Let’s say you’re a float tank center. And more centers are starting to show up in your town…
Or, maybe you are that other center starting up a town that already has float tanks…
As new centers enter the market, the typical response is to run promotions on daily deal sites, promote large specials, and/or run Facebook Ads selling floats for much less than the usual offerings.
The best case scenario is this price slashing behavior subsides shortly after the neighboring center opens.
But what if it doesn’t? What if an existing competitor decides their new price is even lower?
How do you compete with a price slashing neighbor without competing on price?
This is a big question with no single answer. A lot of factors can go into building a marketing strategy, and price should just one point in the overall game plan.
If competing on price, without answering direct price gouging, was an easy problem, small businesses wouldn’t struggle with competing juggernauts like Amazon, Wal-Mart, Costco, Target… the list goes on and is ever growing.
In the retail world, the most common reasons sales occur are: as a quick way to clear out old product (clearance sale), or as a method to bring people into a store where the hopes are they’ll buy something else in addition to the sale item (loss leader).
In a float center, we’re not trying to get rid of outdated inventory, and in most cases we’re not trying to get consumers to buy something else during their visit. Arbitrary sales (sales for little to no reason) are a lazy way to boost revenue and fill empty slots with potentially long term consequences. Gone on for too long, it can quickly become a race to the bottom in your market.
It’s a race that no one wins
And no matter how many warnings are given about slashing prices, people will do it anyways. Especially when the feeling of desperation to fill empty tanks begins to settle in.
If price and availability of time slots are your sole differentiating factor, you’re no longer a service, you’ve become a commodity. In the world of commodities, the buyer tries to locate the lowest price because the good is the same.
Chances are your neighboring float tank center can’t easily sustain cheaper prices while matching the quality of the overall float experience while trying to produce a profit (unless that neighboring float center has an obscenely large bankroll and they’re willing to fund their float center on a loss). Something has to give. Either they acquire all of the attention and you go out of business, or they run out of cash and go out of business themselves. Again, a race to the bottom where no one wins.
If a center in your town goes out of business the efforts of their marketing will no longer trickle over to you, and even worse, the legitimacy of floating may be tarnished in the eyes of people who were curious about it. “Oh that float thing was just a fad, I’m glad I never wasted my money on it,” they might think.
The high costs of having lower prices are more than just short-term financial stresses. Avoiding steep discounts can help maintain a perceived value for your floats. When your price is $65 and you run regular specials where floats cost $40, you’re telling your clients, “I’m actually ok accepting $40 as payment.” Why would they ever want to pay you more?
There are, however, plenty of companies that are able to successfully compete with a low price competitor. One simple example is high-end athletic clubs that are able to function in a world where a $10/month “Planet Fitness” exists in the same town. At the end of the day, if the workout and equipment are the same, why pay more to get in shape? The short answer is that the high-end athletic club is more about the experience, added amenities, and prestige, not just how many ellipticals are available.
There are quite a few ways to increase your competitive advantage that don’t involve price. A classic book in marketing, and one which I revisit at least once a year, is The 22 Immutable Laws of Marketing (it was written over 20+ years ago and some of the examples may be out of date, but the core principles are, well, immutable).
So when given the problem of how to compete on price without dropping prices, I turn to the lessons from authors Al Ries and Jack Trout for inspiration.
Add value, offer more
Find ways to go above and beyond the expected float experience. As an alternative to cutting your prices by $20, what could you offer each floater that had a perceived value of $20 or more, every time they floated?
Notice how I said perceived value. Just because you’re offering something for $20 of value, doesn’t mean it has to cost you $20. You may have bought that item at wholesale, or even bartered for it. You could offer an array of snacks and pastries, or free espresso (post float), or even kombucha. That “something extra” could be worth far more than the $20 perceived value and could be subsidized across a year’s worth of floaters.
The attendees at the Customer Relations Panel at the Float Conference Marketing Forum heard fantastic examples on how the experience of your center alone can bring a loyalty that slashing prices can’t break through. Maybe you make sure to sit down and spend one-on-one time with every customer who wants to chat. Maybe you send them handwritten notes after their floats.
Perhaps you can invest in: plush robes, an infrared sauna, Muse Headbands, a foot bath, NormaTec recovery system, or maybe you’ll go above and beyond and provide a concierge service to run errands for people while they are in their sessions. Think big, something that might cost you $10+k a year to offer your clients might only equate to charging a couple of extra bucks per float (depending on your volume, of course).
Whatever you offer, the costs won’t be as severe as the amount you would end up discounting, and your floaters will truly feel like they’re being taken care of.
Vary your offerings, find a differentiator
Don’t try to be better, be different.
Following the immutable laws of marketing, if you can’t own a market, you can own a category in that market. You can also be first to mind when it comes to a subset of a larger market.
Floating can be just one of the services you offer. If you’re new in town and there is already another center that ONLY offers floats, offer floats and massage, or start up a full blown wellness center that offers a plethora of services. This can take the pressures off a competing float center that just wants to run cheaper floats. Let them. You’re offering your clients so much more. A one-stop-shop (to steal a phrase) where people can treat themselves to a health regimen where they’ll walk away as new people every time they step through the doors.
You can also be another “float only” center and have a differentiator with the styles of tanks that you choose. If another center only has pod style tanks, perhaps you invest in cabin style tanks, or better yet, mix it up! Offer a variety of pods, cabins, and open room style of float tanks. If the existing center in town has a Bohemian-esque vibe to it, if it’s authentic to you, open your center with a more minimalist, upscaled approached.
Your differentiating factor may very well be the thing that people end up talking about. You won’t be known as “just another float tank center.” The immutable law of opposites and duality confirm this… in a world where there is a solid leader, often the best approach isn’t to try and do the same thing. You’ll need to find a way to stand out. The law of opposites says often the best approach is to go in the opposite direction, “zig when they zag.” The law of duality says that most markets become a two-horse race. So whoever is #1 in a mind, #2 should be “the opposite” offering.
Is there room for more that 2 centers in a market? Of course there is! The size of your market, local economics, population density, and proximity to other centers are all factors in the potential sustainability of running a float tank center. As more and more centers enter a market, keeping an eye on your positioning among the other centers will not only help carve your share of the market, but it’ll also help create a clear message as to how you are different and why people may want to choose you.
Find what works, trust the process
The Law of Perspective says that the effects of marketing can take place over a long period of time. This is the chapter that also speaks heavily on the consequences of sales and discounts. Often, when we’re in a scramble to attract attention or increase gross revenue, we just drop prices to attract the typical bargain shopper. Bargain shoppers are historically not the most loyal of shoppers. A compounding problem when you run sales, especially if they follow a predictable pattern, is that your customers who are thinking about floating soon will just wait, because they know a special is coming up.
As float center owners, we throw a lot of stuff against the wall, see what sticks, and discard the rest. But what if nothing feels like it’s sticking? It’s probably because you’re not giving it enough time to cook. Consider this scenario: you lead with an offering (whether it be price related, an added value, or a differentiating factor) and, before people can get accustomed to it or even take notice, you throw something else on top of it or switch your offerings completely.
In a lot of cases, new offerings will perform poorly at the beginning simply because people haven’t adjusted yet. I recommend, when you make a big change to your offerings, give it at least 3 months of tracking before you evaluate the effect. For us at Float On, it took at least that long for our customers to get used to our late night floats and extended schedule.
When offerings are so transient that the clients don’t know what to expect, trust is weakened. Trust and habits are built over time, and when someone can’t rely on things being consistent, they may find start frequenting a business that’s a little more stable.
Finally, don’t feel like it is you that has to change when another competitor comes to town. Unless the new center that comes to town brings an offering that pulls too many of your clients away. Dealing with situations like that warrant a whole discussion of its own. However, in most cases, this is the moment where you double down on what you have proven to work for you in the past. Reaffirm with everyone why they chose to float at your center. All of this is possible when you have the patience to find out, not only what works for you, but what works for your floaters.
Put your best float forward
Whatever position you take on in your market, lead with it in your outbound messaging. People who align with your values and messaging will naturally gravitate towards your center, and as to paraphrase old advice, if you try to appeal to everyone you’ll end up appealing to no one in particular.
Be comfortable with the fact that you “can’t win them all.” In the often overused but timeless example of industry leaders, Pepsi and Coke, they are both able to position themselves as the top two brands in the soft drink industry. They operate in the world with the reality that neither will dominate and totally crush the other. They may even trade places in popularity from time to time, but they know as long as they’re in the top of the conversations happening, enough people will be around to support them. This example also proves that there is room for others.
Try to lead with something that can’t easily taken from you or replicated by someone else. If you’re promoting a benefit that your competitors can also perform without much additional effort, it’s not truly a competitive advantage. More likely it will yield a temporary bump at best, and businesses can’t survive long term on temporary strategies.
Moral of this story: if your product is a commodity, the only thing customers care about is price. Since floating with you isn’t a commodity, you shouldn’t try to make price their reason for choosing your center.