Compete on extraordinary value - not price
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Everyone likes and appreciates a good deal.
There are buyers who just aren't happy unless they beat you down on
price. But there are buyers who are willing to pay a premium price to
experience and enjoy the best their money can buy. There's just
something special about extraordinary value that supersedes price. So
why is it that so many leaders are quick to whip out their machetes and
slash price? Does slashing price make you stand out from the
competition? If you believe it does, what's the hang time on that
differentiation? Yes, for that nanosecond, you've got the spotlight -
until your competitor trumps you with a better price.Competing on price is an ugly game.
Because profit margins are squeezed tight, competing on price forces
your company to focus on volume sales. It gives your company permission
to dial down its commitment to delivering extraordinary value. And
there's nothing more exasperating than a company that's frantically busy
and not making money. It's even worse when efforts to compete on price
do little or nothing to increase sales. Fact: Competing on price means
working harder for less. And in these economic times, working harder for
less is not something you want more of.Here are some no-compromise strategies
to compete on extraordinary value:
- Delivering "average" is easy: Competing
on price is easy. Competing on a platform of extraordinary value is
going to require more work than you're doing now - a lot more. Value
comes from paying attention to details. It doesn't matter if you're
building a product or delivering a service, delivering "average" doesn't
wow anyone. As leader, it's your responsibility to set the value bar
high - and keep it there. Delivering value must begin with you.
- Make price irrelevant:
What would happen if you established a company mandate that any and all
strategies that involve price be centered on adding value? Take
competing on price off the table and lead your team to apply their
innovative thinking to delivering extraordinary value. I bet there are
five strategies your company can implement right now that would lay the
foundation for making price irrelevant. Things like lifetime guarantees,
faster and/or free shipping, after-purchase follow-ups, delivering an
unexpected "thank you" gift, a warm smile, or a new and improved spin on
features and benefits, can shift attention away from price. Again,
making price irrelevant takes work and thinking outside your box.
- Check your audience:
If you've been getting beat up on price, you may be selling to the
wrong audience. Companies, products, services and markets evolve over
time. Whether by need or design, business models change and get out of
sync with your once tried and true customer base. If your company built
its business on price and that strategy is no longer working for you,
it's time to find a new audience that's in sync with your new business
- It's all about profit margin:
Competing on price cannibalizes your profit margins. Shave your profit
margins too thin and you've opened the door to a self-inflicted
cash-flow crisis. It doesn't matter if you're in a service business or
make or sell products, delivering extraordinary value is the best
strategy to protect your profit margins. Groupon is perhaps the easiest
and fastest way to destroy your profit margins while helping Groupon
protect theirs (even though the company has yet to create profit). Pay
attention to and protect your profit margins and you'll quickly shift
your strategy from competing on price to delivering extraordinary value.
- Be bold:
Competing on price is exhausting. Competing on extraordinary value is
bold and empowering. It's a commitment to be best in class - to stand
out in a crowded marketplace where "average" has become an expectation.
What's the worst that could happen if you competed on delivering
extraordinary value? What would happen if the next time you were tempted
to discount or compromise on price to make a sale, you shifted to
adding value instead? Would it be the end of the world if you walked
away from a deal because you wouldn't cave in on price? No-compromise
leaders are not afraid to be bold.
Please share your thoughts with me about today's Monday Morning Wake-Up. Click here to comment.
Neil Ducoff, Founder & CEO of Strategies and author of No-Compromise Leadership
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