Cheap and frugal are often used interchangeably in marketing but they are actually very different. Learn how to spot a cheap vs. a frugal customer and market to them effectively.
Many consumers are more reluctant to spend money than they have been in the past. A general trend towards focusing on cost savings makes it a struggle for any marketing manager to find the sweet spot between appealing to those customers who want a bargain, and actually making ends meet let alone earning a profit at the end of the day.
This is an issue thats not just confined to the B2C world, many of my B2B consultant clients are more cost aware than ever before. Its easy for service based businesses to feel the pressure to discount prices to attract more clients but this is never a good idea. Cutting your prices ever lower will not only eat into your bottom line, it can lead to resentful feelings on your part, especially if you feel you are being played or manipulated into giving someone something for less than its worth.
Whether you are marketing B2C or B2B, there is a very important distinction you will need to make if you want to sell effectively to cost conscious customers. The foundation of it lies in one simple realisation, and that is that cheap customers are not the same as frugal customers.
While they may appear to be the same on the surface, there are some key differences between cheap and frugal customers that will dictate the approach you need to take when you are marketing to them. The main differentiating factor is this cheap customers are concerned with price alone while frugal customers are looking for value.
How to deal with cheap customers
The cheap customers are often the annoying ones who haggle mercilessly and even try to bully you into reducing the price. They arent focused on quality or long term value, all they are interested in is the short term cost of your product or service, and getting what they want for as little as possible.
These customers can be stressful to deal with and often they are not worth the effort of negotiating with them. Negotiate by all means, but to avoid reducing your prices too far for these people it is a good idea to have a clear bottom line that you wont go beneath and be prepared to walk away if they wont accept that.
Cheap customers love sales and special offers and if you have cheap customers among your target customer or client base, approaching them with offers, sales and discounts can be a great way to win their favour and encourage them to buy from you.
How to deal with frugal customers
Not all cost aware customers are necessarily cheap. For many it is about prioritising their money and spending it in ways that add value. Frugal customers dont want to cut costs at your expense, they are just looking to maximise the value they receive for their money. These types of customers are often looking to the bigger picture and may be willing to pay more if they believe it is worthwhile to them.
When marketing to frugal customers its important to clearly demonstrate the value of your product or solution. Take a short and a long term approach and show them how you can help them achieve their goals and add value to their lives in the future. If they try to reduce the price, dont discount, instead reduce the level of service you provide to lower the cost overall.
Customers these days are often concerned about spending money and while being cost aware doesnt necessarily mean they are cheap, learning to spot the differences can really make a difference during the sales process.
Its a good idea for businesses generally to have different pricing structures or a range of products to cater to different budgets and purchasing styles. Having a low range, mid range and premium service is a great way to increase your appeal to different customers and give a positive impression of value to those who are prepared to spend a little bit more.