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.