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Price guarantees

     
4:26 pm on Jun 9, 2009 (gmt 0)

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Anyone got any experiences of offering price guarantees to customers such as if you find the same item cheaper within 7 days we will refund the difference etc etc?

After a lot of research Im sure my prices are already amongst the lowest on the market and I offer free shipping so Im pretty confident that I wouldn't have a customer use it often if at all but has anyone who has tried it actually seen an increase in sales? Does it make any difference at all?

8:28 pm on June 9, 2009 (gmt 0)

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"does it make any difference at all"

Yes, it made our lives miserable. Years ago we tried this and we were swamped with people making claims they found it cheaper here or there. Of course we had to take the time to research to see if it was cheaper, 99% of the time we were already cheaper when you factored in shipping which was clearly stated on our policy. But the time we spent on all this was not worth it, at least for us.

9:30 am on June 14, 2009 (gmt 0)

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One of my calls last week on an expensive item:

Prospect: My local store will give me a 10% discount - will you match it?

Me: Nope.

Prospect: Okay...well...I'm going to order from you anyway. I just don't trust the local guy.

=========

Always remember that money is NOT everything...and the people who think it is tend to be headaches after the sale.

5:53 pm on June 14, 2009 (gmt 0)

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Trouble with price guarantees is that you need to surround them with so many conditions that they always seem to end up looking dodgy.
8:12 pm on June 15, 2009 (gmt 0)

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I would agree with rise2it. If you have a good reputation for quality or service, you will have no need to offer a discount or price match. Price isn't everything, even in a credit crunch. People are more likely to pay more for a "trusted" name, as opposed to potentially being ripped off by someone they do not know of.
1:53 am on June 16, 2009 (gmt 0)

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Nice replies so far, and agree with most.

However, OP already has lowest pricing in his market, and the question was:

has anyone who has tried it actually seen an increase in sales? Does it make any difference at all?

Answer to both: YES.

"we will not be undersold" guarantee does work to make 'em click the holy buy button.

But, try it yourself, either by running two separate campaigns (one with guarantee and one without), or run campaign for a while and compare sales vs. traffic.

2:04 am on June 16, 2009 (gmt 0)

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Seconded.

Split test it... each niche is different.

5:35 am on June 16, 2009 (gmt 0)

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Perfect timing for this topic!

We just implemented a Price Match Guarantee not long ago to combat a MAP (Minimum Advertised Price) challenge. We had our first match last week. But, ours is a little different. Read on...

We're forced into MAP by the manufacturer and we are one of the more prominent Mom and Pop distributors. The manufacturer wasn't enforcing it's MAP policy to the level required. So, to combat this issue which has affected sales, we now let the consumer find the offending distributors not adhering to MAP restrictions.

Has it worked? Too soon to tell. We have uncovered another distributor who is violating the MAP, that was part of the Price Match Guarantee solution, weed out the MAP violators and level the playing field. We offer Free Shipping in the Continental U.S. on those MAP products which usually equates to a 12-20% discount depending on the item. It's a tough sell although the Free Shipping has been proven to be an effective selling tool. Especially when prices are NOT padded to recoup shipping costs, that is foul play if you ask me and many do it.

Does it make a difference? Personally speaking? Yes. I've called Circuit City on their Price Match Guarantee a few times. Before they went out of business. ;)

4:09 pm on June 16, 2009 (gmt 0)

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I think it is great having a price match imo they build customer loyalty even though that customer is shopping based on price. You may get a person buying on price this time but you build a relationship with your consumer and trust when you fulfill your part of the transaction to satisfactory ends.

If I find widget xyz at company B and come to you and ask you to price match it, That says I want to shop with you in preference to company B. If you already have that kind of company awareness maybe a different type of guarantee not based on price would be better.

I think when offering a guarantee you have to be able to back it up in all cases otherwise it looks as if you are trying to scam me out of my hard earned money. Fine print is always a big turnoff.

As another poster said testing is the key to find out what works best.
maybe you have 20,000 purchases a month and if 3% or even 10% took you up on the price match, what would that mean to your bottom line?

Another thing to note, it is far easier to keep a customer then it is to get a new one.

5:57 pm on June 16, 2009 (gmt 0)

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Another thing to note, it is far easier to keep a customer then it is to get a new one.

Each niche is different. i.e. You don't buy everything from office depot, sometimes quill is preferred. I know some who tried to target repeat customer bases, in vain. They now target and have 95% new visitors each day.
6:45 pm on June 16, 2009 (gmt 0)

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Price undercutting, I mean matching. One reason why you should never negotiate prices through email with customers. They forward them to competitors who offer a slight discount, and on down the line, until the customer runs out of responders.

I had a sneaky one of these recently which I did not realize what was going on until afterwards.

10:07 pm on June 16, 2009 (gmt 0)

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You don't buy everything from office depot, sometimes quill is preferred.

I am not sure if that actually negates what I said though. If you had never purchased from Quill or vice-versa Office Depot, would you be more likely to purchase from the alternate vender you had no experience with?

Granted there will be exceptions such as you had a bad experience for one reason or another but if you had a satisfactory outcome you would shop at that location again. Would that be a fair assumption?


I know some who tried to target repeat customer bases, in vain

I am not trying to be argumentative and I would think that to be a failing of some sort or another depending on specific circumstances. Could you give me an example of the niche this type of model works for?

I can see that in some fields where the products are long term purchases. For instance if I buy a water softener I expect that to last for atleast 10 years. As a business you have to get a new customer tomorrow so you can eat. If however you also sell the salt for the water softener then I will make monthly purchases from you because of the previous trust that has been established.

imo once you get a customer you have passed the litmus test so-to-speak. Somehow in your message you have made them trust you to the point they are willing to give you money. Once you have established that trust it is easier to maintain it then to try and build trust with a new prospect or client.

4:01 am on June 17, 2009 (gmt 0)

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One of my competitors uses a "Price match for a year after you purchased it" program. Funny thing is that they are not the lowest price on a lot of things. Makes me wonder.
5:10 pm on June 17, 2009 (gmt 0)

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Are the telephone calls and the credit card fees for refunding people really worth it and do you have the extra staffing to handle it? That is what you really have to ask yourself. A large business such as a walmart, kmart, etc.. have the staffing to do it, but a smaller business might not.

You will find yourself or your company having to constantly look at your profit margins and keep up with research on the web so you can keep the calls to a minimum (I imagine they would become annoying if you were taking calls for price matching or refunds while other people were attempting to call telephone orders in).

Will it attract customers? Yes it will, but on the flip side (what we do) is to monitor sales by item. If an item stops moving (Because someone is selling it for less) we just put it on sale at a lower price and move it. A lot less work when you do things that way and people love to look at sales specials online for deals.

5:50 pm on June 17, 2009 (gmt 0)

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Are the telephone calls and the credit card fees for refunding people really worth it and do you have the extra staffing to handle it? That is what you really have to ask yourself. A large business such as a walmart, kmart, etc.. have the staffing to do it, but a smaller business might not.

You will find yourself or your company having to constantly look at your profit margins and keep up with research on the web so you can keep the calls to a minimum (I imagine they would become annoying if you were taking calls for price matching or refunds while other people were attempting to call telephone orders in).

Will it attract customers? Yes it will, but on the flip side (what we do) is to monitor sales by item. If an item stops moving (Because someone is selling it for less) we just put it on sale at a lower price and move it. A lot less work when you do things that way and people love to look at sales specials online for deals.

And this is the exact reasoning as to why we would not offer price guarantees. Many of our competitors do and we have notice that they have needed to lower pricing to a level that is at or below cost. Seems like a recipe for disaster but what do I know...

6:08 pm on June 17, 2009 (gmt 0)

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Could you give me an example of the niche this type of model works for?

One who sells printers, and also the toner (which is included in first purchase), would not necessarily get his customers purchase toner from him every 12 months.

It's google (or Bing ?) that will provide (to at least 50% customers) a list of 10 vendors (page 1) from whom to buy.
Yes, If the original seller will be in the list, he would have a better chance to get the deal again.

Funny thing is that they are not the lowest price on a lot of things. Makes me wonder.

@gpilling, I don't know the specifics, but in some industries it's no wonder. It's the assurance the potential buyer needs to get prior to buying, that he is guaranteed to pay the lowest price. Not too many actually use this to get their discount.
10:37 am on June 18, 2009 (gmt 0)

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We tried a price match for around 8 weeks. No noticable improvement in conversion, and time wasted on people claiming to 50p.. Hard to beleive that people would go to the effort for less than 1, but they did!
1:47 pm on June 18, 2009 (gmt 0)

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One other option I'm considering is to get myself onto the price comparison websites like Shopzilla as, that way, customers can see I am the cheapest by doing a comparison on the comparison website rather than having to shop around themselves and it also gives me an easy way of checking how I am stacking up against my competitors.
7:56 pm on June 19, 2009 (gmt 0)

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My suggestion, advertise. I have tested shopping comparison sites for a while (Last Year) and I found I hardly had any traffic from them.

The secret about selling is not about how well you are priced on the internet, it is about how easily your company and website is found on the internet and how much web traffic you get.

10:17 pm on June 20, 2009 (gmt 0)

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Interesting thing I saw about price guarantees is that several major online retailes (retailers who advertise on TV) offer a price match guarantee, but definitely don't have the lowest prices online.
I think that it's a great way to price discriminate, while still building trust with your customers. The people who are very price sensitive will go through the trouble to find a better deal and then request a partial refund, while all other customers feel like they got a great deal.

However, this strategy might not work so well if your brand is not known.
As was said above, just test it to see what happens!