Everyday prices are constantly changing, and especially during the holiday season all bets are off.
This is where the concept of price matching comes in. Retailers are now offering their customers the guarantee that if a rival retailer is offering the same product at a lower price, they will either offer the customer the same price or refund the difference (in case customers have already bought the product).
Isn’t that price adjustment?
Price matching and price adjustment are two separate concepts but retailers are known to use them interchangeably.
Price matching as explained above is when a retailer drops the price of a product should a customer notifies them that a competitor is selling the same one at a lower price.
Price adjustment on the other hand is when a retailer will lower their prices and if a customer has bought the product within specific time period, would be eligible for a difference refund.
What you need to consider when drafting a price matching policy:
Never ignore your margins:
A price match policy is great and sounds awesome to your customers but that also doesn’t mean that you ignore your profit margins. You need to rationally evaluate whether you can match your competitor’s price.
There are variety of things to consider – do you have the cushion necessary to drop your prices? Does your cost of purchasing allow you to give refunds to your customers? The biggest concern is that you can never control your competitor’s pricing. What if your competitor decide to lower prices even further? Would you still be able to match these lowered prices?
You certainly don’t want to be in a situation where you cannot match the price and lose your customers.
What makes you different?
Here’s an example you need to consider – two retailers (A and B) have the price matching policy in place. A customer goes to the first and sees that a product is priced higher compared to the other one. Now ask yourself – why would the customer choose the retailer B with the lower price since he can use price matching to get it at the same price from retailer A.
Here’s why you need something to be different from your competitor. Price matching can work but it also needs a unique offering along with it. For instance if a customer comes to you, offer them free shipping, future discounts or maybe gift vouchers. It’s important to make your price matching policy something that stands out from the competitors.
Be meticulously careful in rules and policies
Price matching policies should help you and your customers and shouldn’t leave any party with bad feelings.
It’s important that you spend some time in drafting the policies and rules for your price matching offering. Salient restrictions can include online versus in store products, discounts and limited promotions not included in the scheme etc.
If you want to know how important it is to have proper rules and polices, head over to Bestbuy’s price matching policies section to show how detailed it is. Study how they wrote it and how you can use it in your own retail practices.
Honor your promises
The worst thing you can do when it comes to price matching is not honoring it. If a customer has chosen you to purchase something and wants a price match with another retailer, you should do it if you have the offer in place.
Customers don’t like false advertising and if you promote price matching on your products and don’t honor it when someone comes in for it, you are going to lose customers and generate negative word of mouth against your business.
Remember, it is wise to lose few bucks on a sale than to create a negative reputation. Customers will show their anger by their feet as they move towards your competitors who are offering better price matching offers.
As retailer you need to measure and test your policy from time to time. Just because you started it doesn’t mean you can rest easy. Some retailers enjoy great results while others don’t.
Knowing early on that your policy is hurting your business can help you nip it in the bud and start afresh. Check whether sales are going up or if customers are coming in due to your price matching policies. Basically, you need to know whether its profitable for you or not to have a price matching policy in place.
Price matching is a double edged sword – if you want to work around price, then you will have to go to the bottom since that’s what price matching does. While for some retailers this might be a feasible strategy, for others, it might not be.