13th March 2014

Aegon: Is it price or service your clients value?

How often do you get your hair cut or get your hair done? The human hair typically grows at a rate of around half an inch (1.25 centimetres) per month, and this rate of growth is consistent across the head. This means a constant stream of business for the tens of thousands of barbers and hair salons throughout the land.

Personally I get my hair cut twice a month but by a barber and I grudge paying more than £10 for this service. If I see a queue in one barber I move on to the next. For me it’s all about price, convenience and speed. You can’t do much with my hair anyway!

Others I know will quite happily wait for their favourite barber or stylist, book appointments and pay a premium price for the service they desire. For them it’s about the look and experience not the price.

That’s consumers all over the world and for all products and services and it's why any service profession has to ensure it understands the price versus value dynamic and communicate this effectively in their client service proposition.

Consumers are always looking for ways of saving money, but this does not mean that they prefer cheap products. On the contrary according to a Nielsen study on buying habits, 61% of consumers consider value before buying any product, while 58% also take price into account. At least half of surveyed consumers also considered as "very influential" in choosing a retailer factors such as location convenience, promotions, and the abundance and variety of product.

The informed consumer

We're seeing the rise of the more reflective and critical consumer. More and more consumers now look for information on a product or service before making any purchasing decision. Invariably this search is conducted via the web using Google or other search engines.

No business can ignore consumer trends and the informed consumer is becoming more price conscious, but with a willingness to pay, if real value can be demonstrated.

Anyone involved in a service profession can’t afford to ignore these trends and that business needs to have a strategy and a plan to deal with both the price or value debate.

I would urge you all to think about these questions:

1. Do I understand which of my clients are price sensitive and those who are interested in value?
2. How do you demonstrate value for money to your clients?
3. What tangible examples do you communicate to clients to demonstrate the value you add to them and their lives?
4. Are you sure you add value for money and are you profitable?
5. What more could you do to ensure your clients have an added value experience when dealing with you?

The answers to these questions can help any business ensure they have a communications strategy for existing and prospective clients, regardless of their preference for price or value.

John Joe McGinley
Head of Business Brain 
Aegon

Business Development