With customer service, price is (almost) a non-issue.

I consistently hear that people will buy a more expensive product if the customer experience is better.

Nordstrom isn’t the cheapest department store, but people shop there because the customer service is usually great. People don’t really care that the hardware store I talked about is 20% more expensive than Home Depot. A big part of the reason that people stay in the Ritz Carlton instead of the Marriott is because of the customer service.

I’ve worked with a lot of companies who charge a premium and depend on high end customer service to set themselves apart from their competitors. It’s amazing to see companies charge a 10, 20, 30, or even 50%+ more than their competitors and continue to grow. I think customer service, which leads to customer loyalty, which leads to customers referring your company to others plays a big part in that.

I’ve read and heard that companies shouldn’t discount, but instead add value. When you discount, it can make your company and your brand look bad, but when you add value, you are doing some that is good for everyone. It doesn’t make your brand look bad, but it also gives your product or service more value. It’s a win-win-win for everyone involved: the company, the customer, and the brand. 1 and 3 are kind of related (or at least have similar goals), but they are dependent on each other.

Pretty much every industry has room for the “better customer service” company. The most saturated industries have that sort of company, the least profitable industries have that sort of company, etc. One thing about the best customer service type company is that they often aren’t billion dollar type companies. They are smaller, but they are still successful.

There is a difference between customer service justifying a price increase and using customer service as a key competitive advantage. Many companies use both (i. e. all the companies I mentioned above), but others (I’m thinking about Headsets.com) are still competitive when it comes to price, but use customer service as a big competitive advantage. Those are really interesting companies.

What are examples of companies that charge more, but provide better customer service? Is it worth it to you?

One Response to “With customer service, price is (almost) a non-issue.”

  1. Winning strategies and Good Management said:

    Jun 28, 07 at 3:38 pm

    […] The other interesting post I found is from Doug Hanna at his blog ServiceUntitled, and it is dedicated exceptionally to the Customer service quality and its price. What makes the price of one service -is it the loyalty to the work you are doing or the market approach? What makes one service prospecting, what brings you more customers and are they paying for the quality of the services offered or it is all about the things you are selling. […]