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A customer's alternatives include another business, another kind of solution, doing it themselves and doing nothing; count which the business loses to, and price the customer's own time.
Paper packet. Every task here also exists on screen, where it is checked automatically; answers written on paper are not assessed by Nydus. When you are back at a device, enter your answers there.
You will name the four kinds of alternative a customer has, count from the business's records which one it loses to, price the customer's do-it-yourself route with their own time in it, and find the prices at which hiring the business wins.
A customer's job can be done in several ways, and you can ask about the last time they did it. This lesson asks the follow-up owners skip: when they did not buy from you, what did they do instead? The answer is usually not the business down the road.
| Term | What it means |
|---|---|
| Alternative | Anything a customer does instead of buying from the business. |
| Direct competitor | Another business selling much the same thing. |
| Different solution | Another kind of product or service that does the same job. |
| Do it yourself | The customer doing the job with their own time and skill. |
| Status quo | Carrying on as they are: putting it off or doing nothing. |
| Value of an hour | What the customer says an hour of their own time is worth to them. |
Ask an owner who their competition is and they name the business down the road. Ask customers what they did instead, and the answers are more varied — and more useful. When Northside Repairs rang people who took an estimate and never came back, some had gone to another shop. More had bought a new toaster instead, and a surprising number were simply living without it.
Each kind of alternative asks a different question of the business:
Count which of them the business actually loses to, from its own records, before deciding what to change.
Another way: table
Where Northside Repairs' lost estimates went, one quarter.
| What they did instead | Customers | The question it raises |
|---|---|---|
| Another repair shop | 4 | Price, speed or trust? |
| Bought a new one | 11 | Estimate against the cost of new |
| Still living without it | 7 | Was it needed at all? |
Another way: steps
Doing it yourself looks free to the customer until the hours are counted. A tenant can clean an apartment herself for 25 dollars of products — and eight hours of her time. If she values an hour at 15 dollars, the do-it-yourself route costs her 25 + 8 × 15 = 145 dollars, and a 160-dollar professional clean is only 15 dollars more, with the inspection handled by someone who does it every week.
That comparison tells an owner two things. First, the message to a do-it-yourself customer is about their time, not about the product. Second, there is a range of prices within which hiring the business is cheaper for that customer than their own alternative: anything below the cost of doing it themselves. The value of an hour is the customer's own figure, found by asking, not the owner's guess — and it varies from one segment to another, which is one more reason a segment has to be defined.
List the alternatives. For the job in question, write everything a customer could do instead: another business, another kind of solution, doing it themselves, waiting, not bothering.
Count from lost customers. Ring or email the people who asked and did not buy, and ask what they did instead. One main answer each.
Find the biggest. The largest count is the alternative that matters most, however unlike the business it looks.
Price the do-it-yourself route. Supplies plus hours times the customer's value of an hour.
Find the winning prices. Hiring is cheaper for any price below that cost; at exactly that price the two tie.
Check the answer. The counts must add up to the customers you reached. The do-it-yourself cost must be larger than the supplies alone, unless the customer's time is worth nothing to them, which is rare. And the price range should make sense: if the range is empty, no price beats the customer's own route for that segment, and the business should look elsewhere.
Counting lost customers by what they did instead is allowed because each one made a single main choice, and that choice can be asked about. Valuing their hours at their own figure is allowed because it is their trade-off, not the owner's: a nurse working double shifts may value a free hour at 40 dollars, a student at 12.
Treating the do-it-yourself cost as the ceiling on price is allowed for that customer's view of the money. It is not the whole decision: a professional finish, a guarantee or the deposit at stake may make hiring worth more than the hours it saves, which is why the comparison is a range, not a single right price.
When the biggest count is 'still living without it', a lower price rarely helps. The customer has decided the job is not worth doing at all, at any price near what the business can charge. The useful questions are different: was the job ever really needed, or did the situation that created it pass? Is the business reaching people while the need is still sharp, the day the toaster breaks rather than a week later?
Timing is often the answer. A repair shop that offers a same-day estimate by phone reaches the customer while breakfast without toast is still annoying. A week later, doing without has become the habit.
Knowing the alternative changes the message. Against a direct competitor, the message is about why this business is better: faster, nearer, more trusted. Against a new purchase, it is about the estimate against the cost of new, and what is lost by throwing the old one away. Against doing it yourself, it is about the customer's hours: 'Get your Saturday back.' Against doing nothing, it is about the cost of waiting: the deposit at stake, the commute that keeps costing taxi fares.
The quickest source of evidence about alternatives is the people who asked and did not buy. A short call or email works: thank them for asking, say you are trying to improve, and ask one question, 'What did you end up doing about it?' Avoid asking why they did not choose you; that invites a polite excuse about price. Asking what they did instead gets a fact.
Expect a response from perhaps a third to a half of those asked, and record every answer, including 'nothing yet'. Over a quarter, twenty or thirty answers are usually enough to see which alternative dominates. Repeat the exercise each season, because alternatives change: a new app, a new store or a change in habits can move customers in ways no owner would predict.
Sometimes the honest finding is that the alternative does the job better for a segment. A household that genuinely enjoys a Saturday cleaning routine together is not a lost sale; it is a customer the business was never right for. The useful response is to focus on the segments where the business does the job best, and to stop spending money chasing the rest. Knowing who is better served elsewhere is as valuable as knowing who you serve well.
Alternatives shift with the seasons and with new arrivals. A pool-cleaning business competes with homeowners' own Saturdays in spring and with neglect in late summer, when families are away. A cleaning service competes with doing nothing in January, when budgets are tight, and with doing it yourself in summer, when people have more time.
Keep the count of what lost customers did instead as a running tally by quarter, not a one-off survey. A rise in one kind of alternative is an early warning: when 'bought a new one' starts climbing at a repair shop, something has changed in the price of new goods, and the estimate that won customers last year may not win them now. Spotting the shift a season early gives the owner time to respond before the monthly figures fall.
Every alternative sets a ceiling on price for the customers who would choose it. A repair that costs more than a new toaster loses those customers whatever its quality. A clean that costs far more than a weekend of the tenant's own time loses the do-it-yourself segment. Knowing the alternative tells the owner which price each segment will compare against, and so which segments a price serves.
A tax preparer in Seattle advertised against the big national chains for two seasons, matching their prices for simple returns, and still turned only a quarter of inquiries into clients. In her third season she called 40 people who had asked and not booked.
Their answers surprised her. Five had gone to a chain and three to another local preparer. Twenty-six had done it themselves with free software, most in the last week before the April deadline, and six had filed an extension and still not finished. Doing it yourself, late, was 26 of 40: 65 percent.
She stopped advertising against the chains and spoke to the do-it-yourself filers instead. They valued an evening at around 30 dollars and spent four evenings on their returns: 120 dollars of their own time against her 150-dollar fee. She offered an early-season price of 110 dollars for returns booked by March 1, and a message about getting April's evenings back. The next season her conversion rate rose from 25 percent to 40, almost all of the gain from people who had always done it themselves.
Researchers who study why sales are lost, including sales teams that record every lost deal, often find that 'no decision' is the most common outcome, ahead of losing to any competitor. Customers stay with what they already do because changing takes effort and feels risky. That is why this lesson counts doing nothing as a real alternative: it is usually the one to beat.
Only direct competitors count. Customers leave for new purchases, their own weekends and doing nothing far more often.
Doing it yourself is free. It costs the customer's hours, and they know it once the hours are named.
A new idea has no competition. Whatever customers did before it existed is its competition.
Cutting the price wins back everyone. It does nothing about customers who decided the job was not worth doing.
Note the tenant's route.
$8 \text{ hours}, \ 25 \text{ dollars of products}$
Doing it herself.
Ask her value of an hour.
$15 \text{ dollars}$
Her figure, not the owner's.
Value her hours.
$8 \times 15 = 120$
Most of the real cost.
Add the products.
$120 + 25 = 145$
The do-it-yourself total.
Compare with a 160-dollar clean.
$160 - 145 = 15$
Fifteen dollars more, inspection handled.
Read the owner's assumption.
$\text{lost to the pizza place}$
An assumption about the direct competitor.
Call ten offices that stopped ordering.
$10 \text{ calls}$
Lost customers know what they did instead.
Sort their answers.
$2 \text{ pizza}, \ 3 \text{ platters}, \ 5 \text{ moved meetings}$
One main answer each.
Check the counts add up.
$2 + 3 + 5 = 10$
Everyone reached is counted once.
Name the biggest alternative.
$\text{doing nothing: 5 of 10}$
The job itself disappeared.
Say what the owner works on next.
$\text{why teams stopped eating together}$
A lower price will not win those orders back.
Name the alternative for a broken toaster.
$\text{buy a new one for 25 dollars}$
A different solution.
Add the customer's trip to the store.
$1 \text{ hour at } 15 \text{ dollars}$
The new toaster is not free either.
Find the cost of the alternative.
$25 + 15 = 40$
What a repair must beat.
Write the winning prices.
$0 \le p < 40$
Below 40 dollars, repair is cheaper for this customer.
Compare with the shop's cost to repair.
$32 \text{ dollars of parts and labor}$
There is room between 32 and 40.
Set the price.
$36$
Below the alternative, above the shop's cost.
Check against the count of lost estimates.
$11 \text{ of } 22 \text{ bought new}$
The price targets the alternative the shop loses to most.
List what a café could do instead of buying Maya's cups.
$\text{another potter; mass-made cups; second-hand; keep the old}$
Every alternative, doing nothing included.
Find the doing-nothing alternative.
$\text{keep the old, chipped cups}$
No purchase at all.
Say why it matters.
What else can an office manager do about a Friday team lunch instead of ordering from Neighborhood Kitchen? Sort each alternative.
| Direct competitor | A different kind of solution | Do it yourself | Do nothing or put it off | |
|---|---|---|---|---|
| Order from the pizza place across the road | ||||
| Buy a supermarket sandwich platter | ||||
| Ask everyone to bring their own lunch | ||||
| Move the meeting to after lunch |
Complete the worked solution: a tenant could clean her apartment herself in $4$ hours with $20$ dollars of products, and she values an hour of her time at $18$ dollars. A cleaner charges $160$ dollars. Find the value of her hours, the full cost of doing it herself, and how much more the cleaner costs.
Value her hours.
$(\text{hours}) \times (\text{value of an hour}) =$ v
Her time is part of the price of doing it herself.
Add the products.
$(\text{value of hours}) + (\text{products}) =$ d
The full cost of the do-it-yourself route.
Compare with the cleaner's price.
$(\text{price}) - (\text{do-it-yourself cost}) =$ g
What hiring costs on top of her own route.
Say what the comparison leaves out.
$\text{the inspection risk}$
A professional finish may be worth the difference.
Northside Repairs rang customers who took an estimate and never came back. $11$ said they went to another repair shop, $6$ said they bought a new one instead, and $5$ said they are still living without it. Which alternative does the shop lose to most often?
A household explained why they had not booked Bright Home Cleaning. Mark every sentence that describes an alternative they chose instead.
This task has no paper form; do it on a device.
A tenant moving out can clean the apartment herself or hire Bright Home Cleaning for $182$ dollars. Doing it herself takes about $9$ hours and $25$ dollars of supplies, and she values an hour of her time at $17$ dollars. Fill in what doing it herself costs, and how much more hiring costs than that, in dollars (negative if hiring is cheaper).
| Dollars | |
|---|---|
| Doing it herself | |
| Hiring, compared with doing it herself |
A homeowner in Dallas can mow and edge her own yard in $3$ hours, using $3$ dollars of fuel, or pay a lawn service. She values an hour of her weekend at $24$ dollars. In dollars, what does doing it herself cost each time? Fill in each figure on the sheet.
| Amount | |
|---|---|
| Her hours, valued in dollars | |
| Cost of mowing it herself, dollars |
A bookkeeper offers to prepare personal tax returns. In her first season, $46$ people asked about the service and most did not buy. What is most likely her biggest competitor?
Lesson test: one question per skill, one attempt each, no hints. Your answers are checked when you submit.
A household can clean its oven and fridge itself in about $6$ hours with $15$ dollars of products, and values an hour of its time at $13$ dollars. For which prices $p$, in dollars, is hiring Bright Home Cleaning cheaper for them than doing it themselves?
This task has no paper form; do it on a device.
You can list what customers do instead of buying, doing nothing included, and say for which prices hiring the business beats doing it yourself. Tell someone why cutting the price wins nobody back from doing nothing. Next: writing an offer as a promise.
20. Your turn: Maya's café customers, step 3
$\text{often the most common choice}$
A lower price will not move it.