Part 5 of 7
So let’s get to part 5 — how to understand and determine your own value.
Welcome back!
You’ve made it past the halfway point and soon will be implementing your Pricing Strategy in the real world.
Hopefully you’ve had time to work through Parts 1 through 4. That was a ton of information for you to work on!
So before we move on to the guts of Part 5, let’s review what we’ve learned so far:
In Part 1, you learned the three principles of pricing:
- #1 – Know that you are building a race to make money
- #2 – Know the difference between price and sales
- #3 – Know the difference between under and over pricing
These principles help guide your understanding of how pricing works.
They reinforce the fact that your price is only a tool for enabling sales, since YOU are the real driver behind whether sales are effective or not.
They also established that being profitable was your primary goal of your race.
This meant that your price could not be too high, chasing away racers, or too low, ensuring that you didn’t make any money.
You had to find a way to determine that just right price that worked for you on several levels.
A price that matches your customer’s perceived quality of your race.
In Part 2, we took those principles, and the need to find that right price, and started building the first part to our price decision making system: The Pricing Strategy.
That’s where we decided that a strategy is only “a simple way for you go about deciding how to do something”.
Your strategy is your way of selecting a price based on a consistent, repeatable, and easy to follow process.
It is also your tool for how you will decide on a price, and then be able to measure that pricing decision with real data.
Part 3 was all about knowing your potential customers, collecting information about them, and using that information to your advantage.
This is where you needed to do some research by talking to customers, investigate your competitor’s results, and finding out what customers are talking about online.
This led us to Part 4, where you flipped from customers, to competitors, and looked into what the competition was charging based on the value you thought they had.
The tactics and goals in Part 4 focused you in on understanding what your competitor’s think is a good value for the prices THEY have selected.
Now it’s time to bring all this work home, and ask yourself:
What is MY value?
What IS your value?
Knowing what your competitor’s thinks is THEIR value for THEIR price, gives you plenty to compare when you think about how your own prices will look to those same customers.
If you did the homework in Parts 3 and 4, then you now understand what your competitors are giving their customers for that price.
And what they are NOT giving them for that price.
But what is YOUR value?
What do you bring to table that different or special?
What do you see of value in your races?
Is it the venue?
Do you spend the time to form relationships with property managers that are difficult to obtain?
Is it your timing system?
You might be the only one in 300 miles that is using chip timing for all your races.
How about the pizza that is at every event?
You may see finish line services as the thing that makes your race stand out from everyone else’s.
Could it be your announcer, or the music you play during registration?
There is something very professional — and personal — about having a customer’s name announced as they cross the finish line.
What’s the point to this line of questioning? I have value everywhere, right?
The point is value is subjective, not objective. In other words, value is something your CUSTOMERS perceive, not you.
You could think that your timing system is the greatest thing ever devised. But if your competitor can produce the same finish line results, in the same time, with paper and stop-watches, is it really better?
The answer is: Only if your customer THINK it’s better!
There are plenty of times I’ve heard racers say, “Pizza? Really! Where’s the fruit?”
I happen to like pizza and enjoy a slice right after a tough race. Others do not.
I think that a race with pizza has value.
If you like apples over pizza, you might think that a race with pizza does not have value.
What I think is better is subjective.
What you think is better is also subjective.
So how will I know what is valuable and what is not?
Ahhh, now your thinking!
It’s time to add three (3) new process to your Pricing Strategy tool box:
- #1 – Self-Assessment of Your Value
- #2 – Customer Assessment of Your Value
- #3 – Comparing Your Value with Your Competitor’s Value
We’ll tackle these one at a time:
#1 – Self-Assessment of Your Value
If you remember from Part 4, you did an assessment of your competitor’s value, your impression of their price, and your perception of your own experience.
With that information, you should have created a list that gives you a clear understanding of your competitor’s value based on your own judgment.
It was your initial gauge for determining which of your perceived competitors are really YOUR competitors.
Now it is time to turn that assessment technique in on yourself.
Remembering how you decided to rate your competitors, rate your own value using the simplicity of the 1-10 scale (1 being very poor, 10 being superior), and rate yourself as honestly as you can.
If you don’t remember the 15 category starter list I gave you in Part 4, here it is again:
- Attendance
- Registration
- Starting Line
- Course Marking
- Safety
- Finish Line
- Timing
- Results Postings
- Podium
- Awards
- Direction
- Volunteers
- Parking
- Extras
- Communications
Using the above list (as an example), you will might rate your own event something like this:
{5, 6, 7, 4, 8, 5, 7, 9, 5, 7, 2, 8, 3, 4, 3} = 83
83/15 = 5.3333 = 5.4
This gives you a total score of 83, and an average rating of 5.4 over 15 categories of value.
Here’s an important point that I cannot stress enough.
You will be biased when you do this.
You’re going to think that the value of certain parts of your race are better than your competitors.
That’s ok, and expected.
You expected that?
You can’t help it. It’s human nature.
Honesty is tough when you’re doing a self-assessment.
Nobody wants to think they suck at something. Especially when it comes to building races.
However, your self-assessment is critical to your own success. This is why I’ve built in a fail-safe to help you understand the difference between your opinion and reality.
That’s the second part of our new Pricing Strategy process.
#2 – Customer Assessment of Your Value
Before you can determine which of your competitor’s produces a race comparable to your own, you need to get real with yourself.
What better way to get real with yourself then to ask your own customers?
If you’re doing this for the first time, this part will be difficult.
First timers obviously don’t have any customers yet, so you really cannot do any self or customer assessments.
No worries, Part 6 will be of use to you in that department. But pay attention to this part, because when you DO have customers, you already be ahead of the game!
For those that have done a few races, this is a very important step.
How do I get my customers to give me honest feedback?
That’s easy: Ask them!
You’re looking for their opinion of what if valuable in your race, and what needs work.
You’re also looking for that additional value that they found when you weren’t looking.
Additional value?
Yes! That value you didn’t even know you had.
Customers will tell you what THEY think is really valuable about your race.
Send them your 15 categories and have them rate you 1-10.
I recommend Survey Monkey (surveymonkey.com) since it is really easy to setup, use, and get web-based feedback almost immediately. Survey Monkey’s paid features are nice too, but free for simple surveys like this one.
Hopefully you collected your customer’s emails when they signed your race waivers.
If not, you could go to local trail or bike shops where racers buy gear, find them on the trails, reach out to them in meetups, or find them online.
Pro Tip: Offer then a chance to win a gift card to their favorite gear shop as an incentive to filling out your survey!
However you find them, get their responses and compare them to yours.
How do they compare?
Chances are that you’re going to be surprised to find what your customers thought you did very well.
You will be equally surprised to find out what they thought you needed to work on.
Take it all in with a grain of salt.
Some of you will not like to find out how your customers felt about your value.
You might even resent them a little for thinking something you thought you did very well, received a very low score.
Don’t get angry, and don’t freak out. Just accept that some customers didn’t like something you did during your race.
Think of it as constructive criticism and be honest with yourself.
Could the lowest rated category be better? How could you make it better?
Did the highest rated area surprise you? How can you use that as a point in your marketing?
The point of this exercise is to know what YOUR customers thought YOUR value was to THEM.
Once you have that answer, you can put that information to work.
#3 – Comparing Your Value with Your Competitor’s Value
You’ve made it this far! That is awesome!
Surviving the self-assessment is hard. Nobody likes to be criticized.
But it has a tremendous amount of value when it comes to this last process.
Remember all those comparisons and judgments you made about your competitors in Part 4?
Now it is time to add yourself to that list.
Only instead of adding what your customers said about you, you need to add your self-assessment too.
Why both assessments?
You’re going to find out which competitors come closest to what YOU thought your rating was, AND find out which one your CUSTOMER’S thought you came closest to.
The idea is to see what range of values your race fits into.
Your self-assessment — unless you were really hard on yourself — will probably have a higher average than your customer’s assessment.
Once you place yourself into the list, start to ask yourself some critical questions:
- Which of your competitor’s are closest to your ratings?
- Does what they offer match what you offer?
- What do they charge for their races?
- Do you provide more or less value for that same price?
- Who is considered way above your value?
- What do THEY charge for their races?
These are the kind of questions you need to ask yourself about the data.
You need to analyze your competition in terms of value compared to your own.
It should be your first true apples-to-apples way of understanding where you fit into the market.
The Subjective Nature of Differentiation
It is an important way to understand what value your competitors are offering that is similar to your own value, and what is not.
It is also an effective way to discover what your competitors are NOT doing that you could use to increase your own value.
This the marketing concept of differentiation.
It is the process of distinguishing your race from others, to make it more attractive to your target customers.
In other words, it helps you to stand out from the crowd.
Remember, value is subjective.
If you offer something different to your customers, even if it is a small addition like ice water at the finish, your customers might think it’s value is far more then it really is.
This increases your overall value in their eyes (i.e. subjective value)
But you will never know this if you do not understand what they think of you, your race, and your value.
So go find out!
Now that you have your Pricing Strategy almost complete, your next email will go into how your costs and profit targets impact your prices.
Keep an eye out for Part 6 in my Pricing Your Race series titled:
Part 6 – The Disconnection Between Costs, Prices, and Profits
See you then!
Cheers,
Kyle
Kyle M. Bondo
Reckoneer | reckoneer.com