The Australian Small Business Blog

Friday, August 12, 2016

Price Comparison Websites

by Dr Greg Chapman

To list, or not to list, that is the question, as Hamlet probably never asked.

There are numerous websites now offering customers the ability to get multiple quotes for a service. This is great for the customer because they are able to find the best service at the lowest cost in a side-by-side comparison- but is it the right thing for your business?

The attraction for businesses listing on such sites, if they have been properly promoted, is that it will be another channel for referrals of business that you may not have otherwise received. Unfortunately, this business will likely be won on price.

While such comparison websites offer a convenience to customers, there is limited capability to interact with the businesses. This is necessary as these websites don’t want to be cut out by either customer or the business with them dealing directly, and so losing their commission. This means that it’s difficult for businesses to demonstrate their point of difference and speak with the customer directly. Usually, they just have a text box to describe their offer with limited ability to link to their own website, if at all.

This restriction in communication encourages the customer to focus on price as asking questions, and waiting for responses takes time. From the customer’s perspective, if the job is straight forward, requiring little creativity, this may be quite acceptable, even efficient, but is this the sort of job you want to win?

So when might you want to list?

You might want to list if you are just starting out. (Warning customers!)

You might want to list if your business model is built around doing simple tasks with lower skilled labour quickly and moving on. The McDonalds approach. (Warning customers!)

Or, it may be a loss leader for future business. You may not actually be making a loss, but just cutting the margin to acquire the customer for future premium work. (Warning customers!) However, as it’s likely that these customers are price sensitive, there may be no future premium work. (Warning businesses!) An exception to this would be if you have a service with a use by date, eg hotel rooms which aren’t sold 24 hours before the day may not be sold at all and any income is better than none.

For some businesses, listing can be a good strategy. For others, it is better that they build their own brand where their communication with their customers is unhindered and they are able to clearly demonstrate the unique value they provide. The important thing is to consider carefully whether this referral source is for you.

[Note that these comments don’t refer to Industry Directories that just offer paid listing and leave the customer to make the comparisons themselves and actively encourage direct communication with their suppliers.]

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Dr Greg Chapman is the Director of Empower Business Solutions and is Australia's Leading Advisor on Emerging Businesses and provides Coaching and Consulting advice to Australian Small Business Owners in Marketing & Business Strategies Planning & Systems. He is also the author of The Five Pillars of Guaranteed Business Success and Price: How You Can Charge More Without Losing Sales.

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