On my trip down the California coast, I noticed every little town is full of low-end motels.
Morro Bay has 23 motels in town.
Most are one or two-star motels.
Two claim to be three stars but look like the one-star motels.
The luxury motels in town are Best Western and Comfort Inn.
Want 5-star luxury?
Look at Airbnb or VRBO.
If you owned a one or two-star motel, why would I choose you?
In his book Simplify, Richard Koch describes two types of simplifiers.
- Price simplifier
- Proposition simplifier
Price simplifiers keep costs to a minimum and complete a high volume of low-profit transactions.
Ikea is a good example of a price simplifier.
They dramatically reduced costs by selling unassembled furniture.
Their focus was designing packaging so they could ship the furniture to Ikea stores at minimal cost.
The customer gladly pays less and assembles the furniture themselves (I hear your groans…).
For the most part, people are happy with the Ikea experience because the cost is dramatically lower than assembled furniture.
Proposition simplifier is the other end of the spectrum.
You need an “insanely great” product or service.
Cost is not a factor.
People happily pay more because they want that “insanely great” experience.
Think Tesla.
The motels on the California coast focus on price because they don’t provide an insanely great experience (other than the scenery and the quaint town experience).
The one or two star motel prices range from $67 per night to $300 per night for similar accommodations.
How can one motel charge $300 while next door they’re charging $67?
Some throw in a free high-carb breakfast consisting of cold cereal, bagels, stale pastries and terrible coffee.
Some add a faux fireplace or a hot tub.
From what I see, the motels who focus on nurturing a lot of good reviews are charging more.
These motels actively engage with the reviewers, thanking them for a good review and publicly addressing any issues.
The motels charging $67 do not engage with the reviewers.
Otherwise, you’re getting a clean room, a fairly comfortable bed, and location close to the downtown or beach.
Think McDonald's.
You know what you are getting.
Average food tastes the same no matter where you are.
How are you different than your competitors?
Are you a price simplifier or a proposition simplifier?
Comment below and let me know why I would choose you over your competitors.
