I was reading a great post by Seth Godin on offering intangibles to beef up your service. He lists a few ideas on how to add value to your service instead of cutting prices. Prices wars is an issue that I have been thinking about for a long time and after reading that post decided to post about my own experience with cutting prices to increase sales.

We find that most of the online business and industry sectors are engaging in price wars. With the advent of globalization, the proliferation of the internet and technology and the growth of online companies, the competition has become tough.

To get sales online you might be competing with 100s of other companies offering the same or a similar product or service. It is quite common to target the price as the defining factor in such situations and ultimately, prices get so low that no one makes a profit.

You should resist the temptation to cut your prices when the sales dry up. I know it is easier said than done, when you depend on the daily sales for your cash flow and they are hard to come by. I have been guilty of the same practice in some of my online businesses such as the graphic design business.

However, I changed the approach a little while ago and got good results. Instead of cutting prices, I decided to target the service or product and increase its value. Now, I agree, there are some products that can not be improved beyond a certain degree or can not be improved in such a way that your products are better than the competition. In such cases, and in most cases, really, it is better to think in terms of increasing the value by increasing the service aspect of your business.

It is hard to give examples to justify what I am saying but I will try. Perhaps these are not the best examples out there, but here goes.

For example, in the graphic design business, instead of cutting prices, you can offer better service or throw in some bonuses that would not cost you much but would create great value to your customers. You could for example, offer super fast turn around, or you could offer extra file formats or a personal one-on-one service etc.

If you are selling electronics on your website or on ebay and you get these products from a drop ship company that many others are using and offering the exact same products, you could offer free power cells, or free shipping or no hassle 100% refund and returns policy etc.

When you participate in price wars, your margins crumble and even if your revenue increases, you profits go down. If you do not cut your price, but offer an added bonus that costs a little (less than what you would have cut the price by), then you not only prevent your profit from going down but build a customer loyalty.

The simple answer: Because customers love them.

Nothing more important than that, right? Of course, I would not expect you to take my word just like that. So, here’s the explanation. It’s all about word-of-mouth marketing. What’s the first you thing you do before buying anything which you do not have much knowledge about? Get recommendation from your network of family and friends.

Now, translate that to the online world. According to the information gathered by Future Now (this is a really cool site by the way), about 70% of customers check more than 4 reviews before buying anything. More than half of them spend more than 10 minutes to read these reviews. Because reviews are honest opinion from recent buyers, their insights do matter to shoppers looking for the best product in town.

That’s why you should not tweak product reviews just to favor your products. Aside from being unethical, it destroys the trust between customers and sellers. Be brutally honest all the time.

Product Review Prototype

Luckily, big e-tailers have spent money and time testing different Product Review models that will help improve sales and build credibility. Of course, Amazon.com is one of the best in this field. Do not just copy the whole template but adjust it according to your needs.

Circuit City is one good example for product reviews. It is multi-dimensional, meaning it evaluates and sums up the key attributes common to a group of products. In this case, the item is Toshiba Satellite Laptop. Using different measures like battery life, performance, and display, it gives interested buyers a glimpse of the strong and weak points of the product.

For more details on how to optimize your Product Review section, visit Future Now.

In this very competitive business world where cutting through the clutter is the name of the game, many entrepreneurs are trained to sell, sell and sell. They would rather talk about their products or services. No wonder active listening is often referred to as a lost art.

Shut up! Gag your mouth if you can’t help it. Then go out or pick up the phone and talk to your customers.

Contrary to popular misconception, marketing is not all talk. It’s about paying attention to WHO really matters – your customers and employees (if you have). Researching about your customers need not be expensive. But it should be well-planned. Otherwise, it will lead you to the wrong direction.

The first and most difficult thing to do when listening is to remove all your faulty impressions about your target market. It’s unfortunate that some brilliant entrepreneurs believe they know their customers by heart. Start with an empty mind and try not to contradict the insights. Clarify but not contradict.

Basic questions

In case you don’t notice, consumers like to talk about themselves as much as entrepreneurs love to talk about their products. If such is the case, why not indulge them by asking open-ended questions? This will not only create an impression that you care but also give you free access to multitude of insights. Here are some questions to break the ice:

1. How do you use this product? How often?
2. Are there similar products you’re also buying?
3. Where do you buy these products? Why?
4. Where do you gather information when buying this product?
5. How different is this product to competitors?

Don’t act surprised. These are not magic questions that will direct you to the winning formula. Rather, they are so simple that many undervalue its importance in marketing.

There are many ways to increase your Web traffic and improve conversion rate, to a point it is sometimes confusing for starting entrepreneurs. Good thing MarketingSherpa has released the results of its new SEO study which improved lead conversion by 58%.

In essence, here are the 4 basic tactics you can easily implement to your online site:

1. Develop new language versions of the website or multilingual content if you have non-English speaking customers
2. Create new white paper to qualify leads or add more contents regularly
3. Boost incoming links from relevant sites
4. Test design and placement options for links to Web forms

You can check out the details at MarketingSherpa to fully understand its implementation. Since we’re already touching this subject, you can also check out these highly recommended blog posts about Internet marketing and see if it applies to your business:

The Ultimate Guide to Building the Perfect Link
11 Guidelines for Getting Authoritative Links
Would you like a 14.56% Conversion Rate?
The Facebook Marketing Bible: 24 Ways to Market Your Brand, Company, Product, or Service Inside Facebook

Of course, not all strategies will apply to your online business but the idea here is to find the similarities of these strategies/tactics and apply it immediately. Sad to say, many entrepreneurs are so engrossed about SEO and other Internet marketing lessons that that they failed to use it to their business. Pick out at least 5 items to work on and monitor your progress. In that way, you can easily analyze what’s working and what’s not.

When it comes to selling, the confusion about consumer needs is very evident. Just take a look at some of the hottest selling digital cameras at Amazon.com and you will be bombarded with too many technical details about its superior product features. That, my friends, is the disease called hard selling.

Though the geeks would surely love to get all the info, many potential consumers do not really understand the benefits of having a “9-point AiAF, single point AF, and Face-priority AF” or “7.1-million-pixel CCD sensor”. Can you?

Blame it on sales and marketing guys for some are constantly looking inward, filling their marketing materials like case studies, white papers and other literatures with technical jargons and R&D superiority. Alas, they forgot that their target consumers are ignorant and worse, do not give a damn about these things. In short, CONSUMERS DO NOT CARE ABOUT YOU; THEY ONLY CARE ABOUT THEMSELVES.

The concept of hard selling is long dead yet its applications continue to flourish. Why not? It’s very easy to do, just list all the technical specs and pray that consumers will understand its significance.

Change Perspective
Leave the technical details to “Technical Specifications” section of your communications materials. Instead, concentrate on understanding the emotional and psychological reasons why people buy your products and mold your message according to those cues.

Why do you think the old and grouchy business executives buy cutting edge mobile phones like BlackBerry or Nokia N95? Most of them do not even know how to use push technology or Wi-Fi connection. Still, they bought that item just to showoff social status.

These are some of the insights that you should focus on if you want to sell. If you unlock that mystery, don’t be surprised if consumers will pay you even if they could get for free.