Do We Only Care About Price?

“You know the trouble with Polygon?” the CEO of a large, New York diamond house asked me a few years ago, shortly after joining. “All the retailers on Polygon, when they want a diamond, they only care about price! They’ll buy from anyone who has the lowest price!”

I wasn’t quite sure how to respond. I considered saying “Duh!” but that seemed impolite. I mean, most any shopper—once they’ve identified the product they want—tries to find it at the best price. Isn’t that something we all do, when we go to buy anything? Isn’t everyone’s obsession with low price the reason WalMart is the largest retailer on Earth today? Isn’t haggling over price, seeking the lowest price, something buyers have been doing in every marketplace in the world, for the last five thousand years of human civilization? It’s so ingrained in our culture, that in the Monty Python movie “Life of Brian”, a shopkeeper—in ancient Judea—becomes angry with a customer who’s willing to pay the asking price upfront, and refuses to enter into the time-honored tradition of haggling.

“How much for these sandals?”
“Ten shekels.”
“OK, here’s the money.”
“What do you mean OK here’s the money! You can’t say that. You’re supposed to haggle!”
“But it’s a fair price you’re asking.”
“A fair price? Are you mad! You’re supposed to insult me and scream about how high the price is.”

The point is, it’s entirely natural for customers to focus on price. So many times in our industry, wholesalers and retailers both, become frustrated that their customers seem to only care about price, and price-shop so aggressively.

In the case of the New York diamond dealer, he was preferring an environment where he spent years cultivating good relationships with customers, treating them right, and in return, those customers would buy from him. On Polygon, he felt, he couldn’t do that. His many years in the industry, his reputation, his focus on customer service, the accurate grading of his stones, amounted to nothing. “They only care about price! They’ll buy from whomever has the lowest price!”

But is it true? Yes and no. They will buy from whomever has the lowest price, all other factors being equal. And any of us would. If I go out to buy a camera, and I know what camera I want, and there are two identical retailers in the same mall, side by side, with the same friendly salespeople, and the same return policy, and the same…everything…and one sells the camera at a lower price than the other, of course that’s where I would buy. I’d be nuts not to.

That’s how we behave when we’re the buyer. The challenge we face when we’re the seller is to show the customer that all the factors are not equal. There’s a phrase for doing this that we’ve all heard: “Don’t sell price, sell value.” It sounds good, but what does it mean? And how do you do it? The key is to find a way to demonstrate to the customer that what he receives from you is not the same thing that he receives from your competitor. All the factors are not equal. The two cameras are different, or there is something else that is different, such as a warranty, or training that goes along with the camera, or whatever.

In the case of diamonds, we all know how this works. Maybe the competitor is selling stones with inferior make, or with certificates from a less reputable lab, or on different payment terms, or any number of other factors. As sellers competing in the marketplace, what we all must do is (1) find a way to ensure that what we are offering truly is different from the competitor, even if only slightly, and (2) find a way to politely communicate that to the customer, in a compelling fashion.

At Polygon, we face this same challenge ourselves. Potential customers will often refer to one or more of our competitors and say “Polygon is more expensive. We can get the same thing from Network XYZ!” And if in fact they could get exactly the same thing from Network XYZ, they’d be crazy to sign up for Polygon. It’s our job to convince them that all the factors are not equal. This typically involves us pointing out the many differences between Polygon and its competitors, which include things like the high-volume of trading activity, the diversity of product available (colored stones, watches, finished jewelry, estate jewelry, etc.), quick inventory-reduction resources like the Bargain Channel, the lively and informative discussion forums, the “community” feel of Polygon, that’s been responsible for many life-long friendships, life-long client loyalty (yes, it happens even on Polygon), and two marriages and one divorce (to our knowledge). In other words, Polygon is much more than a long list of diamonds for sale. Although we have that too. Once a prospect finds out how much is going on inside Polygon, we generally make the sale and gain a long-term customer. But the point is, it’s our job to communicate effectively how we are different. We can’t expect someone to know it intuitively. And the same thing is true for a retail jeweler, facing a customer who walks in the door with a long print-out from an Internet e-tailer. And it’s also true for a diamond dealer in New York, seeking to make sales to retail jewelers on Polygon.

Remember: the customer “only cares about price” when they believe there are no other differences. Make sure there are differences. And make sure your customer knows what they are. By the way, there’s a happy ending to the story of the diamond dealer who was upset that everyone just cared about price. Despite his intial frustration, he has stayed a loyal customer for nearly ten years, and now tells me he does a vast quantity of business on the Network.

Apparently Polygon retailers can distinguish when “all factors are not equal,” and buy accordingly.

Jacques Voorhees,
President & COO, Polygroup