Being Beaten on Price? Three Ways To Fight Back

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A comment by Don Hill on an earlier blog post reminds us of the frustratiion of all those in sales at ‘short-sighted’ buyers; you know, the ones who buy on sticker price rather than on total cost of ownership, or some other longer-term value metric. But in free markets with an abundant supply of similar products & services, this is often reality. Short of refusing to sell to them, the relationship is clearly in the buyer’s hands. The buyer’s perception is your sales reality.

If you are being beaten on price, there are a number of things you can do about it. Firstly, you can reduce your costs so that you can reduce your prices and still maintain your margins. The application of Toyota’s lean thinking is one of the best ways to do this. Toyota manages to combine winning customer satisfaction with the lowest costs in the business. Womack & Jones’ lean consumption approach describes how to get the customer to pull value from your business and to drive costs out in the process.

Secondly, you can differentiate your product in a way that adds value to the customer (that they are willing to pay for). Strategyn’s Outcome-driven Innovation approach is one of the best ways to do this. It allows you to identify the outcomes that customers really want. Clayten Christensen describes the approach in a recent article emtitled Finding the Right Job for Your Product.

And finally you can reinvent your industry by rethinking how your products contribute to customer success. Kim & Mauborgne’s Value Innovation is one of the best ways to do this. It shows you where areas of value important to customers are not currently being delivered by you or by your competitors.

You don’t have to accept being beaten on price. These three tools show that you can do something about it. So what are you waiting for?

What do you think? Are you content with reducing your prices and your margins? Or are you going to do something about it?

Post a comment and get the conversation going.

Graham Hill

3 COMMENTS

  1. You made an excellent point. We have worked diligently to achieve and implement specific cost containment measures. Our greatest value is in the level of expertise we deliver when relating to our decades of experience and our commitment to providing exceptional customer service and a more personal buying experience. (Our average employee has over 15 years of industry experience)

    Our reality? The latest generation of buyers have yet to learn the importance of the relationship between supplier and purchaser/end-user. They have grown up in a technology based society and internet ordering is the accepted way of doing business. That brings me to a point mentioned in the article from the Kim & Mauborgne’s paper you referenced, in brief that is complacency. I see this to be an issue that is more common that expected. It effects owners and reps in that comfort of work and lifestyle suddenly do not demand creativity and excitement. Customers are smart enough to see this, thus resulting in a further erosion of the relationship. Companies must recognize this ‘ho-hum’ attitude before further erosions of margins and market penetration take place. Why should a customer be excited about calling us to place an order when we don’t communicate that excitement in response? Make that four ways to fight back!

    Don Hill

  2. At http://www.VolcanoDeals.com we have learned that whether you have the technology or not, upselling is an incredible boost to your revenue. At every chance we try to make sure that the customer is satisfied and we often offer additional deals when we have the customer’s attention to try and win additional business.
    Your article speaks to this directly.
    Thanks for the information.

  3. Don and James

    Thanks you for your comments, they are much appreciated.

    I think you are both spot on the money. I have responded to Don’s comment in a new blog post. Complacency is a symptom of the dark side of long-term relationships that needs to be tackled through a planned process of relationship maintenance and building.

    James’ suggestion of increasing margins through up-selling is another sensible strategy that could well have been added to my short list of three strategies (reduce costs, meet customer outcomes better, reinvent your industry).

    Keep the comments flowing.

    Graham Hill

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