Are you concerned that the products and/or services you offer are being commoditized – that is, reduced down to a “price list” – and that is becoming the determining factor as to whether or not a prospect decides to do business with you?
The problem I see with many businesses in the current economic climate is that they feel compelled to compete on price alone. And when money is tight, this is an easy trap to fall into. In their heart of hearts, every business owner fears that they might push their prospects into the arms of the competition by charging what they’re worth.
The irony is, that’s precisely the kind of thinking that directly contributes to lower sales and/or profitability. Let me explain.
There will always be someone willing to sell their product or service at a lower price than yours. The key is to recognize that, while their product may be similar to yours, it is not yours. Your job – Job #1, I would argue – is to differentiate your product/service for the unique, irreplicable marvel that it is! You must be able to make the case as to why your product/service is superior to all others – and, more importantly, why it warrants the investment you are asking them to make.
Did you notice I said “investment”? Get comfortable using that word to describe your pricing structure. Where people may not be willing to spend in this environment, they are likely to be willing to invest. Just remember this: It’s only an investment if you can articulate the specific benefits to them of hiring you or purchasing your products. If you can’t do that – reliably and concisely, every time – you will not be able to persuade your prospects that what you’re offering is not just another cost or expense.
Commodities cost; investments pay!
When you compete on price, you necessarily reduce profits. There is, of course, a “point of diminishing (or no) returns,” where the profit becomes so small (or non-existent) as to erase the reason for being in business at all. And if you’re hoping to “make it up on volume,” this is not exactly the right environment for that strategy, as I’m sure you’ll agree.
How long can your business survive on diminished profits, a break-even scenario, or (the unthinkable) in a loss situation? This is the ultimate danger of adopting commoditization as your business strategy. It’s a downward spiral from which you cannot recover.
There will always be a lower priced can of corn.
How to Approach Your Business Differently
Some businesses, in order to maintain their pricing, try to do a little “value-added,” which sometimes takes the form of an “extra” service or “freebie,” over and above the product or service purchased. And that can sometimes be a good tack to take, if you have a very well-defined niche and homogeneity within your target audience. Otherwise, the task you set for yourself is to come up with a different “bonus” for each different kind of potential customer/client, because if it’s not seen as truly “valuable,” it’s not going to help you close the deal.
What you may want to do instead is find a better way to distinguish yourself from the outset with every single client. Think about how you can approach the process differently in order to better serve your customers and clients. From the initial contact through the proposal and contract process to the way the project is launched and executed, what would make them say “Wow!” on a day-to-day basis, as they interact with you and your team? Defining yourself in such a way can have a much bigger and more lasting impact than almost any “add-on” bonus you could come up with.
The marketing mantra for some time has been “Differentiate or Die.” Harsh words, yes. But as marketing becomes more ubiquitous in the culture – due to the prevalence of the Internet, social media, smart phones, tablets and other “connected” technology which deliver almost non-stop marketing messages 24/7/365 – it is both more important than ever to set yourself apart, and harder to do so.
If you’re in need of a strategy as well as tactics for marketing your “can of corn” in the 21st century, please contact me.