Two carpet cleaners live in the same town.
Cleaner A is like most carpet cleaners. He struggles to make any decent money, rarely takes a holiday but is happy to have a job. He likes cleaning carpets but wishes that his customers weren't just interested in"low prices" all the time, and would appreciate what he did for them as well as his 'technical knowledge'.
Cleaner B loves his work. He earns more in a couple of days than many other carpet cleaners earn in a week. His customers value his skill and advice and pay him what he is worth.
What's the difference between these two carpet cleaners?
Cleaner A is a low price cleaner. He takes on any prospect and fails to have an ideal customer in mind.
Cleaner B is a premium price cleaner. He targets a very specific type of customer, one who wants high quality work and is prepared to pay a premium price. He gets prospects to qualify themselves before he'll work with them. He disqualifies those who don't meet his criteria.
Cleaner A, because he advertises a cheap price and offers to match any competing cleaners' prices is in a very crowded marketplace at the bottom. It's where all the other cheap cleaners are. He's constantly frustrated that there are so many who advertise prices cheaper than him. He wonders how they can do a good job for the price.
Cleaner B, because he is a premium price cleaner has very little competition at the top. He doesn't care at all about low price cleaners. He knows that his customers are put off by their low prices.
Cleaner A "knows" that his customers won't pay any more than he is currently charging and if he raises his prices he will lose all his customers.
Cleaner B knows that there are always people who want and will pay for Mercedes cars and Gucci handbags. He seeks out only people who value the cleaning of their carpets in the same way.
Cleaner A often works with customers who are loyal only to price and will move to a new cleaner if they are considerably cheaper (which they do!). He finds that he has to rush through jobs to make any money. As a result of attracting low price shoppers he is constantly dealing with complainers and those who want to knock his price down even lower.
Cleaner B doesn't deal with price shoppers at all.
Cleaner A is often trying to clean carpets that really should be replaced and don't respond all that well to cleaning. He is often trying to make cheap polypropylene carpets regain a new look. He doesn't have much job satisfaction.
Cleaner B usually cleans "clean" carpets that don't look visibly dirty. He often works on high quality carpets that look great after cleaning. He loves his job.
Cleaner A is viewed as "just the cleaner" and treated as such.
Cleaner B is viewed as a trusted adviser whose expertise is valued and sought.
Cleaner A is overly concerned with "branding" and image type advertising. He hopes that his prospects will be impressed enough to buy when they need carpet cleaned. That's if they remember him at all. Of course he doesn't really know.
Cleaner B commits "image suicide". He recognises that prospects are not at all concerned about his business, in fact they don't even think about it except in terms of what it can do for them.
Cleaner A constantly seeks new customers, new customers. He fails to nurture relationships with his existing client base. He is always looking for the "one thing" that will bring in a flood of new enquiries.
Cleaner B recognises that the money is in his database of clients and nurtures his past customers. He knows the lifetime value of his clients. He realises that the back-end when he sells to them again and when they refer is much more profitable. He tracks all his enquiries so he doesn't waste money. He knows exactly how much it costs to get a new customer by all the different sources.
Cleaner A only quotes over the phone. He feels it's much quicker to price this way. After all, he's only trying to convince his prospects that he's cheaper than the rest.
Cleaner B visits every new prospect. He realises that body language is a large part of communication and that an in-home audit is an opportunity for theatre and persuasion. He knows that homeowners who are premium buyers are more concerned with the type of person they will be working with rather the price.
Cleaner A doesn't have a selling process. He just "wings it".
Cleaner B has a choreographed selling process including testimonials and a strong guarantee. He has already prepared to overcome common objections. He knows that a "close" is not something whipped out at the end of a sales call but rather is a "logical conclusion".
Cleaner A doesn't see the need to educate his prospects. He thinks if he just advertises a cheap price, people will beat a path to his door. He speaks in terms of "we're the best!". Competitors charging more are viewed as "ripping the customer off".
Cleaner B constantly educates prospects and his customers and has a clear unique selling proposition.
Finally,
Cleaner B has good profit. He's able to use this for better educating of his clients and better marketing. He's able to afford to send a regular newsletter which build trust and loyalty. He knows that he is primarily a marketer of carpet cleaning. He is able to replace his cleaning machinery and vehicles on a regular basis.
Cleaner A doesn't realise that his business depends on margins and profit. He thinks of himself as just a carpet cleaner. He is slowly going broke. He just doesn't know it... yet.