It’s Sunday afternoon, and my one-year-old granddaughter has fallen asleep in her stroller. I just stopped into Whole Foods to let her snooze, which she is doing as I’m writing.
Here’s what else is going on around me while Adina naps: Whole Foods is busy. The check-out lines are full, people are filling to-go containers with salads, soups and pre-made entrees, and the coffee bar has a line. Today isn’t an aberration; it seems every time I go into a Whole Foods Market I have to wait in line at the register to pay.
Remember the pejorative nickname people once used to describe Whole Foods? “Whole Paycheck.” Yes, Whole Foods’ prices are high, but my (admittedly) empirical observation is that it doesn’t seem to hurt them.
A quick search for the company’s recent financial data supports this empirical observation. Since 2009, Whole Foods’ revenue and gross profit are up more than 50%, while operating income, net income and earnings per share have more than doubled. So even as we have spent more money in their stores, fueling impressive sales growth, we have enabled Whole Foods to make an even higher profit every time we visit their stores. Giving them our “whole paycheck” must not be worrying us.
So what’s the lesson in this?
You are more worried about your prices than you customers are.
Nearly 30 years ago, I attended a conference by a guy who called himself “The Pricing Advisor.” One clear message I remember from The Pricing Advisor:“The most common pricing problem is not that your prices are too high, but that they are too low.”
Customers base their purchase decisions on many factors, one of which is price. If the other factors under consideration are not clearly understood, compelling or differentiating, the customer focuses on price. If they are, the customer has other reasons to buy, and your prices can be higher.
In my workshops, I frequently hear business leaders say, “My customers just care about price. I wish they would focus on something else.” My answer: Give them something else to focus on.
Clearly, Whole Foods has given plenty of people something to focus on besides price. And Whole Foods is not alone. Look at any retail mall in America, and notice that very few of the thriving stores base their customer promise on price. Even consider a company like Wal-Mart that actively promotes price; when you visit Wal-Mart, how frequently do you choose the lowest-priced item on the shelf?
You deserve to charge higher prices to your customers, because you deliver them something of value. If you encounter price resistance, don’t reflexively lower your prices. Instead, look for ways to more effectively communicate a clear, compelling and differentiating story to your customers.
Over the next week, pay attention to the purchase decisions you make, for your business and personal life. How often are you choosing the option with the lowest possible price? Not much of the time? Doesn’t your business deserve the same consideration from its customers?