most customers under-appreciate value and over-appreciate price. I believe this to be true. But business owners sometimes fall short by thinking that the lowest price is needed to attract and keep customers.
Remember, price is not an issue until someone demonstrates a desire for your product. Is simply advertising the lowest rental rate going to attract a new customer to your counter? In some instances, it probably will. Chances are, however, that to keep that customer, you will need to educate him on the merits of the services you provide beyond the product itself - in other words, value. If price is the only determining factor in a customer remaining a customer, won't he immediately go elsewhere if he finds that your competition is cheaper?
As consumers, we all want the best price for the products or services we buy. Think about your last vehicle purchase. Was price the sole determination of where or what you bought? You probably gave as much consideration to location of the dealership, reputation for service work and the personal service provided by its people as you did to the price. Thus, the dealership created a value for you beyond the product itself.
The lowest price may be what customers want only because that is what they have been conditioned to look for in the past. Value is determined by your customers, but it is not printed on their foreheads. You as a business owner must be cognizant of ever-changing customer expectations. When these expectations are identified, you must sell to them through your product and services. Do your customers recognize the other services you provide within your business? Accenting a niche product or service that the competition will not do or cannot do is creating value.
Reacting to change in your marketplace need not be done out of fear of your competition and the perceived resources they may possess beyond those of your own business. Embrace change by being responsive to your marketplace with more than just the lowest price. The balance between value and price is critical to your long-term success. Don't shortchange your business by simply relying on the latter.
