Buying on Price in a Slow Economy

Buying on Price in a Slow Economy

One of the most frequent issues confronting businesses today is the dilemma of losing business to lower priced competitors. There have always been “price shoppers,” but it seems the downturn in the economy has exacerbated the problems. Often, companies find themselves having to sacrifice even a meager margin to win the business. What can you do to survive – and even thrive in these price-competitive times?

Disclaimer: To be sure, there will always be customers that decide on price alone, and you will lose those sales. More about that later.

Winning most customers, though, depends on the word, “value.” You must be absolutely clear on the value of your product or service and you must be able to articulate that value in terms that are abundantly obvious. So, before anything else, sit down and carefully examine your offering and identify in behavioral, outcome-related terms what the value is. Don’t say, “customer service.” Everyone will say that. Define in unmistakable terms what that is and what it looks like and how the customer will experience it.

Whether the value you offer is around service or quality or parts availability or longevity or safety, or ROI or anything else, you must be able to define it from the viewpoint of the customers. It is what they perceive that counts in the value equation. Here’s the rub, different customers value different things. You must be careful to fully explore the value offered. Some of the obvious things are listed above, but think about some of these less-obvious ones:

Impact on the environment – from the standpoint of materials used, manufacturing processes, use, peripheral threats to non-users, and even disposal.
Source of the labor – who produced the product and at what wage and under what conditions?
Strength of the relationship between you and the customer – how your in-depth knowledge of the customers and their special needs outweighs the issue of price.
Compatibility – with customers’ current products, values, customer base, policies and procedures, risk profile, etc.

If you deal in commodities, your options are reduced, but it is not impossible to define value. If I am selling gasoline, for example, I may focus on the convenience of our location, or the unique food items my store offers, or the “we fill your tank while your car is being serviced” option, or a frequent-fillers bonus or special, etc.

Once you have taken the step of identifying value, you must be able to communicate it. Make sure that every single employee truly understands the value equation. Focus all your marketing and sales efforts on value. Address the issue of price openly, challenging the customer with the opportunity to examine value.

Now, about those customers that insist on buying strictly on price: maintain your relationship with them and contact them later with an offer to help in whatever way you can. If you were right about your value equation, they will be back to you after experiencing a disappointment in the “low” price they paid.

(For insight on the ethics of price shopping, see On Price Shopping).

About Purpose is about your purpose.

Aim: Identify and articulate your purpose.

Arm: Shape yourself around your purpose.

Act: Achieve your purpose.