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A Thai Perspective
On a quick jaunt through Koh
Sian Road, Bangkok, Thailand, I stumble on a very fashionable set of
trousers (I thought so anyway!) I questioned the lady at the stall
on the going price ... "how much?" 650 Baht came the reply (approximately
$27 NZD). Now based on previous experience with the Thai locals I
understood that this didn't really mean they wanted 650 Baht for the item!
In fact it is widely accepted that you will bargain with the vendor for a
better price. They are ALWAYS prepared to discount their price!
This in mind I managed to pick up the same trousers for 250 Baht (NZ$10)
following a bit of back and forward negotiation. Because the whole Thai society revolves around price
discounting, never will anyone accept the asking price and are always
reluctant to pay it - regardless of the associated value for money. Everywhere
you are "taught" to search for a "special price".
Price Discounting Destroys Trust
This process destroys the trust that people have in your product or
service. The same applies to the fitness industry. If you have
a reputation for discounting prices people will lost the trust in your
service. How do they know that you are not preparing to run a
special next week ... after they have paid full price! They will
always wait for the next "special".
There is nothing unique about price. (Generally) People market and
compete on price because they know no other way! I continue my
stroll through the market to cries of "half price", "special price for
you" or "200 Baht today
only!" I think to myself that if noone discounted their prices -
people would be prepared to pay the initial asking price - they wouldn't
know any different!
Price is NOT the issue
Looking at the fitness industry again, we see many centres STILL
presenting price lists and giving out prices over the phone. Here
you are educating prospects that the only difference between your service
and the person down the road is price. If this is the case ...
that's
fine. However, if you believe you have a superior service, then get
the prospective member to your facility to find out why! Encouraging
a member to join is all about uncovering their needs / wants / emotional
pain and showing how your can help them achieve their goals. A well
documented sales system will assist you in completing this ( for more
information on sales systems see the members only section of the Gyms.co.nz
website).
Negotiations stalled as my girlfriend and I tried to bargain for some
"Oakley" sunglasses. We had decided initially that we were only
prepared to pay $X. However convinced of the need for (perhaps not
the quality of) the sunglasses we paid well above our anticipated purchasing
price.
If you are providing quality products and / or services then there is no
need to discount your price.
When it comes to fitness - Joe public will pay "whatever" you ask so long
as they see the value in what you are providing. In the sunglasses
case we paid more than we wanted because we saw the value in having
"trendy" sunglasses in the glaring sun and heat of Thailand. When selling
health and fitness you couldn't possibly have an easier product to sell -
quality of life ... so why discount it?
Do you wish to attract the price sensitive customer?
Would you rather have 1000 members paying $500 or 500 paying $1000?
I know what I would rather service. Discounting your price will
mean that you attract the price sensitive customer - the one that
disappears down the road at the sign of the next special... you want to
attract the stable long term customer to your facility!
A Thai Example
I walked into a brand new fitness facility in Thailand. This centre had
a wide range of benefits including - brand new equipment, a special VIP
room with 1 on 1 attention 100% of the time, a separate kids gym to
ensure that they cater for the whole family, a wide range of classes ...
and much more.
I asked to have a look around.
They sat me down with a sales consultant,
which I was pleased to see (if you don't have someone focused solely on
sales at your facility then you should have!).
I discussed that I was not a potential member and would just like to have
a look around... All going well to this point! Then immediately he
proceeded to pull out the price list and tell me about the possibility of
discounting the short term (1 week) membership for me while I was here.
He had done a good job uncovering some background information, however he
suddenly undid all his good work by trying to discount his price.
The consultant
thought price was an issue ... it wasn't. I was just being nosy!
The DO's and Don'ts of
Referral Marketing
1) Reward Customers for Referrals and
they will continue to refer.
During our Thailand visit referral marketing was rife throughout the city.
You may or may not be aware, but Bangkok tourism operates on a series of
'kickbacks'. For example: Street walkers posing as civilians refer
you to Tuk Tuk drivers for tours of many of the cities tourist sights - or
at least that is what you are lead to believe! Tuk Tuk drivers take
you to many of the 'sights' but also encourage you to visit the fantastic
once in a blue moon 'sales' at various tailors and merchandise stores.
Once a sale is made at the store then the street walker and the Tuk Tuk
driver get a commission for their referral. Because of this 'reward'
the Thai locals will continue to refer people to the appropriate stores.
2) Ask for referrals - If you do not ask you will not get.
On our journey with our 'friendly' Tuk Tuk driver a number of times we
were informed of the (supposed) best fashion stores, tailors etc and asked
if we would like to take advantage of their great today only sales.
A couple of times we said yes and went and had a look - if we weren't
asked then we wouldn't have gone!
The best time to ask for referrals at your centre is during point of sale.
If you are joining a new member then ask them at the end of your sales
process if they have any friends that may be interested in joining / a
trial workout / training with them etc. Make the new member aware of
the reward for them if their friends join.
3) Make your customers want to refer to you.
Now here is where the Bangkok scheme falls down. Many of the links
involved in the referral system will use any means necessary to get you to
the shop in their quest for commission. In fact we were lied to,
tricked and swindled a number of times before becoming aware of their
deception. At this stage we became less than impressed and not only
did we avoid Tuk Tuks for the rest of the trip, we also advised other
foreign travellers of the need to avoid these places / people... not good
for ongoing / repeat business. If we were happy with the service we
had been shown, and had not been lied to we would probably have referred
or suggested to others that they do a similar trip. Remember: If you
provide your customers with good service, honesty and assist them in
achieving their goals they will want to refer friends to you.
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