Warren Buffett, chairman of Berkshire Hathaway Inc., speaks during an event marking Business Wire's expansion into Canada in Toronto, Ontario, Canada, on Wednesday, Feb. 6, 2008. Buffett said a credit crunch isn't under way and he forecast that the dollar's value is likely to decline. Photographer: Norm Betts/Bloomberg News

The Warren Buffett way to building Customer Loyalty

Written by Kushal Dev | Co-founder, Customer Guru

Warren Buffett is an American business magnate, investor and philanthropist. People around the world recognize him as one of the most successful investors of our time. He is the CEO of American multinational conglomerate Berkshire Hathaway and has consistently been ranked among the wealthiest people in the world.

Buffett’s autobiography, The Snowball had been released in 2008 to portray the financial mogul’s life story and achievements. In his book, he wrote a very famous line that many can learn from. It is: “It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.” A statement that gave us a direct insight into his perspective on price and value.

The topic of pricing is one that is discussed a lot in companies among the c-suite and in training. During sales, employees seem to become very nervous when it comes down to the price. Questions like, ‘What if a customer opposes the price,’ or ‘Our customers always think that our product is too expensive,’ arise. This is a valid concern, moreover, pricing and value are some of the more complex sales issues.

Going back to Buffett’s line ‘It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.’ We can learn a lesson or two from it, in relation to the product or service that your company sells. Your customers feel the exact same way as Buffett does. They feel much better when they know they are getting an amazing product at a fair price rather than an average product at a lowered price. Thus, the concept of value comes in. You should position your product or service to be the most wonderful option that customers can find, and keep the price fair. This is how you can inculcate value into the product or service and sell on it.

Value selling can be best pictured using a weighing scale. Imagine price on one side and value on the other. It is your aim to create such an experience for the customer that you outweigh the price with the value that they can obtain from your product or service.

Value selling earns you customer loyalty

When the customer knows they are getting utmost value out of your product or service they end up becoming remarkable brand advocates. Take Apple for example. Their price is considered to be very high relative to other smartphones, yet why do they still have such loyal customers? Well, Apple’s customers know they get a much better value out of the product relative to the price that they are paying; despite it being so high.  Apple understands value selling.

Value selling doesn’t end at the sale. Its starts before and lasts for every. When the customer buys a product or service from you they are also buying the customer experience and service that comes with it. Therefore if a customer ever faces a problem it is your responsibility to keep up the value that you sold to them. This is where we can learn from one of Warren Buffett’s other traits. He always thinks in the long term. Customer loyalty is not a one-time thing. You cannot expect to gain your customers’ loyalty if you implement a certain policy towards it once. It is a continued, long-term effort that will gain you those invaluable promoters who voice their praise for your brand everywhere they go.

So according to Warren Buffett who knows a thing or two about successful selling, is focus on value. In the end your job is to think of ways to build value into the sale

Warren Buffett is a man who makes the cleverest decisions when it comes to buying a wonderful company for a fair price. By instilling his mantra in your company – when you sell – you will find that your loyal customers will pay you the price you want, just to get their hands on whatever you have to offer.